Developments in technology, shifting markets, and the rise of distributed energy resources (DERs), such as solar, are working to change the traditional way of doing business for utilities and beyond.
That’s according to a new white paper from Siemens that explores what the company calls “the dawn of the microgrid.”
The report explains that several trends are pushing more utilities to consider utilizing generation assets from their customer base — an interesting and disruptive proposition for today’s utilities.
One of these significant trends over the past 10 years has been the widespread use of distributed solar.
In fact, according to a 2018 Wood Mackenzie market report, between 2018 and 2022, U.S. distributed solar installations will grow from today’s roughly 2 million to almost 3.8 million.
Beyond solar, behind-the-meter battery storage is also on the way up, expected to grow from 200 MW to almost 1,400 MW during the same timeframe.
For utilities, the rise of DERs threatens revenue and perhaps reliability, and it also makes the energy landscape more complex. So, in light of this, how are utilities preparing for the shifting sands ahead?
“Today, most utilities are beginning to prepare by entering discussions around grid modernization, DER compensation, and business model transformation, by sharply enhancing core utility priorities, such as reliability, resiliency, and efficiency,” the Siemens report explains.
And this includes looking into yep, you guessed it, utility microgrids. But there likely won’t be a one-size-fits-all approach. Instead, the report points out there “will be different models and requirements, along with different approaches based on resources, customer preference and regulations.”
Microgrids can act as small power grids with defined boundaries, and can operate when connected to the larger electric grid, or as an “island”, in light of an interruption on the main grid.
The report suggests that as dramatic changes to utilities’ IT architectures are complex and difficult, these businesses would be wise to partner with vendors in the microgrid industry to explore further opportunities.
Microgrids have, of course, been used in niche applications for years, used as backup energy for military bases, college campuses and more. And as the demand for renewable and reliable power grows, microgrids are only expected to become mainstream, perhaps serving as “a core piece of the electricity grid infrastructure,” according to Siemens.
The report also explores as an example a recent project of Commonwealth Edison’s — the first utility-operated microgrid cluster, with Siemens microgrid software as the platform. The project, designed for the Bronzeville community of South Chicago, includes a cluster of microgrids that collaborate with each other to help each other out as needed and as possible.
Implementing new technology for future energy landscape changes, while maintaining normal ongoing operations is expected to be a major challenge for utilities in the coming years. In light of this challenge, many utilities are choosing to partner with vendors in the microgrid space to develop, deliver and deploy utility microgrids in their territories.
Download the full white paper, “Dawn of the Utility Microgrid: The Path to a Profitable Future,” to learn more about the potential of the utility microgrid and where microgrids may be leading the larger energy industry.