Microgrid Standardization Will Accelerate Much Needed Adoption

Feb. 24, 2023
Demand for microgrids is growing in large part because they offer resilience for today’s energy needs. Microgrids are just one example of distributed energy resources. They generate electricity on site and can be used while connected to the utility grid or while disconnected in “island mode.” Microgrids offer backup power and answer demand when the grid goes down or when prices peak, and they readily integrate renewable energy sources.

Despite rising demand and expanding capacity, microgrids generate just 0.2% of electricity in the US and are heavily concentrated in just seven states. What’s stopping widespread adoption of this key technology? In a word: standardization. Microgrids tend to be highly customizable, which contributes to the time to market as well as the investment needed. Microgrids can also introduce complexity into the power distribution equation. But standardizing microgrid design and implementation can mitigate these challenges and accelerate much needed adoption.

Challenges in the current microgrid landscape

Before implementing a microgrid, organizations should perform analysis and a feasibility study to understand impact, return on investment (ROI) and solution design options for their needs. When starting, organizations should aim to answer questions including:

  • What energy source(s) should be used to generate its electricity?
  • Will the organization need a battery? If so, what size?
  • Will the microgrid asset connect to the larger power grid?
  • How long will the integration take?
  • What will the interconnection with the utility look like?
  • How to best maintain, operate and optimize the microgrid?

Once organizations answer these types of questions, they can then consider financing options. The National Renewable Energy Laboratory estimates that microgrids cost $2 million-$4 million per MW, and that’s without accounting for location, energy mix and purpose. Organizations that wish to invest in microgrids must either have capital ready or understand how to obtain financing for such a project, all while projecting their expected ROI.

Organizations investing in microgrids can look for energy-as-a-service (EaaS) models that require OpEx-only payments and alleviate the upfront capital burden. EaaS providers build, operate and manage energy infrastructure and act as long-term partners, giving firms the power to meet their desired energy outcomes.

Managed partnerships also help organizations minimize any technical complexity involved with procuring microgrids. Microgrids can integrate with the larger grid, as well as other products, solutions and hardware. Each of these components must be readily serviceable. Solutions that use artificial intelligence to automate system monitoring and maintenance, coupled with partner expertise, make it much easier to realize microgrid benefits. 

Microgrids also come with attendant regulatory considerations. Interconnecting with a utility grid comes with its own set of regulations. And incentive programs vary from jurisdiction to jurisdiction. Firms will need a strong understanding of what regulations govern microgrid procurement, implementation and usage before embarking on the journey.

Standardizing the path to market accelerated microgrid adoption

In many ways, microgrids are a relatively new concept. If microgrid adoption is going to continue growing and achieve greener outcomes, the industry needs standardization of all aspects of the solution including the design, physical components, digital experiences and data. In doing so, organizations can accelerate adoption and realize a faster return on their investment.

For example, pretesting microgrids against common benchmarks will accelerate deployment timelines. Preconfigured intelligent solutions and integration packages will ensure microgrids are interoperable with other software, hardware and solutions in their ecosystem. Standardizing design and feature sets can help firms get a better grip on the associated costs and more accurately project the long-term capital needs of their investments, making microgrid ROI more attractive.

The sustainability impact of standardized microgrids is apparent. Microgrids enable on-site optimization of renewables and capitalize on energy storage while avoiding consumption of non-renewables from the grid. Getting these tools to market faster will also promulgate the concept of microgrids, expanding adoption. With management offerings like EaaS  to accompany microgrids, their viability as bottom-line growth drivers will increase as well. As awareness and usage of microgrids increases, they’ll help more organizations realize energy independence and resilience.

The potential of microgrids as catalysts for sustainability is undeniable. Now it’s time for the industry to usher the technology forward with a standardized path to market.

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