Microgrids: Building Blocks of the Smart Grid

The term “microgrid” may conjure up images of self-sufficient military bases and remote outposts, generating and consuming power without any connections to the larger electricity grid. After all, backup generators that support multiple buildings — the bare-bones definition of a microgrid —  are already a mainstay of hospitals, refineries, data centers, semiconductor plants and other institutions that can’t afford to let the power go down, even for a second. Such stand-alone microgrids now add up to about 450 megawatts of commercial and industrial capacity, and another 322 megawatts in the campus and institutional sector, in the U.S., according to Pike Research.

But utilities, as well as their customers and partners, are increasingly looking past microgrids’ ability to “island” themselves to protect from broader power outages, and are seeking out ways they can use their on-site distributed power generation, and demand reduction and management systems to help the grid at large. Theoretically, these types of microgrids could help the outside grid keep its own power quality stable, helping entire neighborhoods ride through disruptions. And at the end of the road, microgrids could sell their generation and demand reduction back to the utilities they usually buy power from, giving would-be microgrid operators a whole new set of financial incentives to help bolster their business cases.

Legos of the Smart Grid

In fact, these bite-sized smart grid systems could be an inevitable part of the build out of the “super grid” envisioned by such smart grid champions as Al Gore. That’s because microgrids could help ease the “smart at the edges, dumb in the middle” problem recently described by Ray Gogel, president and COO of Current Group. Gogel told Forbes in February that all the smart meters, rooftop solar panels and other “nodes” on the edges of the grid will require much more robust communications and controls along the “middle mile” of distribution substations and feeder lines to operate effectively. Properly designed and integrated microgrids could aggregate many of these edge nodes into a single point of interconnection and interface, making the job of coordinating them in the middle that much easier.

Dave Pacyna, senior vice president of Siemens Energy’s North American transmission and distribution division, sees microgrids as a natural part of the evolution of the smart grid. Pacyna said in a January interview:

“When it comes to a utility figuring out how to manage this wide, dynamic set of resources and control points, the only way they can do that efficiently is to break their networks down into small nodes – i.e. microgrids – and then add a level of control on top of it.”

Siemens would like to provide a few key software platforms to manage the disparate smart grid technologies being installed by utilities today, which means that it’s working with multiple sets of partners, including microgrid partners. For example it is partnering with microgrid management software provider Viridity Energy, and has teamed up with BPL Global to take advantage of the latter company’s system for controlling loads, such as HVAC systems and industrial motors, that can be put together in microgrid structures, Pacyna said.

Microgrids As Tools

How do microgrids help utilities manage their smart grid ambitions? One of the most recent examples comes from American Electric Power, which since 1999 has worked within the Consortium for Electric Reliability Technology Solutions (CERTS), a Department of Energy/California Energy Commission-led group that’s concentrated on inverter technologies to allow the fast, safe disconnection and reconnection of microgrids to the larger grid. Modern inverters can also allow a microgrid’s power to serve as backup and stabilizer for the outside grid. Pike Research has pointed to the CERTS systems as among the first to standardize microgrid-grid interconnections. Will more such standard connection systems emerge?

Last year, AEP showed that its East Busco, Indiana microgrid, could island itself and keep itself powered using CERTS-based technology and large-scale sodium sulfur batteries, according to Smart Grid News. AEP has three such islanding projects underway in Indiana, West Virginia and Ohio, and sees them partly as a way to avoid building more transmission lines to far-off service areas, said Brad Roberts, power quality systems director for S&C Electric, one of the companies working with the utility.

That points out another benefit of microgrids — they could help utilities use distributed power generation systems like solar panels on customers’ rooftops in a far more effective way. This, in turn, could help them cut back on the need for a massive investment (and permitting nightmare) in building lots of new high-voltage transmission lines to carry renewable power from far-off wind farms and utility-scale solar plants to towns and cities. Locally-based solar, wind, biomass generators, fuel cells and other distributed generation systems would be much more convenient sources of power, and would cut down on the line losses associated with long-range transmission to boot. But right now, distributed generation systems are more of a headache than a help for most utilities, since utilities can’t control the way those resources put power onto the grid. Too much intermittent solar power can cause grid instability, for example — see Greentech Media for a breakdown of the challenge.

The Potential

The smart grid is expected to cost about $165 billion over the coming years, according to a recent middle-road estimate from the Electric Power Research Institute. Taking a larger view, the Galvin Electricity Initiative — a nonprofit founded by former Motorola (s MOT) CEO Bob Galvin that is a big proponent of microgrids — estimates that the world will need $6 trillion in grid investment over the next 25 years. What share of that build out will come in the form of microgrids? According to Pike Research, the microgrid market will grow to about $7.8 billion in cumulative investment by 2015 or so.

Where are the next-generation microgrids being built? Right now, several microgrid projects are being funded with DOE smart grid stimulus grants, including Galvin Electricity Initiative’s Perfect Power System at the Illinois Institute of Technology campus in Chicago. Viridity Energy is involved in two stimulus-funded projects — one with Consolidated Edison in New York City, and another with PECO at the Philadelphia campus of Drexel University. San Diego Gas & Electric is working on a small-scale microgrid project in Borrego Spring, Calif., but a larger project planned for the University of California at San Diego campus may be reconsidered after it failed to secure DOE funding last fall.

There are more projects that incorporate various concepts that underlie microgrids, including “virtual power plants” that coordinate local distributed generation and demand response resources, and distribution automation systems that apply new technologies to balance grid power. But just what is and isn’t a microgrid is a matter of some uncertainty, with definitions shifting as time goes on. Stay tuned for future posts on these distinctions, and other microgrid-related topics — including the question of whether it will be utilities or private operators who push them forward the fastest.

Image courtesy of NREL Solar Decathlon 2009’s photostream Flickr Creative Commons.