Microgrids are a localized grouping of electricity sources that operate and connect to the centralized grid but can also disconnect and function autonomously. These systems can serve a number of functions, including providing continuous electricity for buildings that cannot lose power or providing back-up power for emergency shelters in municipalities that are wisely preparing for resiliency in the face of increasingly severe weather patterns. In addition, when integrating renewable energy sources, microgrids support a flexible and more efficient electric grid.
The traditional, centralized electric grid that has serviced cities and towns for decades contributes to a dramatic loss in energy during transmission and distribution. The U.S. Energy Information Administration estimates that conventional electric transmission and distribution loses on average about 6% of the electricity that is transmitted and distributed domestically each year. A large percentage of energy is lost in the production of electricity at the source, so this additional 6% loss during transmission and distribution is significant. A microgrid can substantially minimize this energy loss and the inefficient process of burning fossil fuels from power plants.
Microgrids can produce and store energy from a number of different sources. Solar, wind, steam/gas turbines, and fuel cells are efficient ways for communities or mission critical assets to produce their own energy and have the ability to function without the power grid. These mission critical assets (hospitals, government buildings, data centers, community storm shelters) depend on a constant and reliable source of energy to function. Microgrids are resilient, fuel efficient, and can provide these establishments with an energy source during a centralized grid outage.
Storing energy in a microgrid relies on battery storage and/or a system that stores energy thermally for domestic water heating, process heating, and/or space heating. Combined Heat and Power plants (CHP) use internal combustion engines or steam turbines to allow for a portion of the energy production to be used for electricity production and the excess heat energy to be used for thermal loads. This technique is extremely efficient compared to a single-stage, high-mass, fossil-fuel boiler. There is no need for the establishment to buy and maintain backup generators, and these microgrid systems lead to an increase in property value.
Microgrids are scalable and exist in residential, small/large commercial, and district-size systems. Residential and small commercial systems typically consist of a solar energy system, battery storage, and a backup generator. Large commercial and district sites typically add CHP to the energy mix. These larger sites are also able to manage their demand charges, meaning they can charge up their batteries during times of low demand and discharge during peak energy demand periods. Demand charges can vary from $10 dollars to more than $50 per kW and typically make up half of the electric bill of a commercial facility. Mitigating these peak demand charges with a microgrid allows for significant savings to the utility customer.
The price of solar energy with batteries has dropped significantly in the past few decades. A 30% federal tax credit, rebates, grants, and accelerated depreciation are important advantages that can be utilized when investing in a solar electric system with or without battery storage. CHP systems have also come down in price and offer an array of plant sizes that are compatible with everything from small commercial projects to large institutions. The typical payback of these systems range from 7-12 years with a 40-year serviceable lifespan, making these systems affordable and practical.
Microgrid systems can act as a service to utilities by helping them manage the ever fluctuating demand on the power grid. The vision for the utility of tomorrow is that every customer has their own microgrid capabilities that can act as a service to the utility when it is there and can provide ‘offline’ power when it isn’t.