Innovations and FERC Policies Increase the Value of Microgrids

Recent advances in the complexity of microgrids currently being installed are stimulating a rush to increase the versatility and function of a technology platform originally conceived around the notion of hyper-reliability. This is why the Department of Defense (DOD) is so enamored by the prospects of microgrids, since they can protect mission critical functions during times of emergencies, including war, by creating islands of energy self-sufficiency.

In many ways, the ultimate application for DOD is forward-operating mobile microgrids that can be deployed during combat missions, especially those powered by modular solar photovoltaic (PV) units that could be carried in backpacks.

Even with mobile microgrids burning fossil fuels, fuel consumption could be cut in half by simply networking diesel gen-sets together instead of relying upon each generator to operate as stand-alone systems. Prototypes of such microgrids, being tested out in actual combat missions in Afghanistan, are currently validating such applications, which epitomize the simplicity of microgrid technology, albeit serving a very important service for troops in combat.

In a recent Pike Research forecast, it becomes clear that while renewable energy will be a major emphasis at DOD over the next two years, federal investments in microgrids outpace both smart meters and conservation.

On the other end of the spectrum are highly complex and revenue maximizing microgrids such as the one at University of California-San Diego, a 42 MW state-of-the-art facility that is actually up and running today. This microgrid features two of the most sophisticated microgrid offerings on the market today. The first comes from Power Analytics and represents a models-based management continually updated according to external fuel factors (such as levels of sunlight) and internal factors (shifts in demand). Layered on top of this sophisticated scheduling platform is Viridity Energy’s software, designed to extract the greatest value for the microgrid owner according to real-time market conditions.

At present, the Viridity Energy wholesale market optimization features have yet to go live, but they will shortly. (The California Independent System Operator (CAISO) does not yet offer a “plug and play” transmission market.)

Just within the last year or two, an important insight has emerged among microgrid advocates. Lessons learned from both military and campus-based microgrids has underscored the importance of integrating load shedding systems – such as demand response — with critical control of the generation assets. By incorporating dynamic and interrelated supply side generation with dynamic load shedding schemes, a more stable, robust, and efficient balance may be maintained to optimize energy surety and overall microgrid and macro-grid system stability.

The Federal Energy Regulatory Commission’s (FERC) recent ruling mandating a demand response (DR) market by authorizing Independent System Operators (ISO) to compensate these distributed resources on par with generators is a game changer and will only accelerate the growing marriage of supply and demand resources within and outside of microgrids. This ruling could transform microgrids from threats to local distribution utilities into valuable resources for the larger grid. The FERC ruling’s primary impact is on energy service provision and less so on capacity and ancillary service offerings. Each ISO/RTO must file its demand response compensation tariffs later this month, but for all practical purposes, it will not be until next summer that this new revenue stream will be available to demand response providers. Just how significant is this new FERC initiative? According to Viridity Energy, payments would double in the PJM demand response market, which is already the most advanced market for demand response aggregation services.

Yet another twist to the microgrid vision revolves around forecasting. When a microgrid system level control is then coupled with more externally-focused information sources (weather patterns, commodity/energy prices, et cetera) available from enterprise level supervisory control systems (such as that provided by Power Analytics and Viridity Energy), the purported and well-hyped future functionality of microgrid systems is actually already here today.

The functionality, economics, and modularity of implementing such systems is possible because companies with decades of experience with similar competencies have re-purposed their field-proven tools to the unique needs of microgrid technologies as well as ownership models. A prime example is another firm that has been flying under the radar: Encorp LLC, which released its own “Microgrid System Controller,” this past April.

The company claims its new technology is the first microgrid system controller to connect onsite synchronous generators (typically diesel generators) with inverter-based solar PV, small wind, and advanced energy storage systems, and then monitor and control the resulting microgrid. Word has it that Encorp may not always win the initial contract, but is frequently called in after the fact to rescue projects that are not performing up to expectations. In essence, the Encorp system controller handles the nuts and bolts of the technology integration, interconnecting the combined generation portfolio of the microgrid to the larger utility grid or operating these devices while in island mode. Few other companies seem to be able to network legacy diesel gen-sets with more modern inverter-based generation and storage options as seamlessly as Encorp.

The new Encorp offering is based on the company’s well-regarded Gold Box™ and related software technology offerings. With over 1,000 MW of generation capacity under its control at 400 projects around the world, the company is betting big on the microgrid market. The new controller already has been successfully installed at a major international defense contractor site to ensure power reliability and reduce greenhouse-gas emissions. Among the projects Encorp is involved with is a small microgrid at Fort Sill, Oklahoma, where the firm’s technology is creating the building blocks to help meet cyber-security goals. The company hopes to help realize new revenue streams for the DOD by helping to secure power supply for critical processes at Fort Belvoir, Virginia from a new Combined Heat and Power (CHP) installation. And at an undisclosed East Coast military site, Encorp is keeping its fingers crossed that it can work with Power Analytics to help a military base operate indefinitely in the case of a grid outage by integrating 1 MW of solar PV with advanced battery storage.

The growing sophistication of the microgrid market is truly impressive. We’ve come a long way since 2009. Yet, without the basic on-the-ground know-how and technology provided by firms such as Encorp, all of the functionality and optimization promised by the microgrid value proposition will go up in smoke.

Article by Peter Asmus, appearing courtesy the Matter Network.


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