Driving forces and barriers for microgrids in the U.S. Michael T. Burr Energy Bar Association – “Microgrids 101” webinar / Sept. 25, 2013
defini niti tion* on*: Micr crogr ogrid id A local energy system capable of Distributed balancing captive supply and Generation demand resources to maintain stable service within a defined boundary. Microgrids are defin ined ed by their function tion, not their size. Microgrids combine various distributed energy Energ rgy resources (DER) to form a whole system that's Managem ement ent greater than its parts. System Most microgrids can be further described by one of three categories: Isolat lated d microgr ogrids ids, , including those on Demand • Electricity islan ands and at remote inlan and sites, not Response, Storage connected to a local utility. Efficiency Islan anda dable ble microgr grids ids that are fully • interconnected and capable of both consuming and supplying grid power, but can also maintain some level of service during a utility outage. Asynchron ronou ous microgr ogrids ids are connected to • utility power supplies, but they aren't inter connected or synchronized to the grid. Such non-synchronized microgrids are capable of consuming power from the grid, but they aren't capable of supplying it. *Source: Microgrid Institute www.microgridinstitute.org Michael T. Burr Sept. 25, 2013
Microgri grid Techn chnologies ogies Microgri grids can use almost any and Resourc ources form of e energy nergy supply. • Gas or diesel cogeneration The key to making a microgrid • Fuel cells and microturbines work is the ability to balance ce • Photovoltaic (PV) modules demand nd agains nst availab able le supply y • Wind, biomass, small hydro in real time and thereby maintain • Efficiency, conservation, and service that’s adequately stable demand response capabilities and sufficient for the host’s • Electricity storage purposes. • Energy rgy mana nagem gement ent and Not all microgrids must provide auto tomat mation on syst stem ems service levels equivalent to modern utility service. In fact most will not. Michael T. Burr Sept. 25, 2013
Micr crogr ogrid id Drive ivers rs in Industri dustrialize alized d Mar arket kets ▶ “Supply Surety” † ▶ Social Policy especially at mission-critical Environmental liability, jobs/economic development in various jurisdictions – and outage-sensitive facilities states, cities, and economic development zones Military and government • Renewable mandates • installations Environmental constraints • Institutional campuses • Sustainable/domestic fuel preferences • (universities, hospitals, Local self-reliance • prisons) C&I sites (data centers, • ▶ Transm smiss ssion congest stion corporate campuses, factories, processing plants) Siting challenges, load pockets, Communities that repeatedly least-cost regional planning • endure extended outages (NE, Florida, etc.) ▶ Economic competiti tiven veness ess vs. high-cost utility power. Where DG is near grid parity, microgrids can optimize † Government agencies and laboratories in the U.S. use the terms “surety” and capacity and add value. “assurance” in describing energy supply priorities. Related engineering and regulatory concepts involve resilience, reliability, and power quality. Michael T. Burr Sept. 25, 2013
Distr tributed ibuted Energy gy Re Resour urce ces s Tr Traject ctory ory ~Timeframe: me: 1980s 1980s-Present 2000s 2000s-Present 2010 2010-Present Present-2020+ 2020+ 2015+ 2015+ Self-Gen Generati tion on Demand d Respon onse Distr tribu bute ted d Generati tion on Microgr ogrids ds Transacti tion onal Energy gy Technol ology gy Aeroderivative DR energy Rooftop PV, DR & DG technology, <+ Advanced smart turbines, management microturbines, fuel energy management grid, distributed cogeneration/CHP, systems, cells, energy storage, software, distributed sensors and submetering, smart inverters, controls, retail diesel gensets, etc. sensors and controls distributed controls, smart grid integration energy smart metering/ exchange/market smart grid infrastructure integration Policy PURPA, State IRP, EPAct 2005, FERC In progress (FERC Technical orgs are PURPA, EPAct, ARRA etc. Order 2000 & 745, Order 1000 policy on developing IRP & efficiency/ non-transmission standards (GridWise, conservation policies alternatives (NTA), OpenADR, OASIS, ARRA, state policies) SGIP) Contr tracti ting Turnkey EPC, Energy service DG PPAs, leasing Microgrid service Energy service power purchase contracting, agreements contracting, forward aggregation, agreements (PPA) contracts conservation service agreements, Marke ket t Settl tleme ment Bilateral trading, Regional market None (possibly None (possibly Bilateral contracting and regional wholesale settlement regional market regional market trading, combined with market settlement settlement for DR settlement for DR spot- and forward- for energy and functionality) and DG) market bids and tenders capacity Pricing g & Tariffs Interruptible rates, Dynamic rates, Net-metering tariffs, In progress (derived Tariffs might be standby rates, and conservation/ standby rates, DG from IPP, DR, and DG applicable for utility sometimes deferral efficiency incentives, interconnection fees, tariffs, plus FERC fixed cost service rates to discourage locational marginal and sometimes incentive tariffs for but TE model envisions market self-generation pricing (LMP) fixed-cost charges NTAs?) based pricing. Michael T. Burr Sept. 25, 2013
Market Trajectory: Increasing granularity in supply and demand assets and price signals Convergence in wholesale and retail Order 1000, markets; Order 745, Emergence of capacity transactional markets, nodal distributed Order 2000, pricing, energy RTO/ISOs, demand networks locational trading pricing Michael T. Burr Sept. 25, 2013
DG Technology Trajectory Manufacturing scale economics vs. network scale economics Batt ttery ery storage orage, , EV smar EV art t char arging ing Gas-fired engines, packaged cogen Aeroengines, diesel gensets, and backup Fuel el cell lls, s, Roofto oftop PV generators microtu croturbi rbines nes, , V2G Small-scale wind chargers, PV modules, and battery storage for remote sites, office- scale UPS Michael T. Burr Sept. 25, 2013
Microgrid Financing: A work in progress Commercial Debt Site Host and Private Equity Government Funding Early-stage Microgrid portfolio Debt service met financing through with combined projects in development revenue streams: industrialized companies and markets are mostly - Energy sales contractors, such as: financed by host - Renewable credits - Pareto Energy - DR aggregation institutions with - General Microgrids - FERC NTA tariffs government - Microgrid Solar support. Hybrid project - Horizon Energy financing will include Projects in - Anbaric Power tranches of host, developing - SAIC government, and PE countries are being investment. financed with Sponsors pursue multilateral aid. REIT and MLP structures. Michael T. Burr Sept. 25, 2013
Microgrid Regulation: A work in progress Net- • Pressure rising to reduce net- metered energy payments and metering restrain growth of DER • Interconnection policies and fees tariffs increasingly onerous and costly • Volumetric pricing and rate-base Demand regulation discourages conservation and load shifting response • DR tariffs and ISO/RTO policies policy shifting to prohibit DR sales that are enabled by DG Michael T. Burr Sept. 25, 2013
Microgrid Regulation: A work in progress (continued …) • Franchised utilities challenge behind-the-meter Retail energy transactions • Microgrids seeking to serve multiple customers or franchise / even multiple premises face lawsuits and potential regulation as public utilities service • Energy development zones and community energy projects are nascent and their regulatory frameworks territory laws are still evolving • FERC Order 1000 opens the door to transmission FERC 1000 incentive rates for microgrids and other non- transmission alternatives (NTA) NTA rules • No regulatory pathways currently exist for development, planning, and financing of NTAs Michael T. Burr Sept. 25, 2013
For more information … “Economy of Small : How DG and Microgrids Change the Game for Utilities,” by Michael T. Burr, Public Utilities Fortnightly, May 2013 http://ow.ly/mZczd Foll llow ow our soci cial media ia feeds eds Micro crogrid rid Subred reddit http://www.reddit.com/r/microgrid DG/ DG/DR DR/DE /DER R Subred reddit http://www.reddit.com/r/DGDR/ RSS http://www.reddit.com/r/microgrid.rss Michael T. Burr Sept. 25, 2013
Ho How to r o reach ach me me Michael T. Burr Director, Microgrid Institute mtburr@microgridinstitute.org www.microgridinstitute.org Connect with me on LinkedIn
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