By Peter Asmus . The goals of both the Smart Grid and the microgrid are the same: to maximize generation assets through embedded intelligence while dramatically boosting efficiencies, thereby minimizing costs.    The Smart Grid is largely being deployed by utilities, while the microgrid model has been, until recently, primarily the terrain of non-utility developers. Instead of upgrading the entire utility grid to the same “smartness,” microgrid advocates argue that power quality and reliability (PQR) could be improved incrementally at the local level, offering services specifically tailored to the needs of customers.

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Utility engineers have historically opposed the concept of microgrid “islanding” on the basis of safety. The Institute of Electrical and Electronics Engineers’ standard P1547 requires an automatic and rapid disconnection of all grid-tied distributed energy generation (DEG) during grid outages.  For well over five years, the IEEE has been working on developing a “guide” on islanding, and is allegedly set to vote on P1547.4 for proposed standard practices on islanding in 2010. 

Among the non-utility firms pursuing the microgrid opportunity in the absence of these new standards is ZZB Energy, which has developed a zinc bromide “flow” and “regenerative” fuel cell storage device, and is focused on off-grid microgrid projects in the developing world. Non-Synchronous Energy Electronics LLC (NSEE) is working with Pareto Energy to develop a microgrid that avoids utility interconnection issues in a Stamford, Connecticut pilot project by only purchasing – and not sending back – power from the host distribution utility.

Utilities Starting to See Microgrids as an Opportunity

But the times are changing, and a few utilities are beginning to embrace microgrids rather than viewing them as a threat. Balance Energy, a new subsidiary of defense contractor BAE Systems, is seeking to develop a microgrid at the University of California-San Diego in a direct partnership with San Diego Gas & Electric – as well as GE and IBM. 

American Electric Power (AEP) and the Sacramento Municipal Utility District (SMUD) are also showing that some utilities do indeed see microgrids as an opportunity.

AEP hosts the Consortium for Electric Reliability Solutions (CERTS) R&D test site, which began testing in 1999 and has helped commercialize key inverter-based breakthroughs.  On May 21, 2009, AEP’s East Busco site performed its first successful islanding response to an unplanned grid outage. 

SMUD is bringing the CERTS microgrid architecture out of the laboratory into a real world setting – its own corporate headquarters.  This 310kW microgrid will feature three 100kW reciprocating engine generators manufactured by Tecogen, a company whose inverter-based units were commercialized during the CERTS R&D testing. 

Market Poised for Growth

Just how significant is the microgrid market opportunity?  Between now and 2015, Pike Research forecasts that over 3.1GW of new microgrid capacity will come online worldwide, representing a total market value of $7.8 billion.  We expect that North America will capture $5.8 billion or 74% of this market.  The United States is the current capacity leader – with at least 626MW operating by 2010 – and that capacity will increase to 2,352MW by 2015.  Two of the fastest growing segments in this market are the Commercial & Industrial and Institutional/Campus sectors, which will present utilities with a number of opportunities to utilize the microgrid as an important arrow in their quiver.

Peter Asmus is an industry analyst with Pike Research, a market research and consulting firm that provides in-depth assessment of global clean technology markets.

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More on Microgrids from SGN:

   NY City Says No to Microgrid

   GE Hooks $2 Million to Demonstrate Smart Microgrid on Marine Base

   Grid Divorce Just Got Easier

   Macro Trends Point to Microgrids