Doing it right: Top 6 things to consider when developing microgrids

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By Stuart McCafferty

 

As the technology matures and the risks decrease, microgrids continue to be one of the most exciting and talked-about opportunities for companies, campuses, utilities, and government.  Microgrids offer a variety of compelling business opportunities to help meet organizational mission requirements, participate in the electricity markets, increase energy surety/resiliency, and incorporate renewable energy resources. 

 

The conundrum is that there are many, many ways that a microgrid could be designed, and a design that was optimized for one organization in one location is highly unlikely to be optimal somewhere else.  So, with these types of non-trivial investments, very strong requirements and accurate modeling and simulation of the microgrid is imperative to ensure that it has been properly designed and optimized.  Too often, engineers and developers want to skip through the requirements and analysis and design steps in order to save money and move faster.  Unfortunately, this can end in disastrous results with a system that does not meet the real requirements of the organization, is inefficient or insufficient, is not extensible or future-proofed, or is risky or unsafe to operate.

 

There are 6 primary requirement areas to consider when designing a microgrid:

1.     Mission:  What is the organization’s mission?  How will a microgrid help support the mission?

2.     Loads and Generation:  What are the existing and future loads that will need to be addressed by the microgrid?  What are the existing suitable generation resources available?

3.     Infrastructure:  How is the current grid configured?  How will the microgrid interact and take advantage of what is already there?  How do the infrastructure elements need to be monitored and controlled to ensure stable operation and meet operational goals?

4.     Scenarios:  What are likely events (typical, emergency, opportunistic) that a microgrid can support?

5.     Policy:  What policies, incentives, and constraints need to be considered?

6.     Costs:  What are current and projected costs of the system?

Mission

Will a microgrid enhance my ability to support the organization’s mission?  This is the biggest driver in making a decision on whether a microgrid is a good investment or not.  Bottom line is that if a microgrid does not support the organization’s mission or the microgrid is not designed to support the business requirements of the organization, then it becomes an economic albatross that needs constant care and feeding, but provides little or no value to the organization.  Some key questions to consider when developing mission requirements include:

·         What organizations/agencies are represented within the microgrid territory?

·         What is the mission for each organization/agency?

·         Why is a microgrid being considered?  (Energy surety/resiliency/mission sustainment, cost savings and/or market participation, power quality, use of renewable resources, etc.)

·         Would the microgrid be grid-connected or stand-alone?

·         What are the power quality requirements?  For what equipment?  What are the tolerances?

·         Which building(s) and other load(s) are needed to support the mission?

·         If power is lost, how quickly must recovery occur?  What are the consequences if the recovery does not occur quickly enough?

Scenarios

Scenarios (or use cases) are key aspects of any microgrid design.  Whether connecting to the grid for market participation or ancillary services – or – enhancing resiliency against earthquakes, tornadoes, hurricanes, or bad guys, it is an excellent best practice to develop use cases that step through the operational requirements of the system to support each scenario.  Questions to tease out those scenarios include:

·         What scenarios are critical for evaluating threats to business continuity?

·         What weather-related outage and power quality scenarios are likely?

·         What environment-related outage and power quality scenarios are likely?

·         What man-made related outage and power quality scenarios are likely?

·         What is the typical non-emergency installation-wide electricity use profile for each season?

·         What energy services scenarios are likely?

·         If providing energy services, what control scenarios are likely (e.g. transactive, reactive, predictive, etc. )?

Policy

Let’s face it; a lot of projects just don’t get off the ground unless there are policies in place that support the economics or help limit the risks.  Some highly visible projects like the Beacon Power flywheel frequency regulation project in New York is a perfect example of where an amazing technical solution did not have the regulatory policies in place to properly to compensate it for the short-term frequency stability benefits their solution provided.  Successfully navigating regulatory policy before, during, and after microgrid system commissioning can make the difference between success and failure.  Some important policy questions to ask include:

·         What are the federal credits or mandates for energy efficiency or renewable energy?

·         What are the state credits or mandates for energy efficiency or renewable energy?

·         What are the local credits or mandates for energy efficiency or renewable energy?

·         What are the utility credits or mandates for energy efficiency or renewable energy?

·         Are additional incentive programs available that should factored into the design?

·         Are there policy constraints (penalties, labor or equipment purchasing requirements, market participation, environmental, etc.) that may affect the design?

·         Are there locations on the installation with special considerations (siting restrictions, etc.) that should be considered in the design?

Costs

The first thing anyone does when they receive a proposal is flip to the last page and look at the cost.  The key success metric is nearly always cost, or it is at least in the top two.  A thorough understanding and modeling of system operational and capital expenditure costs is required before committing large investments in a microgrid solution.  Economic optimization includes minimizing energy costs while maximizing revenue streams by selling energy and ancillary services into the energy market or reducing/eliminating production downtime.  It includes the analysis of electricity tariffs, cash flow, load projections, energy and tax credits, debt service, discount rates, Net Present Value, Total Cost of Ownership, and CAPEX/OPEX costs. 

 

If the project doesn’t make sense financially, then DON’T DO IT!  Some questions to ask that will assist economists in developing models include:

·         What tariff structures are available through the electricity provider?

·         Which tariff structure is currently being used?

·         What are current monthly electricity usage costs?

·         What are the load and cost projections for electricity over the next 10 years?

·         What is the cost associated with power quality and outage events?

·         Are ancillary services an opportunity?  What are the engagement rules and benefits for each?

·         Who pays the utility bill now?  Who will pay in the future?

·         What effects will lower/higher electricity costs have on the organization?

Conclusion

Getting clear requirements and understanding the environment you will be working in is the first step in ensuring a successful microgrid project.  The next step involves modeling and simulating the system from business AND technical points of view using the variables and scenarios defined in the requirements development.  Understanding the large number of unique local variables for each system is paramount to success, and that work should be performed BEFORE any implementation investments are made.  This article was intended to provide you with some of the necessary questions to ask as you validate the need and optimize the design of your microgrid solution.  Look for more articles from me on this subject in the near future.

 

Stuart McCafferty is the President of GridIntellect, a certified Veteran Owned Small Business. Recently awarded the Project Management Institute’s (PMI) 2013 Distinguished Project Award, Stuart is a U.S. military veteran, business leader executive, program manager and system engineer professional with nearly 30 years of experience.  He has specialized expertise in microgrids, smart grid technologies, managing complex technical projects, system architecture design, software development and implementation, real-time data acquisition, and managing Program Management Offices (PMOs).

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