The top five microgrid customer benefits
By Stuart McCafferty
The concept of developing local microgrids to support organizational missions is a current topic of interest in board rooms, campuses, utilities, and city councils. The truth is that microgrids are not cheap, require a lot of careful design, require ongoing operations and maintenance expenditures, and are not always the optimal solution.
In a previous article, I discussed the "the 6 things to consider” when developing a microgrid, and provided some practical questions to answer before investing a lot of time and money. Any major power investment like a microgrid should not only support the organizational objectives, but it should also provide benefits to the power consumers - the "customers.” This article does not represent an exhaustive list, but instead provides some of the more common and provocative customer benefits when considering a microgrid solution for your organization.
The US Energy Information Administration (EIA) states that the average price of electricity for residential consumers is 12.4 cents/kwh in 2014. Even though energy usage statistics continue to decline due to energy efficiency standards and more efficient lighting and appliances, the cost of electricity to end users continues to climb steadily. EIA further predicts that US electricity prices will rise 2% each year for the next few years. This may not seem like much, but at this pace, a consumer that is paying $500 per month today will be paying $609.61 in just 10 years.
The more relevant risk factor, however, is that no one really knows what the actual cost of electricity will be in 5 years, let alone 10. There are a lot of variables that control the cost of electricity - weather, natural or man-made disasters, electricity demand, fuel costs, infrastructure upgrades, and policy decisions. Any one of these could have non-trivial effects on the local retail cost of electricity - higher or lower.
Microgrids provide a mechanism for cost guarantees over long periods of time - typically 20 years. This is normally accomplished through Power Purchase Agreements (PPAs), which are legal contracts between the buyer (the customer - or the customer’s electricity supplier) and the seller (the electricity generator). These contracts not only define the electricity price over the period of performance, but usually also include power delivery performance minimums such as reliability and power quality with financial penalties for failing to meet those metrics. More about reliability and PQ later.
The thing that makes a microgrid more than just backup power or integrated renewable energy is the ability to perform command and control. All microgrids have a controller that monitors and manages the system assets - generation, storage, loads. The microgrid controller’s logic can be fine-tuned for any particular mission, but they are commonly programmed to balance the system to ensure reliable electricity at the lowest cost.
Energy efficiency is a large piece of this overall balancing puzzle. When local renewable energy power generation is low (cloudy or low wind day, for instance) or when macrogrid peak usage issues (high costs, blackout/brownout) occur, the microgrid controller can send messages to the loads (building automation systems and smart devices) to reduce the electricity usage. Also, since the loads can be monitored by the microgrid controller, when unusually high electricity usage occurs, it can help identify inefficient thermal properties due to poor insulation or even equipment that is at the end of its lifecycle or operating out of bounds. And, in a world where energy efficiency is being mandated through local, state, and federal policy, microgrids provide the real time monitoring, and command and control opportunities to properly manage electricity usage.