Owners See More Reliability and Less Cost in Microgrids

May 20, 2014

The aging national power grid costs more to maintain each year, and those costs are passed on to customers.

Since Superstorm Sandy barreled into New York and New Jersey, business has never been more aware of power grid reliability and the cost of outages.

While estimates of the economic costs are tricky, few doubt that outage costs are large and growing. A report published last August by the President's Council of Economic Advisers put the average annual cost for U.S. weather-related outages between 2003 and 2012 at an inflation-adjusted $18 billion to $33 billion. The aging national power grid costs more to maintain each year, and those costs are passed on to customers.

Replacing the old grid with a national smart grid would increase reliability, efficiency, and ability to balance renewable sources and supply/demand. But that mammoth task will take decades to construct. What can a building owner do now?

The answer for some is a smart microgrid customized to individual users' needs and demand patterns. These microgrids typically have some storage capacity and on-site generation using renewable energy, fuel cells, solar or CHP systems. Transmission losses are reduced due to the local generation.

While some of its smart technology is new, the concept of the microgrid is not. Backup power systems and onsite power generation systems in campus situations, health care buildings and critical facilities have existed for years. The smart microgrid adds technology that makes it possible to function independently in "island" mode or connect to the prevailing power grid in order to receive power or sell its own excess power.

At Odds with the Utilities
Working microgrids in the U.S. include military bases and higher-education campuses, which are financed by the owner institutions themselves. But a microgrid joining multiple buildings and owners is likely to run afoul of the utilities' traditional business model. For example, franchise regulations may not allow a utility to sell energy to an entity consisting of several retail customers. Even more of a threat to the utilities is the idea that customers could, in essence, decamp in mass from the grid, undermining utilities' cost recovery structures.

Using a model related to a business improvement zone, Fort Collins, CO, is building a microgrid called FortZED (Zero Energy District). The mission: transform a 2-square-mile downtown area with many historic buildings into a net-zero smart microgrid serving businesses and residences. Key participants in the partnership include Fort Collins Utilities (the city-owned utility), Colorado State University (whose campus is within the district), and the Colorado Clean Energy Cluster.

FortZED encompasses more than 7,000 residential and commercial customers. It represents some 10-15% of Fort Collins Utilities' distribution system. Smart technologies planned for FortZED include advanced mixed-fuel technology, micro-wind turbines, solar PV and thermal systems, and fuel cells.

Advanced Metering
FortZED recently completed an advanced metering infrastructure (AMI) to enable two-way communication between utilities and customers. According to Kraig Bader, standards engineering manager at Fort Collins Utilities, the AMI system replaces a phone system that formerly connected building meters to the utility. The new system uses meters with radio transmitters integrated into a mesh network, a design that provides redundancy should the transmitter in any single meter fail. Collectors on lampposts transfer the data from the network to the utility.

Whereas the phone system collected customer usage information on a 24-hour cycle, the AMI enables usage updates to customers approximately every 8 hours. It also offers more reliable data exchange. Bader believes that the new network's quicker turnaround of consumption data increases customers' awareness of their ability to manage their usage through energy dashboards.

The global microgrid sector is expected to grow from $10 billion in 2013 to $40 billion by the end of the decade, according to Jon Creyts, Program Director for the Rocky Mountain Institute. However, much of the investment is likely to come from customers rather than utilities.

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