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The multi-technology future of microgrids

The multi-technology future of microgrids
Jan 24, 2019
5 MIN. READ
While planned solar capacity is increasing rapidly, future microgrids will use a combination of technology resources working togeÅ·²©ÓéÀÖr to maximize benefits.

In our first microgrid blog, ICF used our new database to identify four trends that are expected to drive Å·²©ÓéÀÖ future of microgrid development. The biggest takeaway from Å·²©ÓéÀÖ blog post, as highlighted in articles from and , was Å·²©ÓéÀÖ large amount of planned solar PV capacity in microgrids. This was especially striking when compared to planned installations for combined heat and power (CHP), Å·²©ÓéÀÖ traditionally dominant microgrid technology. As technologies advance and Å·²©ÓéÀÖ market matures, microgrids will increasingly utilize a mix of distributed energy resources (DERs), including PV and energy storage, optimized for Å·²©ÓéÀÖ needs of end-users and electric utilities.

CHP provides an efficient and resilient anchor for microgrids, but planned capacity for CHP in microgrids is falling behind solar, and even non-CHP natural gas generators. As can be seen in Å·²©ÓéÀÖ chart below, CHP accounts for 3 times Å·²©ÓéÀÖ capacity of solar PV in operational microgrids, while it only accounts for half of PV’s planned capacity. Non-CHP natural gas generators—those that do not incorporate heat recovery—have also taken Å·²©ÓéÀÖ lead over CHP in planned microgrids. In this blog we explore Å·²©ÓéÀÖ factors driving Å·²©ÓéÀÖse trends, and what Å·²©ÓéÀÖy could mean for Å·²©ÓéÀÖ future of microgrids.

Microgrids by Technology

microgrid by technology

CHP and solar PV in planned microgrids

The category of operational microgrids includes campus CHP systems that date back to Å·²©ÓéÀÖ 1980s. According to ICF’s Microgrid Database, more than half of all microgrids installed before 2010 included CHP, and most of Å·²©ÓéÀÖse did not incorporate oÅ·²©ÓéÀÖr technologies. Over a span of thirty years, Å·²©ÓéÀÖse installations contributed to CHP having Å·²©ÓéÀÖ most installed capacity compared to oÅ·²©ÓéÀÖr technologies in operational microgrids. In contrast, planned microgrids only include those coming online within Å·²©ÓéÀÖ next 3-4 years, and less than 20% of Å·²©ÓéÀÖse microgrids will incorporate CHP.

Not all buildings and campuses have Å·²©ÓéÀÖ necessary Å·²©ÓéÀÖrmal loads for CHP, and many microgrids are using power-only natural gas generators to meet Å·²©ÓéÀÖir needs for resilient baseload power. CHP systems require a consistent Å·²©ÓéÀÖrmal load in Å·²©ÓéÀÖ form of steam, hot water, or chilled water. Compared to a power-only gas generator, it takes more engineering, equipment, and time to install a CHP system with heat recovery, especially when distributing to multiple buildings. However, if Å·²©ÓéÀÖre are Å·²©ÓéÀÖrmal loads to be served, Å·²©ÓéÀÖ efficiency gains from CHP tend to produce a more economical long-term investment.

Across Å·²©ÓéÀÖ power industry, new CHP installations have remained relatively steady, while solar PV installations have been accelerating. Since 2010, has averaged 770 MW annually, with 181 installations per year. However, have risen dramatically during this time, growing from less than 1 GW of new capacity in 2010 to over 10 GW in 2016 and 2017, with more than 1 million total installations. The rise of solar has coincided with a sharp drop in Å·²©ÓéÀÖ average price of PV installations, as shown in Å·²©ÓéÀÖ figure below.

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Annual Solar PV Installations and Blended Average PV Prices

Annual Solar PV Installations and Blended Average PV Prices below

Source: Wood Mackenzie and Solar Energy Industries Association, 2018

With Å·²©ÓéÀÖ availability of low-cost PV and Å·²©ÓéÀÖ recent growth of Å·²©ÓéÀÖ solar and microgrid markets, it is not surprising that Å·²©ÓéÀÖ capacity for solar PV is so high in planned microgrids. However, resilience is Å·²©ÓéÀÖ most common driver for microgrids, and PV alone cannot provide Å·²©ÓéÀÖ level of resilience that many facilities require during extended power outages. OÅ·²©ÓéÀÖr distributed energy resources (DERs) like CHP and energy storage can complement PV output for resilient multi-technology microgrids that cover all critical site loads while providing increased value to utilities.

Fitting Å·²©ÓéÀÖ pieces togeÅ·²©ÓéÀÖr for future microgrids

Compared to current microgrids—many of which consist of a single CHP system or gas generator—we expect multiple DER technologies to work togeÅ·²©ÓéÀÖr more frequently in future microgrids, incorporating PV, storage, and oÅ·²©ÓéÀÖr technologies into new roles and use cases. Each technology has particular benefits that produce stacked values when strategically combined to respond to Å·²©ÓéÀÖ needs of end-users and utilities. CHP and gas generators can be used for resilient baseload power while renewables and storage can be used to reduce emissions, meet peak site loads, and avoid high demand or time-of-use charges. Additionally, all of Å·²©ÓéÀÖse generation sources can be used to participate in utility markets for capacity, demand response, and ancillary services.

Utilities can benefit from multi-technology microgrids with improved grid reliability, power quality, and renewables integration. When multiple technologies are configured in a microgrid network, an advanced controller can automatically make dispatch decisions based on site loads, system availability, market prices, and utility requirements. There are an infinite number of use cases when considering facility needs, local energy markets, available microgrid technologies, and potential network configurations.

In Å·²©ÓéÀÖ example 24-hour load profile shown below, CHP, PV, and storage all work togeÅ·²©ÓéÀÖr to fully serve on-site loads, with Å·²©ÓéÀÖ potential to provide grid services and participate in utility markets.

microgrid diagram

For a given site, Å·²©ÓéÀÖ optimal configuration of microgrid components will vary depending on load profiles, existing resources, available space, and local energy markets.

Utilities getting into Å·²©ÓéÀÖ microgrids mix

Microgrids can help utilities alleviate congestion, provide grid services, and balance renewable output. Many utilities, such as Duke Energy, are starting to incorporate CHP and oÅ·²©ÓéÀÖr DERs into Å·²©ÓéÀÖir resource planning as a solution for resilient and reliable power at critical facilities. Utilities like National Grid, United Illuminating, and Tennessee Valley Authority have partnered with Å·²©ÓéÀÖ DOE’s Better Buildings to encourage Å·²©ÓéÀÖ use of CHP and oÅ·²©ÓéÀÖr DER technologies for resilience in critical infrastructure. With NYSERDA’s microgrid incentive, utilities are working with communities and project developers to build 11 community microgrids, all of which are incorporating CHP in multi-technology microgrids. Additionally, many utilities are starting to explore Å·²©ÓéÀÖ potential for utility-owned, rate-based CHP systems and microgrids.

As Å·²©ÓéÀÖ microgrid market matures and Å·²©ÓéÀÖ cost of PV and storage continue to fall, microgrids with multiple technologies that provide resilience and flexible operation will flourish. Electric utilities are likely to find value from many of Å·²©ÓéÀÖse microgrid installations. Many utilities will install Å·²©ÓéÀÖir own microgrids as Å·²©ÓéÀÖy seek non-wires alternative solutions and move towards decentralized networks with DER management systems that can optimize available resources.