The Who, What, Why and Where of Microgrids

In this 20-minute webcast, we discuss:

• What is a microgrid?
• What types of businesses to microgrids make sense for?
• What are important success factors for businesses who invest in a microgrid?

Watch the recorded webcast:

Webcast Transcript:

Craig Noxon: Hello everyone. Welcome to Solar Tea Time. I’m Craig Noxon. I’m VP of Enterprise Sales at REC Solar and we have a very special guest expert for this month. It’s Schneider Electric’s senior director of North American Microgrid Competency Center, Philip Barton. Welcome Philip.

REC Solar and Schneider have worked together on several solar plus microgrid projects and we thought that we would share some of the answers to questions that we frequently get and also hopefully give you some insights around microgrids.

Philip Barton, on behalf of REC, we welcome you and Schneider Electric to Solar Tea Time.

Philip Barton: Thanks Craig. But before you get started, I just want to thank you and the whole REC team for suggesting this. It’s a great idea and it has been fun preparing for it with you guys. So thanks again for the invitation.

Craig: Yeah, no worries. Philip, the first part of this question is,

“What is a microgrid?”

Philip: A microgrid is really a collection of distributed energy sources. Think solar photovoltaic, generator sets, maybe battery energy storage systems all working together, which can island or separate from the grid or maybe even, electrically speaking, be a true island.

There are others in the industry that say that islanding is not necessary and that a microgrid is really an organized set of sources and a set of loads operating within a definable, electrical boundary. But it’s also fair to say that a microgrid is a new word for something we’ve all been doing for a long time.

Maybe the reason there’s so much buzz around this word, this “microgrid” word, is that microgrids and solar go so well together. They actually need each other from our point of view and I think if you said “What’s just the one reason why”, it would be that solar photovoltaic systems are forced to turn off when utility grids shut down due to utility outage.

In a way, microgrids really unleash the solar and other inverter-based generation resources when they are needed the most. Microgrids allow these distributed energy resources to work with and without the grid. This is important because the US grid is made up of over 10 percent of distributed generation. Solar is the fastest-growing part of this by far, making the idea of making solar work without the grid is very important.

Craig: Philip, I just wanted to touch on a point you just brought up and that is that a lot of people don’t know. Solar needs to shut down during a blackout. People often think that if they have solar, they have an additional resource and they will be fine in a blackout if the sun keeps shining. But that’s not true and the reason for that is twofold. Technically the first reason is that solar requires a voltage source to synchronize with the grid and the second reason is really one about safety.

If you think about it, if there’s a blackout, then utility crews need to be working down the line and if all of a sudden there’s a current in solar, that is making those wires live, there could be injuries to safety workers. So those are the two reasons why solar needs to shut down.

Craig: But can you tell our audience a little bit.

How microgrids help make solar work when they are required to turn off during an outage?

Philip: Sure, Craig. Like you said, the law really or UL 1741 is that part of the code that requires the inverters to turn off when the grid turns off. But UL 1741 only applies when the main breakers and switches that connect to the site, the end user, the customer to the utility are on or where there’s continuity through those breakers and switches.

As soon as you open the main breakers and open the main switches, then you’re free to use your distributed energy resources including your solar however you would like to.

What we do in a microgrid is we send a signal to the inverter and to the generators and we tell them that instead of looking to the utility for the voltage source, look at the anchor resource, which could be a rotating machine, like an engine genset or generators. It could be of course multiple rotating machines. It could be something like a battery energy storage system.

But look at this anchor resource and use that as your reference voltage and that’s basically how these microgrids work.

Craig: You kind of described to me examples of an anchor resource.

Can you just more fully explain what you mean by anchor resource?

Philip: Yeah. It’s that whole idea that the grid is really the anchor resource. When you’re grid connected, when the microgrids are connected, the grid is the anchor resource and the solar inverters are very precisely attached to that voltage resource and lock into that very stable 60-hertz frequency.

The anchor resource is really just an alternative resource in island mode like the gen set or the combined heat and power system or co-gen system or again battery energy storage system.

Craig: Solar with grid, fine. The grid is the anchor resource. If the grid goes away, you have to shut it off because you need a voltage source and safety. Basically, you’re solving those two problems in a microgrid. You’re solving new voltage source with anchor resource and you’re islanding off from the grid.

Philip: That’s right, Craig. That’s right. You’re not back-feeding the grid because you’ve separated from it and you can’t send it back – the grid is not set up for back-feeding all the time unless that’s done especially under a contract.

Craig: Tell me,

Why do a lot of organizations deploy microgrids?

Philip: I think it really all boils down to three things and we like to call it the triple play for the baseball fans out there. The triple play of resilience, cost avoidance and sustainability. So resiliency, reliability, cost avoidance or efficiency and again sustainability, greenhouse gas reduction, et cetera. Those are really the main reasons that anybody would put a microgrid in.

One example that we’ve worked on together that illustrates this really well is Montgomery County, Maryland. Montgomery County, Maryland is in the Washington DC area and there are two campuses there. It’s the largest county in Maryland. It’s a million people and a bedroom community for the capital and the two projects there, one of them is the public safety headquarters and the other one is a correctional facility. The public safety headquarters is quite interesting. They had resiliency problems both externally from the utility and also internally in some of their medium voltage or electrical distribution.

At the same time, they were deploying solar in many of their buildings and building clusters and campuses across this fairly large county in Maryland. They were leveraging sustainability and greenhouse gas reduction and they were saving money while they were doing it. But the missing part was the resiliency.

The investments they were making in solar weren’t really helping their resiliency. So what REC Solar, Schneider and Duke Energy working together were able to do was to use a new combined heat and power plant at each of the two facilities, plus some existing natural gas-fired generation as the anchor resource for the nice, shiny two-megawatt AC of solar carports that REC Solar is installing.

It’s really a great project that demonstrates the resiliency piece, the sustainability piece and of course the resiliency, sustainability and of course the cost savings because they could do all this at just a very small premium to what they were paying for their existing utility and get some electrical upgrades and things they really needed anyway in the PPA that we created together for them.

Craig: Can you give us some other examples,

Who might be a good candidate for a microgrid? What type of organization? Where are they located?

Philip: Yeah, I think it’s people that want resiliency. So certainly customers and businesses that already have solar but need resiliency, I think that’s one place to look. I think considering the hurricanes, we do have a lot of microgrid work related to storm hardening. We do a lot of microgrid work related to cyber security concerns and things like that.

Many companies, big box stores like the Home Depots and the Walmarts and the Lowe’s and then corporate campuses inclusive of data centers and laboratories and government facilities. We were talking about Montgomery County in Maryland and military bases. Command centers for cities, water treatment facilities and of course universities as well.

So in all those, we have this combination of resiliency needs, laboratories, serving the public and really just that need to run without the grid for extended periods of time.

The other thing we don’t always like talking about is that a lot of people see microgrids not just as storm-hardening and resiliency, but they also see microgrids as a hedge against things like cyber-attacks or even kinetic attacks on the macrogrid or other critical infrastructure.

Craig: A couple of years ago, Ted Koppel had a book called Lights Out and it talks about how there could be a terrorist attack on the US grid system and just how easy it would be to take the US grid system out for a long period of time. It’s certainly a kind of topic not only to mention the recent hurricanes that we’ve had in the US. It’s a good topic to talk about here when speaking about microgrids. I wonder if you could talk a little bit about some of the risks that might be out there when people deploy a microgrid.

What should people watch out for?

Philip: Yeah. It’s a good question. I think number one, you really want to work with a developer. Not just somebody that says they can do it, but somebody that has been doing it and is experienced with the different types of microgrids that may need to be deployed for a given enterprise.

I think also it might be tempting to go to a manufacturer or supplier of a certain type of distributed energy resource. You shouldn’t let the type of equipment that you’re contemplating dictate exactly who you team with. I think it’s better to team with the companies and partners or really work with a lot of different types of distributed generation. So you can speak to the different types of microgrids that will need to be constructed across the geography relative to the cost of power or the thermal load, the size of the project and the incentives and other factors that would dictate the ultimate size and shape of the microgrid.

Above all, you really want to work with somebody disciplined on the project development cycle so you don’t waste time and money trying to lay a good foundation for your program.

Craig: That leads me into my next question. We got a lot of interest in this topic, more so than any of the other Tea Times we’ve done in the past. A lot of questions that we got related to cost. When people talk about cost, I typically like to talk about cost avoidance or risk avoidance and so if I summarize a bit of what you’ve been saying, it seems that when customers have solar. They have generators. They have other systems. But maybe by putting them together, they’re able to create something greater than some of their parts, right? Creating business continuity or a triple play of risk mitigation, lower costs, and sustainability.

But can we talk about how companies are paying for microgrids? What kind of structures they have set up or Opex versus Capex approach.

Philip: You said it well. I think there are two different scenarios here. I think there’s a scenario where you’ve got an existing solar or existing backup generator or maybe even you’re in California and you have some energy storage that you put in place for purposes of demand reduction or utility cost reduction, peak shaving and what not.

You want to use the distributed energy resources that you have already and complement them with what you need to build the microgrid. That’s the most cost-effective way to do it and if you do it right, you can run for a long time without the grid with your existing solar and with the right anchor resource and the right proportion.

You can have a great project that’s far more valuable than some of its individual parts to your point there, Craig.

Craig: If you have more of a blank sheet of paper or your facility is growing in size, then you have the opportunity to really look at how you want to do this. Do you want to pay capital? Do you want to put the capital out for it or do you want to do an Opex model, like a solar PPA or a lease and what we might call energy as a service or microgrid? Even microgrid as a service. These are specialized PPAs typically and they’re very easy to justify geographically in the US east, the northeast in particular and of course California and US west where a lot of times the power is 13 to 20 cents per kilowatt hour.

It’s fairly easy. There’s not much extra cost to do a microgrid there or there might even be savings even with that resiliency piece. But in other areas of the country, renewables or solar might not pencil as well. But in those cases, a lot of times, the natural gas cost is very low and that’s where it has been nice to work with Duke Energy Renewables on– not just the solar – but also the combined heat and power or maybe biogas or digester gas type microgrids as well.

A lot of flexibility there, green field and brown field.

Craig: Philip, we’re just about out of time here. I think we might wrap it up and I just want to thank you and Schneider for getting into the details about microgrids.

Philip: Thank you Craig and thank you REC Solar.

Craig: OK. On behalf of everyone that’s in REC Solar and Schneider Electric, cheers. Have a good day. Bye.