Originally published on ilsr.org.
This article was written by Matt Grimley, the Institute for Local Self-Reliance Energy Democracy initiative’s Research Associate. He regularly publishes articles and reports on local, renewable energy solutions.
A century-old style of electricity production—large, centralized power plants and far-reaching transmission—is increasingly inefficient, burning dirty fuel, and leaving customers with more outages than ever before.
The solution may lie in a combination of 21st-century technology and 20th-century grid structure: microgrids.
In the early years of the electric grid, power plants were just large enough for a neighborhood. Utilities eventually learned to scale up production, with coal, gas, and nuclear facilities now big enough to power small cities. But clean and renewable technologies such as wind and solar have become competitive, spurring customers to generate power for themselves. Rapid innovation in batteries is providing new ways to store and use renewable energy. Stunning advances in communications technology put the power to manage energy use in every customer’s hand. Rather than wait on utilities to fix the aging grid, many customers could join together to generate energy for their communities in a more efficient, clean, and resilient way: microgrids.
A microgrid has many definitions (see U.S. Department of Energy), but important to every definition is the microgrid’s ability to operate independently from the larger grid. In most cases, they are computer-controlled to maximize the efficient use of the microgrid’s resources. These community-wide or just-a-building grids bend the lines between utility and customer, supply and demand.
Take, for instance, the Santa Rita Jail in California. Using peer-to-peer controls, it can seemlessly integrate a wide array of small-scale energy resources, including rooftop solar, wind power, a fuel cell, and energy storage. It uses market signals to tell it when to buy energy from the utility, self-supply, or even use demand response to tone down how much energy it uses.
In many states, it’s almost impossible for Santa Rita Jail to sell energy to the market or to other users. In a recent ILSR interview with Craig Lewis, whose organization Clean Coalition is piloting microgrid models, he says that thanks to rules that protect incumbent utilities and their exclusive territories, microgrids today exist mostly on the customer side of the utility meter, serving single buildings. But that’s changing fast with advanced community microgrids that can serve multiple buildings, even an entire neighborhood.
Though the name says small, microgrids can mean big changes in the energy mix. “We’re talking enough renewables to get 50 percent of the total energy consumed over the course of the year from local renewables,” said Lewis of the Long Island Community Microgrid Project in East Hampton, New York.
There are enormous incentives to move microgrids beyond serving single buildings. TheStafford Hill microgrid in Vermont, according to project representatives, will soon expand the solar-and-storage capabilities to nearby homes, helping to keep the lights on during grid outages. Combined heat-and-power microgrids at hospitals and universities across the nation share heat and energy through multiple buildings, using district energy to reduce greenhouse gas emissions and save money. Other microgrids could be incentivized by economies of scale to provide power to nearby buildings, lowering the 95–cent per kilowatt-hour cost (in the case of Hamden Plaza in Connecticut) to just 12 cents per kilowatt-hour, lower than what residents already pay for retail energy.
The microgrid market, is still young. A lack of standardized computer controls or business models inhibits their growth. But to allow enough iteration for the best of each to emerge, the rules have to change.
A few states, such as New York and California, are models for smart microgrid policy. New York is incentivizing microgrids through the NY Prize, while remaking the rules of the grid through its Reforming the Energy Vision regulatory proceeding. Meanwhile, California has embarked on distribution resource planning that is forcing utilities to look at the grid from the ground-up. Most other states come up short.
As the table suggests, state rules typically raise big barriers to these small but mighty power grids, at a time when the nation’s electrical grid needs innovation. Microgrids offer an opportunity to build a more resilient and renewable grid, and to offer a multiplicity of models for doing both. State legislators and market regulators should look to enable these micro, but mighty, power grids.
We recently released our report “Mighty Microgrids,” on which this article is based. The Institute for Local Self-Reliance is hosting a webinar on Tuesday, March 15th at 2:00PM CST, register here.