Needing to price resilience

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Too often electric resilience — the ability to withstand or bounce back from an outage — is an intangible in the minds of energy users, he said. They don’t consider the cost of downtime, even though power outages create clear financial losses that can be quantified – and that microgrids can avert.

For example, a supermarket may lose hundreds of thousands of dollars in frozen food. A college may have to reimburse students for dorm shutdowns due to storm-related outages or could lose millions of dollars in research. A utility may need to spend tens of millions on a new substation when existing lines become overburdened.

The Northeast was shocked into understanding the value of electric resilience after Superstorm Sandy. “Back-up generators failed, and wastewater treatment plants were dumping raw sewage into rivers in New Jersey…Hospitals had to vacate and move their patients to other hospitals in NYC. That woke everyone up,” Bakas said.

Soon after, the Northeast embarked on what has become one of the most earnest microgrid development efforts in North America to date. 

Microgrids mirror renewable growth

Pricing resilience is just one challenge that the microgrid industry needs to overcome to realize full growth. Regulatory barriers exist as well, particularly sorting out the utility role. Some utilities may try to block microgrids, seeing them as a threat to their business model. Others may want to be in the microgrid business themselves. As rules are established and the market shakes out, players are likely to come and go, he said.

“I’m bullish on this space. I think it’s coming. But just like renewables, there are some challenges that must be overcome for microgrid adoption and deployment,” he said.  Bakas sees parallels between the rise of renewables a decade ago and today’s emerging microgrid industry.