Distributed energy resources (DERs) have greater reliability and resilience at lower costs

The Importance of Distribution-Scale Solar for Grid Resilience   |  By Titiaan Palazzi and Laurie Guevara-Stone with RMI.org

When Hurricanes Harvey and Irma blew through the southern United States, they left millions without power. During such natural disasters, access to electricity is more critical than ever, allowing hospitals to run medical equipment, letting people charge phones and computers to communicate with the outside world, and powering lifesaving air conditioning for the elderly and infirm. According to Homeland Security estimates, Hurricane Irma alone knocked out power to one out of every 22 Americans.

Many cities struck by Harvey and Irma face a long road ahead to rebuild their electricity infrastructure. According to Duke Energy, to turn power back on in Florida, crews must replace nearly 3,000 poles and 950 miles of wire.

As cities and utilities rebuild, there’s an option to look toward solutions that provide grid resilience, such as distributed energy, especially solar and battery storage sited on distribution grids. In fact, a growing body of evidence suggests that states and countries that replace old, costly fossil-fired generators with renewables, efficiency, demand response, and other distributed energy resources (DERs) have found greater reliability and resilience at lower costs.

Increased Resilience through Distributed Energy Resources

Many cities and universities around the country are taking this to heart. The Sterling Municipal Light Department installed a solar-plus-storage microgrid in the town of Sterling, Massachusetts. The 3 MW solar array and 2 MW/3.9 MWh of battery storage can keep the town’s police station and emergency dispatch center running for at least two weeks in the case of a power outage. On the other side of the country, when the transmission line feeding Borrego Springs, California, was damaged by lightning, San Diego Gas & Electric used the Borrego Springs 26 MW solar microgrid to power the entire community of 2,800—preventing what would have otherwise been a 10-hour power outage.

This lesson in resiliency was also learned in North Carolina when power was cut off to Ocracoke Island this past summer after a construction company accidentally cut the transmission cables feeding power to Hatteras and Ocracoke Islands. Fortunately, North Carolina Electric Membership Corporation (NCEMC), the power supplier for most of the state’s electric cooperatives, had invested in a microgrid with 15 kW of solar, 500 kW/1 MWh of battery storage, and a 3 MW diesel generator. While the transmission line was out of commission for seven days, the microgrid helped provide power for island residents.

Ocracoke Island’s utility, Tideland EMC, utilized controls on water heaters and smart thermostats to limit electric load on the island. Rooftop solar and back-up diesel generators powered some buildings, such as the local water treatment plant, while mobile emergency generators provided power to the island’s distribution grid.

Lee Ragsdale, senior vice president at NCEMC, points out that solar and battery storage alone do not guarantee continuous delivery of power. “With a major storm, you can lose the lines and infrastructure. If this happens the generator and battery can only do so much. Microgrids provide redundancy and resiliency, but they are not a panacea. They are only part of the solution.”

These examples show that a combination of solar, storage, flexible electricity demand, and small generators increases resilience. The ideal combination of distributed energy resources depends on the community’s needs and the costs and values of different technologies. As the costs of solar, storage, and demand control continue to fall, resilience can increasingly be realized in a low-carbon way.

Lowering Costs with Renewables in Texas

The best news is that resilience does not have to come at a high cost. In fact, distributed generation can be cheaper than the alternative, as illustrated by Bandera Electric Cooperative (BEC) in Texas. Bandera, on the outskirts of San Antonio, is home to Bandera State Park, a popular summer spot for people who want to cool off in the Medina River. The area receives throngs of tourists over the 4th of July weekend. While the transformer that feeds the area operates with around a 70 percent load factor on an average day, the holiday weekend sees 140 percent of the average load. “For 99 percent of time, the transformer’s perfect, but with the weekend overload we’re concerned about damaging equipment,” says Bill Hetherington, the CEO of BEC.

It was going to cost the utility several hundred thousand dollars to replace the transformer. “The reality is, if we upgrade the transformer, we’re overbuilding for this peak,” adds Hetherington. “We would spend a lot of capital for a handful of hours per year.” Instead, the utility installed a 1.9 MW solar array through a power purchase agreement (PPA). BEC sold 100 kWh blocks of solar electricity to its customers who wanted to support solar but could not put it on their own roof.

The fact that the peak load occurs during the sunniest part of the day and year created a “perfect storm” for a solar array. “It wasn’t just about energy offset or shifting that peak. We wanted to lower the demand on our system, and it overlaid with what solar was able to do for us,” said Miguel Rivera, renewable energy program manager for BEC.

The system has provided the cooperative with positive economic returns, which they plan to invest in energy storage for the next phase of the project.

Beyond Resilience and Cost Savings

The benefits of distributed generation go beyond resilience and economic benefit. The system in Bandera has created jobs and community awareness about renewables, with school groups frequently visiting the solar farm. In North Carolina, the Ocracoke Island microgrid serves as a working lab for electric co-ops to test the interoperability of these emerging technologies. “There has been a lot of interest about our lessons learned from other co-ops throughout the state and nation,” says Ragsdale. “And we’re looking at how solar, storage, and microgrids could benefit cooperative members in North Carolina.”

Trump administration takes percent without electricity or connectivity in Puerto Rico off FEMA website

Meanwhile, an excerpt from Utility Dive on Nanogrids:

  • Hurricane Maria hit Puerto Rico hard, knocking out electricity and other essentials for much of the island. Days later, the island is still reeling as generator fuel is running out. The biggest issue facing the island is in transmission and distribution lines, not power generation, as reported by Reuters.
  • Engineers and other experts from Cornell University are among those working on power storage solutions to avoid future Puerto Rico-style catastrophes. Edwin Cowen, faculty director for energy at the Atkinson Center for a Sustainable Future, says that storing power in nanogrids could be part of the solution and a step in building truly resilient communities. A nanogrid, a single building that generates and controls power to meet the needs of its occupants, could be powered by solar panels or small wind turbines. Electricity storage could be sufficient for smaller storms where the grid may only be down for about a day before power is restored. 
  • Though batteries are getting cheaper, they’re still a bit costly, so to truly make a building “islandable,” it has to produce its own power. “By integrating renewables such as solar or small-scale wind turbines with onsite storage, a building can host its own grid and distribute power from its generation capacity to critical functions in the building, and store the excess to be distributed at night or when the wind is low,” Cowen said in a statement.
It’s not just island territories and nations that have been battered by hurricanes this year. Millions of Florida residents were left without electricity after Hurricane Irma and Hurricane Harvey knocked out power for thousands of Texas residents and hit the entire refining capacity of the United States. While there are plenty of cleanup and recovery efforts, the scale of destruction from recent natural disasters is highlighting the need for proactive, rather than reactive, solutions.

Enter the resiliency plan. To protect resident health, safety and well-being, citizens need to plan for the future instead of just react to emergencies as they pop up. For example, cities shouldn’t just be working to drain water out of flooded city blocks, they should pursue strategies to keep them from flooding in the first place.

When it comes to keeping the lights on, cities may have to move beyond energy storage. Los Angeles is moving forward with an ambitious battery storage project, but not every municipality has the same level of capital or even physical space for such initiatives. Investing in small-scale wind turbines or solar power projects can help get around that project.

If a resident can generate electricity with a solar panel, or if a hospital can keep its lights on by plugging into a rooftop solar array, cities can ensure that vital services continue after natural disasters. While generators are useful, the situation in Puerto Rico shows that they aren’t infallible — there can and will be times when diesel can’t be delivered. By investing in local renewable energy projects and ways for buildings to store or create energy themselves, cities could go a long way in keeping their residents safe when their electric grid is damaged from storms, earthquakes or terror attacks.

Photo Credit: Ruhani Kaur/SmartPower India

Mini-grids have had their fair share of hype in recent years, so a measure of skepticism is warranted, especially when you consider the multiple challenges that have prevented them from scaling: access to affordable capital, uncertain policies, unpredictable consumption patterns, complex community dynamics, currency risk, high transaction costs for investors, etc. In the words of Frank Bergh, vice president at Sigora International: “A start-up utility is still a jumbo shrimp.”

For the sector to go mainstream, what’s needed for scale can be boiled down to one word: standardization. It’s a boring word, but let’s face it, the energy sector is a subsidized infrastructure business that provides a public good. Access to power can enable many amazing things, but the business of making, moving and selling electrons itself is not particularly sexy. To get to sexy (i.e. reaping the dividends of access to electricity such as improved health and education, greater gender equality, access to clean water or powering enterprise), mini-grids must first scale, and that means sector-building through standardization.

Standardization is needed in (at least) the following 5 areas and, as we explore in the September 2017 newsletter, each one of them is currently being addressed to varying degrees. If it all plays out accordingly, 2018 is shaping up to be a year where the pieces fall into place for scale to start to occur, and for mini-grids to take a central place in the race to end electricity poverty for 1 billion people. “The future of rural electrification is at a tipping point,” says Vivian Vendeirinho, managing director of RVE.SOL and Alliance of Rural Electrification board member. “The private sector can drive the needed change if perceived positively by governments.” Which segues nicely to our list of 5 focus areas:

Messaging and Data: what is a mini-grid? Depending on where you go, you still get different answers. In India, a micro-grid is smaller than a mini-grid, which is different from many other countries, where micro-grids are much larger, often captive systems. Then there are also nano-grids or pico-grids. Some developers refer to themselves as a micro-utility or just a private utility. Yet others suggest “standalone rural electrification grids”. Whatever you call yourself, a sector is only going to scale if it is clearly defined. What are we? What level and type of service do we provide? If the sector isn’t consistent, financial and policy support won’t be either. Just as important, if not more so, is a huge void in useful data, whether it be market size, location of current grids or performance data (see our new infographic). “We need a whole lot more focus on the messaging,” says PowerGen CEO Sam Slaughter, a founding member of the new Africa Mini-grid Developer Association (see our interview with him for more on AMDA). He adds: “There is a lack of information in our sector around what is the current situation on the ground.”

Subsidy Parity: “Public finance is going to be necessary for the long term. Mini-grids are not just about productive use, but about access, which is a public service,” said Xavier Vallve, director of Trama TecnoAmbiental. It’s relatively simple for regulators to figure out how to create parity between subsidies for capital expenditures (CAPEX) made by private developers to build mini-grids, and CAPEX subsidies for the centralized grid. In India for example, mini-grids have been receiving a 30% CAPEX subsidy. How to do the same for operational expenses (OPEX, or the ongoing cost of running a business) is another question altogether. As Slaughter stresses in our interview: “We’re not seeking new subsidies, but to benefit from subsidies that public utilities already benefit from. We want to convince large donors and the governments they support that it is in their interest to subsidize not only the public utilities, which they currently do to a pretty extreme degree, but make that funding similarly available to private utilities to create a more multi-polar power landscape.”

Technology: Today, every mini-grid developer starts from scratch and builds its own design. While customization will inevitably be needed in some cases such as bigger systems, there is huge room for reducing costs through establishing global technology standards and standardizing system configurations. “The smaller the system, the more it makes sense to standardize, which results in high profit increases for systems between 50 kWp and 2000 kWp. For mini-grid systems, this increase would be even more dramatic,” says Martin Baart, CEO of ecoligo. Already, such initiatives as the Rockefeller Foundation-funded research on “Utility in a Box” is driving down CAPEX considerably. And even if there is ultimately no one-size fits all technology solution, there is “much more opportunity for technology standardization than is being exploited in the market today”, says Alexia Kelly, CEO of the Microgrid Investment Accelerator (MIA).

Policy: Countries like India and Nigeria, together home to about 40% of the roughly 1 billion people globally without electricity, are stepping up with national mini-grid policies (see a more detailed look here in our September newsletter), as are some sub-national governments, helping to end doubt around tariffs, grid extension and oversight. The mini-grid sector, through collective action and pro-active engagement with regulators and policy-makers, must work to get other countries do the same. “Policy, regulatory and enabling environment are critical and will continue to be,” says MIA’s Kelly.

Finance: Finally, the lack of the above 4 standardizations has left commercial capital almost completely on the sidelines. But exciting developments (discussed in our newsletter here) are taking place that offer a uniform platform to standardize projects for investors, developers and vendors. And important new vehicles like MIA are emerging to prime the pump for bigger ticket investments.

Learn more in the newsletter, and if you have thoughts please share them with us at info@powerforall.org