As extreme weather events increase and energy prices fluctuate, facility executives are turning to microgrids, which can help keep institutional and commercial facilities online during power outages. They do this by providing electricity from onsite sources of power instead of the electricity grid served by the local utility company. But a microgrid can mean vastly different things to different people and in different contexts.
“Usually a microgrid combines solar energy, battery energy storage systems (BESS), and a microgrid controller,” says Alexi Miller, director of building innovation, at the New Buildings Institute, which is currently working on a microgrid project that also includes a bi-directional electric vehicle charger and an electric school bus to help power a microgrid.
According to Hiva Nasiri, vice president, Thornton Tomasetti, in terms of enhanced resilience, microgrids offer several advantages over facilities that are solely dependent on the electric grid.
“While the grid has been reliable for many decades, it is still vulnerable to aging infrastructure, environmental impacts, and even cybersecurity risks,” Nasiri says. “With a proper design, a microgrid with islanding capability, diverse generation sources (solar, natural gas, diesel, etc.) and energy storage systems (BESS, hydrogen, etc.) can provide a reliable energy resource with complete independence of the grid. In the event of an outage, a microgrid can utilize its local resources to power its entire loads or just critical operations.”
However, to realize this enhanced resilience, the microgrid design must include substantial redundancy, interconnectivity, and high equipment reliability.
“While this redundancy is inherently built into the grid/regional transmission organization (RTO), achieving these capabilities at the microgrid level requires a significant capital investment,” Nasiri says.
Microgrids are just one strategy project teams can implement. As Ian LaHiff, director, energy and carbon, technical development, U.S. Green Building Council (USGBC) points out, smart owners and facility executives recognize that maintaining continuity of operations is integral to success.
“By making investments in energy infrastructure and creating microgrids, buildings are able to unlock the ability to operate during extreme weather, grid disruptions or dark sky events,” LaHiff says. “During blue sky or normal operations, microgrid technology can also hedge against grid energy price volatility.”
With natural disasters occurring more frequently and impacting large utility networks, additional on-site backup may be needed for more than just a few hours every few years. A self-sufficient microgrid can avoid downtime for critical systems and reduce long-term costs.
“The grid is being stressed not only by extreme weather, but also by the growing demands of electrification from various sectors and the changing dynamic of power flows through the network (e.g., DERs),” says Emily Kunkel, associate principal, Thornton Tomasetti.
“We have already seen cascading failures across Spain, as well as major disruptions to U.S. airports due to overstressed transformers. These types of outages are no longer tied to weather patterns, nor are the fixes quick, which can leave facilities relying on backup methods for extended periods. Improving reliability and reducing downtime can significantly reduce costs and reputational harm related to lost business, data, sensitive materials, damages and legal fees.”
A cost/benefit analysis often shows that the capital investment of additional on-site redundancy for improved resilience can pay itself back after a few events, ultimately reducing cost of operations in the long-term.
As Miller explains, most microgrids are installed for resilience during electricity outage events, to provide power when the grid is down. In this case, the microgrid is saving money by avoiding the cost of down times for the organization and responding to urgent needs in the local community.
“Those avoided costs can vary drastically from one facility to another,” says Miller, who suggests that managers utilize a free Customer Damage Function Calculator offered by the National Renewable Energy Laboratory to estimate avoided costs. “When the electrical grid is operating fully, microgrids can often help reduce operating costs by reducing utility bills. They do this by helping facilities reduce their peak power demand and shift demand toward off-peak hours. It can make a substantial difference in energy costs for commercial and multifamily facilities whose power bills include demand charges and/or are on a time-of-use electricity rate or tariff,” Miller says.
This approach will become even more important as more utilities are rolling out time-of-use rate structures and increasing demand charges. Some microgrids also reduce costs by selling the power stored in the system batteries to the larger energy market when they are not needed for emergencies.
LaHiff adds that the combination of onsite power generation, localized energy storage and smart energy monitoring systems can substantially reduce utility costs.
“An adequately sized microgrid provides an opportunity to reduce building power demand and offset time-of-use penalties common from grid operators,” LaHiff says.
Brian Patterson, chairman, EMerge Alliance, says that microgrids are moving from the “too expensive” category of investment, to a “must have” item for many owner/operators of commercial and industrial facilities as they can significantly reduce costs for businesses through stacked cost saving mechanisms.
“Microgrids can incorporate renewable energy sources like solar and wind power, which have become increasingly affordable,” Patterson says. “Businesses relying on continuous operations, such as data centers or hospitals, face significant financial losses from even brief power outages.
Microgrids can ensure uninterrupted power supply, avoiding these costs.”
Microgrids also can participate in utility demand response programs, selling excess power generated or capacity back to the main grid during periods of high demand, creating additional revenue streams.
Maura Keller is a freelance writer based in Plymouth, Minnesota.
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