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Microgrids: Opportunities For Contractors

In the early days of the United States, people generated their own power. Then, over time, starting with the first electric utility, Thomas Edison's Pearl Street Station in New York in the late 1800s, centralized utilities came into existence and began providing power to the majority of people, eliminating their need to generate their own power. Now, however, it seems, with the growth of a technology called microgrids, that trend could be reversing.

What is a microgrid? The complete definition is lengthy and complex. However, in short, according to the Microgrid Institute (www.microgridinstitute.org): "A microgrid is a small energy system capable of balancing captive supply and demand resources to maintain stable service within a defined boundary."

The Microgrid Institute identifies three types of microgrids:
- Isolated Microgrids (a.k.a. "islands"): These are microgrids that are not connected to a local utility grid.
- Islandable Microgrids: These are microgrids that are fully interconnected to a local utility grid and are capable of both consuming power from, and supplying power to, the utility grid. They can maintain some level of service during a utility outage. Operators remain tethered to the utility grid and switch seamlessly back and forth, drawing energy when they need it, and selling it back to the utility when they have surplus.
- Non-Synchronous Microgrids: These are microgrids that are connected to utility power supplies, but are not interconnected or synchronized to the grid. As such, they are capable of consuming power from, but not capable of supplying power to, the grid.

Microgrids combine various distributed energy resources (DERs) to form the whole system. These include natural gas or diesel cogeneration/CHP; fuel cells and micro-turbines; renewables (photovoltaic solar modules, wind, biomass); and/or small hydro. Microgrids also utilize batteries for storage capacity, and include energy management and automation systems.

According to Navigant Research (www.navigantresearch.com), spending on microgrid projects is expected to increase almost five-fold over seven years, from $4.3 billion in 2013 to $19.9 billion in 2020.

Why are microgrids increasing in popularity? Many of the reasons relate to increasing customer demands related to power. That is, more customers are insisting on more reliable and sustainable electric service, especially in light of recent superstorms and other natural disasters. In addition, customers have increasing concerns over grid security and survivability. They also want access to lower-cost energy, especially as costs for renewable sources, especially solar, continue to decrease. And many customers are committed to the benefits and efficiencies of renewable energy.

According to Navigant, customer groups for microgrids can be organized into five categories: industrial/commercial, community/utility, campus/institutional, military, and remote. Microgrids are especially appealing to facilities that have a critical need for uninterrupted power, such as data centers, hospitals and military bases.

Even facilities that don't have such critical needs are getting involved. For example, the University of California at San Diego (UCSD) has a 42-megawatt microgrid using PV panels, fuel cells and natural gas generators, covering over 90 percent of the power requirements for its 1,200-acre campus. It saved the university $850,000 per month in energy costs. Another university, Caltech, generates more than 80 percent of its electricity from a microgrid, which includes solar, steam and natural gas.

Walmart is looking into microgrids to keep its stores and warehouses powered in bad weather. Already, in fact, 41 Walmart stores in California are partially powered by fuel cells that run on natural gas or biodiesel harvested from landfills. Within two years, the retailer plans to test cells that can power its stores if the main grid goes down.

Other facilities with operational microgrids include eBay and the U.S. Food & Drug Administration in Maryland. Currently, a 34-unit residential complex in Sacramento is being built with an integrated microgrid. The system will automatically switch residents to the cheapest power source, whether that be solar or conventional, while storing backup power for use if the grid goes down.

What does it take for an electrical contractor to get involved in the growing demand for microgrid projects? It's not an easy entry, according to Michael T. Burr, director of the Microgrid Institute.

"Installing a microgrid requires electrical contractors who are licensed and experienced with both internal building control systems and electrical utility systems," he said. "A microgrid is an advanced automation and control system, so the most specialized skills involve installation, testing and maintenance of both electrical and communications networks, in addition to integration of related systems."

On the utility side, the most specialized skills required for electrical contractors involve interconnection and protection systems (such as to prevent backfeed when microgrids are "feeding" the main utility grid).

"All of this relies on specialized power system engineering, control system engineering, and software implementation," Burr said.

One electrical contractor significantly "ahead of the curve" on microgrid installations is PDE Total Energy Solutions (Santa Fe Springs, Calif.), which specializes in critical power design/build.

"From the beginning, we worked for the telecom industry, which utilizes batteries and other energy storage systems to back up their telecom systems," said Dan Henrich, founder and president. "This gave us an early exposure to this technology, including the design/build aspects of a DC power plant."

Then, about five years ago, when solar and wind began to become more popular, PDE realized that it would only be a matter of time before these technologies would need energy storage capabilities.

"At that time, we began to expand beyond just lead-acid batteries for the telecom industry, looking at lithium-ion batteries for larger systems," Henrich said. "We also began working with inverter companies, encouraging them to build multiport inverters, which they weren't building at the time." The reason? PDE saw the potential for inverters in microgrids that could accommodate PV solar, wind, fuel cells, and other energy sources, all being connected into one microgrid system that could either be grid-tied or islanded.

"Soon after that, we began to see the potential to tie in advanced lighting controls, mechanical controls, and energy efficiency systems, bring all of them together as one integral unit," Henrich said.

In the last six years, PDE has been involved in a number of microgrid projects. The first was the installation of a lithium-ion battery microgrid project for a city in California in 2009. Then, in 2010, the company installed a residential microgrid that involved connecting an energy storage system to solar, a fuel cell and a propane generator.

"In 2012, we did a project for the City of Commerce, which was a game-changer, although it was only 50 kW in size," Henrich said. This project involved tying energy storage, solar, and an electric vehicle charging station together, connecting it to the first multi-port and bi-directional inverter every built, and connecting the complete unit to the grid. "This was a first of its kind inverter," Henrich said. "It was such a significant project that four members of Congress came out for the ribbon-cutting."

PDE's next project was for the environmental group of the U.S. Department of Defense, located at the 29 Palms Marine base in California. The unit has 1 megawatt of solar and a 7.5 megawatt cogeneration plant.

"We are also installing a half megawatt to 1 megawatt of solar storage to stabilize the solar, so that it doesn't affect the operation of the cogeneration plant," Henrich said. (That is, the solar array can be unstable, based on cloud cover, which can negatively impact the cogeneration plant. The solar storage helps to eliminate this instability.) "This project has been completed, and they are just waiting for the interconnect between the base and the utility grid system," he said.

PDE also did a first-of-its kind microgrid project in the Caribbean, where it installed energy storage to firm up a solar farm, which provides power for a reverse osmosis water desalination plant.

"We are very excited about this project and future opportunities there because the grid is very unstable in the Caribbean, and power is very expensive, so payback is much quicker," Henrich said.

PDE also has numerous other projects in various phases of design and build. One of these is a microgrid project for Penn State University, which will be the second project to use the multi-port inverter. This microgrid be on-line in mid-2015, according to Henrich.

In the spring of 2014, PDE began design work for a net zero energy project for a facility in the City of Commerce, which is the second phase of that project (described above). "This will be a much larger system," said Henrich. "The facility will have over one megawatt of solar, almost one megawatt of energy storage, as well as advanced lighting controls and mechanical controls." In addition, the unit will participate in an automatic demand-response (peak shaving) program. "We are acting as the overall construction manager for the entire project," Henrich said. "We are doing the solar and storage ourselves." Another electrical contractor is doing the remainder of the project.

PDE has also recently completed the design for, and is starting to build the equipment for, another microgrid at a military base just north of Los Angeles, which will feature a four-battery system. In addition, the company is in discussions with the Los Angeles Department of Water & Power for a microgrid project.

"We are also having discussions with the country of Columbia to provide energy storage and solar at a remote military base," he said.

As PDE expands the number of microgrid projects it is designing, and as demand continues to increase nationwide and worldwide for these installations, the company is beginning to work more and more with other NECA contractors on these projects.

"In these instances, we act as the engineering and procurement entity, providing the design expertise and the spec'ing of equipment," Henrich said. "This then allows the other NECA contractors to work with their clients on the actual installations."

As Henrich sees it, microgrid projects really represent a paradigm shift in the electrical contracting industry.

"All of this is coming together at the same time—renewable energy, smart inverters, controls, and advanced electronics—all into one system, that can be grid-tied or islanded," he said. In fact, he believes that it is really as big of a shift as when Edison created the first electric utility in New York.

The Microgrid Institute's Burr also sees a bright future.

"The global microgrid market is small, but it is growing quickly," he said. "In the next two to five years, microgrids will likely become more common, but this market segment probably won't achieve significant scale until the early 2020s, or perhaps 2030. At that time, it seems likely that microgrids will become fairly common."

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