This is the third in a series of blog posts that discuss microgrids. This series of mini-articles was developed in response to the interest expressed by various stakeholders in the Hawaii power market around microgrids, in particular, legislation that has been proposed in the 2017 Hawaii Legislature to promote microgrid development in certain circumstances.
All of the components of microgrids are commercially available today from large vendors (e.g. ABB, General Electric, Schneider Electric, Siemens, etc.) and several niche players. The market is still relatively young, so we can expect continuous improvements in performance and functionality, with additional price declines as volumes increase. Let’s identify each component of a typical microgrid and discuss each.
Generation: For a microgrid to provide energy supply to its connected loads without help from the utility, there must be a source of generation within the microgrid. This could be solar PV, wind, combustion turbines, reciprocating engines, cogeneration, or any other form of generation. Considerations in the selection of generation include the level of firmness required (i.e. does the generator need to start at any time, no matter what?), the desire for renewable forms energy, availability of fuel (and fuel storage requirements) and of course, cost. Across virtually all generating technologies, economies of scale are the rule, meaning that smaller generators have a higher per unit installation cost relative to larger ones, resulting in a higher cost per kilowatt–hour for the energy produced. For example, in Hawaii a 5 kilowatt (KW) residential solar PV system costs around $4 per watt to install, while a 50 megawatt (MW) solar PV farm might cost around $2 per watt to install. In this example, all other things being equal, the busbar cost (as expressed in cents per kilowatt-hour of output) of the larger generator would be half that of the smaller one.
Energy storage: Most microgrids will have an element of energy storage that allows the microgrid to absorb and store energy that is produced when supply exceeds demand, and to return that energy (net of storage inefficiencies and line losses) when the demand exceeds supply (e.g. during evening hours when solar production is not available). Energy storage can also be used to provide arbitrage opportunities where wholesale power markets exist or when time-based rate schedules (e.g. time of use, real-time pricing, critical peak pricing, etc.) are available.
Load Control: More sophisticated microgrids will incorporate the ability to control end-uses in a manner that allows the generation and storage resources to be optimized. For example, non-critical loads like lighting, hot water heaters, etc. can be automatically shut off or turned down to help maintain energy flow to critical loads (e.g. computer servers, life-support equipment, etc.), especially during times when variable renewable generators are not available. As with storage, load control can also provide arbitrage opportunities in power markets and/or where time-based rates are available.
Utility Interconnection: A key design feature of a microgrid includes the interface with the utility’s power grid. During interconnected operation the microgrid-utility interconnection must be designed for safe and reliable parallel operation of the microgrid and the power system. For reliability-based microgrids where operation in an islanded mode is anticipated, the interconnection must also include equipment that will allow for the seamless disconnection and reconnection of the microgrid and the power grid. This "re-synchronization" of the two systems is not a trivial undertaking and failure to properly plan and design for this function can result in the instability of both grids. Accordingly, islanding of microgrids must be addressed at both technical and policy levels.
Microgrid Control System: A microgrid control system ties all of the components together and maintains the real-time balance of generation and load. In a very simple microgrid, a control system is typically a governor control on a diesel generator. In more complex microgrids, control systems are made up of sophisticated software platforms, sensors, metering, and communication paths designed for real-time optimization and control of the generators, energy storage, loads, and utility interchange. During interconnected operation, the control system must be able to manage the utility interface and communicate with the utility’s (or independent system operator's) system operations center (including demand-response management systems) in near real-time.
The provisioning of each of these components incurs cost. As discussed in the post on value propositions, higher microgrid costs may be justified if the negative consequences of a customer outage are large (e.g. a spoiled batch in a semi-conductor fabrication process, life support system outage, air traffic control outage, financial firm data center outage, etc.). Accordingly, the reliability service delivered by more sophisticated microgrids, while costing more, provides value that is many multples of the cost.
The key takeaway here is that the design of the microgrid should be driven by the customer's objective - which most of the time is a function of the customer's mission - not the desire to outsmart the local utility. Our next post will discuss practical considerations for energy end-users who are contemplating microgrids.
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