Regulatory drivers for DG
“Regulatory efforts to encourage microgrids are not easily identified because they are so interwoven with or even coincidental to other goals, such as expanding renewables, encouraging efficiency and CHP, strengthening demand response, and alleviating congestion,” Marnay said. This is especially true at federal and state regulatory levels.
One industry-based regulation mechanism that does specifically address microgrids is the Institute of Electrical and Electronics Engineers (IEEE) P1547.4 standard development process. This standard, IEEE Draft Guide for Design, Operation, and Integration of Distributed Resource Island Systems with Electric Power Systems, specifically addresses the conditions under which local generation can island with colocated loads, which is one definition of a microgrid, according to Marnay.
This draft guide provides alternative approaches and good practices for the design, operation, and integration of DER island systems with electric power systems (EPS). It includes the ability to separate from and reconnect to part of the area EPS while providing power to the islanded local EPS. This guide addresses the distributed resources, interconnection systems, and participating electric power systems. The draft standard is intended to be used by EPS designers, operators, system integrators, and equipment manufacturers and is meant to be relevant to the design, operation, and integration of DER island systems. Implementation of the guide is intended to expand the benefits of using DER by targeting improved electric power system reliability and to build upon the interconnection requirements of IEEE 1547. For more information, visit http://grouper.ieee.org/groups/scc21/1547.4/1547.4_index.html.
Challenges to microgrids
“Microgrids are a technology that will only succeed if embraced by what are currently individual customer sites, or groupings of customers, either contiguous or virtual. The challenge, as I see it, is to create products that can be attractive to this clientele,” Marnay said. “Traditional U.S. macrogrid service is very good, and in some developed economies, notably Japan, it’s excellent, so microgrids are no slam dunk.”
That said, there have been some highly successful microgrid demonstrations in recent years in Europe, North America, and especially Japan, so there don’t appear to be any major technical barriers to microgrid deployment, according to Marnay. Some other governments, notably Korea, and equipment vendors also are now establishing microgrid research programs, so technical progress will inevitably accelerate.
“But, as is so often the case in our industry, while we’re progressing on technical problems, making the economics work and establishing a favorable regulatory environment are the real challenges,” Marnay commented.
Making the economics work for small-scale generation close to loads, often including intermittent renewable generation and opportunistic fuels, will be challenging. According to Marnay, one obvious factor that’s easily overlooked is that the cost of on-site generation competes with the delivered cost of electricity rather than its competitive wholesale price at the power plant bus bar, and the former is two to three times the latter on average.
“One motivation for microgrids we’ve already discussed, namely heterogeneous power quality and reliability, poses an economic challenge because we really don’t have effective methods of valuing PQR. Energy conversion to electricity close to end users creates increased opportunities for waste heat capture in combined heat and power systems, and this will be an increasingly important economic driver,” he said. “High fuel costs and climate change concerns will strengthen the case for CHP. And I see microgrids being designed and operated around heat requirements, as well as electrical ones, especially the application of waste heat for cooling using absorption or adsorption cooling technology. Finally, there are other potential benefits of microgrids that might lead to revenue streams—for example, the provision of local ancillary services such as voltage support.”
The future of microgrids
“There are some powerful fundamental drivers that lead me to think microgrids will become a familiar feature of the U.S. power system, although perhaps not in the coming decade,” Marnay said. “There have been some successful microgrid demonstrations, but the market is not yet developed to the point that we can think of them in this competitive manner. Nonetheless, some elements of microgrid technologies will emerge sooner, and some, such as Tecogen Inc.’s Premium Power Module CM-100 generator, already are becoming commercial.”
One of the other powerful drivers for microgrids might well be that they potentially offer a more hospitable environment for small-scale renewable generation, as well as efficiency investment and simple conservation. According to Marnay, it’s currently only a matter of faith, but he believes that if the trade-offs between self-generation, power purchase, efficiency equipment investments, behavioral adaptation, and the like were all focused at one decision point, a more rational balance between these factors than heretofore achieved could be possible.
Not surprisingly, manufacturers of hardware that could be deployed in microgrids are enthusiastic supporters of the concept. Marnay pointed out that among vertically integrated and distribution utilities enthusiasm for microgrids varies widely. Though some are highly skeptical, others see great technical and business opportunities.
The greatest potential of microgrids is to provide heterogeneous PQR to serve sensitive loads and to improve energy efficiency by moving thermal generation close to possible uses. This would permit waste heat recovery and use and also promote better integration of small-scale dispersed renewable sources, such as solar, into the energy supply infrastructure. On the flip side, the promotion of microgrid concepts will require considerable financial investment in their research, development, demonstration, and deployment. If such challenges can be met, microgrids could take their place within the world’s future power systems.
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