Short-Term Financing for Microgrid Communication Systems Will Payoff Long-Term

Energy companies are currently taking a hard look at distributed energy and microgrid technologies. That’s a good thing. Microgrids also need advanced communications networks to operate at optimum efficiency. That’s a fact.

Microgrids offer incredible potential benefits, including the ability to disconnect from the traditional power grid and deliver electricity during blackouts, natural disasters and cybersecurity incidents, all while staying coordinated with local utilities. They do, however, need advanced communications capabilities to function at optimum efficiency.

Incidents like recent cyberattacks on U.S. utility control rooms and the destruction of Puerto Rico’s power grid resulting from Hurricane Maria threaten critical and sensitive facilities in the United States (hospitals, emergency responders, transportation systems, defense bases, senior living developments and even wholesale food markets). With microgrids, however, facilities can silo themselves off from affected regions of the traditional grid. To be fully effective and integrated, they are incorporated into distributed energy resource management systems and virtual power plants for the purposes of demand response and optimal power flow.

However, simply having a microgrid is not a silver bullet, as its safety and stability relies on advanced networks to maintain coordination and connection. Operating with communications networks that traditionally rely on internet protocol (IP) networks presents architectural vulnerabilities in areas such as service and data privacy. If these networks are compromised, the benefits are essentially voided.

That’s why microgrid operators need advanced secure backbone communications systems not only to ensure they are optimally integrated with other grid assets and can coordinate with local utilities, but also so they can operate individually and not become overloaded during disasters or even large public events.

Unfortunately, many of today’s current networks are based on technologies that are either being abandoned by commercial carriers (e.g., 2G and 3G technologies) or based on limited capability, such as decades-old private radio systems that can’t meet the evolving needs of today’s critical infrastructure industries. Critical infrastructure industries need access to advanced broadband technology in a separate and secure environment, just as emergency responders will have access to the FIRSTNET system.

Game-changing broadband spectrum could be readily available today to enable the advanced capabilities that critical infrastructure industries and microgrid operators need to meet their evolving needs. But certain rules governing the use of such spectrum haven’t been updated in over 30 years.

Fortunately, the current Federal Communications Commission (FCC) can make administrative rule changes governing the radio spectrum that microgrid operators could use. FCC Chairman Ajit Pai indicated Commission staff is already working to draft a Notice of Proposed Rule Making (NPRM) on the 900 MHz spectrum band, which would provide the energy sector with access to aforementioned broadband spectrum.

But the work can’t stop there. State regulation of microgrids is also a matter of significant debate. Public Utility Commissions (PUCs) across the country are evaluating the role that microgrids can play in addressing energy needs in their states and considering the financing required to build and operate these microgrids.

No doubt there is often pushback against many initiatives that aspire to be included in an electric utility’s rate base and subsequently in consumer rates. I get that. As Governor, I was well aware of the need to focus on keeping rates low.

However, there are times when innovative concepts merit inclusion in an electric utility’s rate base. Microgrids and the communications systems upon which they depend to operate effectively fall under this category.

Of course, applicants must prove the benefits of their microgrid proposals outweigh the costs to consumers. But the reliability and security efficiency benefits of these systems are clear.

The bottom line is that regulators, ratepayers and end users must understand that the long-term benefits of microgrid projects and their communications systems far outweigh the short-term costs to finance them.

Jack Markell is the former Democratic governor of Delaware from 2009 to 2017.