Leveraging the possibilities of modern grid design and management to drive resilience, efficiency and sustainability
Humans tend to underestimate the potential impact of extreme events and crises on their lives. But natural disasters like the wildfires in California or Australia and the current COVID-19 pandemic have driven home the need to prepare for the “unthinkable”. This is especially important for key industry sectors like energy, which – without even considering the added burden of extreme events – already faces a number of stress factors that significantly affect grid stability. These include a rising share of renewables in the mix, changing load profiles and the rapidly growing adoption of e-mobility. Whereas most consumers would see one minute without electricity as something of a nuisance, they would find an hour totally unacceptable. A blackout lasting hours or even days would have catastrophic consequences. Just think UK in 2019 or EU in 2006. It is extremely important to take the right steps now to secure and stabilize tomorrow’s power supplies.
Resilience as a top priority – not only for DSOs
Security of supply is a key objective for every TSO, DSO and utility. But with the looming threat of blackouts and a growing awareness of the need to be prepared for all eventualities, the importance of energy security is moving into focus among a broader cross-section of the public. Critical infrastructure buildings like hospitals, airports and data centers must stay operational, even in the event of outages, so they can continue to provide essential services to the public. Local communities, cooperatives and housing associations are also moving forward as they develop their own energy generation capabilities in the form of PV or CHP systems, which can securely supply an apartment block or even an entire district within a city. In energy-intensive industries like steelworks, glassworks and mines, many companies have already been operating their own small power plants for years. But more and more industrial and commercial consumers (e.g. supermarkets, high-tech manufacturers) are now also keen to ensure an uninterrupted, high-quality power supply as they look for ways to reduce the risk of unscheduled downtime and the cost of rejects. All these examples show that security of supply is becoming a top priority among a growing pool of stakeholders.
Energy as an asset – turning a trilemma into a “triad of value”
All of those stakeholders must master the energy trilemma to effectively address the resilience challenge. This entails balancing the need for reliability with economic efficiency and sustainability. Especially for industrial and commercial consumers, lowering energy costs or reducing their carbon footprint can create a significant competitive advantage. Housing associations use the carbon neutrality of their projects as a value proposition to attract new residents, and communities are looking to embrace a more sustainable, progressive lifestyle. Traditionally, achieving one objective within the trilemma comes at the expense of the other two. Achieving zero carbon emissions or establishing full independence from the power grid entails high costs. Similarly, lowering energy costs could compromise resilience and climate protection goals. But with the digitalization of the energy system and the development of cost-competitive renewable generation and storage solutions, consumers can actually balance these three objectives and maximize the cumulative value.
Microgrids – the perfect solution in a highly dynamic environment
Microgrids are the “weapon of choice” in the battle to solve the energy trilemma. A perfectly aligned system combining generation and storage capabilities with intelligent management software hits the sweet spot at the intersection between reliability, efficiency and sustainability.
- Resilience through autonomy: Microgrids can run in island mode, completely independently of the power grid, to deliver the highest possible degree of resilience. In 2019, wildfires prompted Californian utilities to shut off power supplies in the interest of public safety. Although large parts of California were in darkness, the microgrid of Blue Lake Rancheria allowed the reservation to keep their systems up and running. They even made room in their hotel for medical patients dependent on electrical equipment (Read more).
- A continuous value driver: Management software can be used to detect inefficiencies in the system, reduce peak loads and align the use of self-generated electricity with market prices. This adds value by improving control over all assets, reducing energy costs and saving OPEX. In addition, microgrids allow the operator to participate in the energy market. Users can sell their excess energy and help stabilize the grid by offering flexibility services to system operators, thus generating an additional revenue stream.
- Many paths to sustainability: A microgrid can be configured to leverage all available assets with a view to minimizing carbon emissions. Typical measures include prioritizing emission-free, self-generated electricity, balancing demand and generation and running machines more efficiently.
The digital layer of the system, in combination with the microgrid controller, allows the operator to align the configuration settings of all available assets with user objectives and needs. In other words, microgrids can adapt to evolving market regulations, increases in demand to power new manufacturing lines or new priorities as strategic roadmaps change.
Islanding – a great opportunity for utilities
Although microgrids can potentially lead to a loss in revenue for utilities and system operators due to a drop in market demand for electricity, they also represent a huge source of opportunity for forward-looking players. On the one hand, utilities use microgrids to make their own grid more stable and secure. PG&E is installing more than 20 microgrids near substations to keep electricity flowing when the utility shuts down power lines that could spark wildfires during windy and dry weather. By aggregating existing microgrids into virtual power plants, DSOs and utilities have an additional tool to smooth peak loads and avoid voltage fluctuations. On the other hand, utilities can position themselves as experts for the other three stakeholder groups. Industrial and commercial consumers, critical infrastructure operators and communities are not energy-savvy. They need a strong and trustworthy partner to guide them through the complex process of designing, building and operating a microgrid tailored to their demands. This is a completely new business opportunity to be developed.
From idea to action – innovative ways to innovate
Alongside technical complexity, financial limitations are often a barrier to the implementation of microgrids. The digitalization of the energy sector and the up-and-coming “Internet of Energy” offer completely new financing models. Providers of microgrids offer risk-free “design-build-operate-maintain” (DBOM) or “energy-as-a-service” models. In combination with traditional economic models like financing or leasing, this brings the benefits of microgrids within easy reach of almost all stakeholders. The different stakeholders can increase reliability, save costs and tap new revenue potential whereas utilities can stabilize their grids and develop new business models. In a nutshell, it’s a win-win for everyone.