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It didn’t seem that long ago that we were all talking about microgrids, a lot. We may have anticipated a large series of small, renewably driven, battery powered, local energy grids that can be disconnected from the larger utility grid and operate independently. The momentum seemed to have cooled on this revolution however, but recent signs suggest that microgrids – still fresh in our memory – may soon be all the rage again.
“Projections suggest that microgrids are set for exceptional growth in the coming years, alerting the related energy storage and renewable energy industries. However, questions still hang over microgrids potential to out value conventional grids in major markets,” we said in an article back in 2015 entitled ‘Microgrid Growth Potential Stimulates the Energy Storage Industry.’
Perhaps they just entered an extended trough of disillusionment, as Gartner’s Hype Cycle would put it. Initially buoyed by the excitement surrounding its potential, the advance of Microgrids may have been slowed while waiting for performance to improve and cost to come down on key technologies, such as distributed renewable energy, energy storage and the smart grid.
“It’s rolling out much more slowly than people expected,” Harvard Business School Professor Rebecca M. Henderson has said of the smart grid in her papers on the subject. “Consumers seem less interested in its capabilities. The regulation regime is difficult. People have been talking about the market for 10 years, but it’s not yet where it’s supposed to be.”
It is not the first time that hype around the microgrid has risen and subsided. In fact they are the basis of our electricity transmission and distribution system when, some 100 years ago, a series of small, unconnected grids served communities around the US. These early systems expanded until favorable economics pushed us into an age of interconnected, regional, national and even international mega-grids.
Then half a centruy ago, microgrids found a promising niche during the cold war. In the 1950s and 1960s, the Atomic Energy Commission (predecessor to the U.S. Department of Energy) and the Department of Defense put substantial resources into exploring ways to provide remote military bases with reliable electric power.
A prototype small nuclear generating plant was developed at the Idaho National Reactor Testing Station (NRTS) in Idaho’s remote eastern desert, with the aim of powering missile early warning system radar stations inside the Arctic Circle. That is until what nuclear engineer and historian James Mahaffey describes in his 2014 book Atomic Accidents as “the strangest and most tragic reactor accident in American history.”
The project had been running for two years when on the night of January 3, 1961, one of the operators incorrectly lifted the main control rod on top of the reactor much more than was instructed. The plant went critical in a reported 2 milliseconds, the resulting steam explosion killed all three of the facility’s crew, one of which was pinned to the ceiling by the control rod itself. Human error perhaps, but it quickly soured the feeling around microgrid development.
In the decades since, the microgrid has found its place in specific niches but only began to consider its potential when the hype surrounding advances in renewable energy, energy storage and smart grids came to the fore. There is potential for renewable energy almost anywhere in the world, when combined with storage and smart grid systems designed to balance demand and supply, there becomes potential for robust microgrids almost anywhere in the world.
This was the dream in recent years, so why has adoption of microgrids been slow and stunted, and why is that now changing? Firstly, depending on the development of three other technologies was always going to have its delays, and while solar PV, energy storage and smart grids have stayed in the news their advancement has been stunted. 2017, however, has shown signs that these technologies are reaching the point at which microgrids gain traction.
“Storage companies and technology giants continue to lead the charge on solar and storage microgrids while island communities are test-beds for piloting new systems and ideas,” explains the 2Q 2017 Frontier Power Market Outlook report by Bloomberg New Energy Finance. With “energy storage companies such as Tesla, Fluidic Energy, and Electro Power Systems continuing to deploy significant capacity in the first quarter. Specifically, Tesla’s island microgrids represent 36% of the company’s total power storage capacity deployed to date.”
The second door to be opened for microgrid growth is made of policy. Incentives for microgrids only exist in the form of grants from a handful of US states, and only if they incorporate green energy to qualify for federal tax credits. Microgrids incentives seem to have been lost between clean energy generation and storage, however key figures are making the case for policy change in this area.
“Getting incentives right means taking into account and quantifying the range of values that microgrids can bring to the grid, as well as helping customers to understand the added benefits that will accrue to them,” said Steve Fine, vice president at ICF. “Benefits to the grid include identifying locational value by potentially avoiding capital expenditures on the grid, while benefits to consumers include increased reliability and resilience.”
Once all the pieces of the puzzle fit together for microgrids, this revolution may finally take place, ushering in a new age for the power sector. At the Harvard Business Review, Gregory Unruh from George Mason University in Virginia, said, “We are witnessing perhaps the twilight of the macrogrid and…the dawn of the microgrid.”