Microgrids help utilities improve grid resilience, but hurdles to deployment remain

Published on July 21, 2021 by Chris Galford

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Experts say microgrids, which can help keep the grid energized in the event of a broad power outage, are ready to advance, but their deployment is complicated by questions of market price, valuation and who exactly stands to benefit from them.

“Microgrids are part of the resilience toolbox for utilities,” Susan Mora, director of Utility Initiatives & Analysis at Exelon Corp., said while speaking on a panel at the National Association of Regulatory Utility Commissioners (NARUC) Summer Policy Summit this week.

She added that both public and private microgrids are costly, but require different efforts to make their value proposition work. Additional revenue streams are making it easier to see value, even as they add complexity to the grids themselves, but at their core, microgrids are tricky to nail down because of their key purpose. 

“We don’t have a good way to value community resiliency,” Mora said. “It’s their No. 1 value, yet we don’t have a way to give value to resilience.”

Electric companies use microgrids to improve resiliency for customers, to provide clean energy, and to improve energy efficiency. Microgrids can either be connected to the larger grid or be utilized in “island” mode, connecting customers to small-scale energy resources like private solar or storage. According to a definition from the New Jersey Board of Public Utilities, there are essentially three levels of microgrids: a single customer or facility on a single meter, such as a hospital; a single customer setting, controlled by a single meter at a point of common coupling, such as with a university campus; and a multi-customer, multi-facility grid, such as deployed at a town center and covering multiple meters. 

Each speaker on the microgrid panel at the NARUC event viewed the benefits and challenges of microgrid deployment through their own unique lens. 

Mora, as part of Exelon, helps preside over one of the largest overall electric providers in the country, with stakes in the grid stretching numerous states; Megan Levy is a Local Energy Programs Manager and Energy Assurance Coordinator from the Wisconsin Office of Energy Innovation, where the vast majority of the state is rural, but where residents still seek power sources closer to home; and Genevieve Shiroma is a commissioner with the California Public Utilities Commission (CPUC), from a state where multi-million dollar budgets have already been set up for a variety of complex, multi-property microgrid projects and microgrids to counteract some of the dangers of wildfires.

“One of the biggest concerns is resilience,” Levy said. “We have derechos, we have tornados, we have extreme weather in the Midwest. We have cyber attacks and other reasons you might lose power, just like anyone else. So as we explore how to harden our grid, people ask: why not microgrids?”

Resilience is likewise the big concern for California. Microgrids have been utilized there for some time, and Shiroma noted the state has had to change tariffs to suit them, and worked to keep costs contained in ways that shape deployment. 

“The biggest benefit for a microgrid is the resilience,” Mora said. “There are clear benefits, especially for public purpose microgrids. But how do you put a value on that, on being able to give people a place to go and do essential things? Hopefully in working together we can put a value on resilience.”

In reckoning with that value, equitability must be considered. Low-income customers are more often left behind when it comes to renewable energy, Levy said. For them especially, but for all customers, another important component of the microgrid question will be whether such systems will be the most efficient way to add resilience to the larger grid. Most utilities, according to Mora, had plans for investing in resiliency before the COVID-19 pandemic struck, only to be forced to slow them down and shift focus as a result. 

Would that money be better spent increasing resilience for everyone, or on a project that will benefit a specific few?

“Everyone gets a bill every month,” Shiroma said. “It’s very public facing when a utility applies for a general rate case, asking for a double digit rate increase. What a commission will ultimately do, well, that’s an 18 month case – customers don’t see that. They just see utilities asking for millions of dollars.”

Or, as put by Levy: “We don’t want the rest of customers to bear the cost because these are cool and shiny.”

On the question of public versus private, Allan Schurr, chief commercial officer for Enchanted Rock, a developer, owner and operator of industrial sized microgrids, and another panelist, put it like this: public grids could allow for free-riding customers, but private grids could appeal to those just wanting to pay directly and gain access to resilience closer to home.

In theory, this could mean that private microgrids would provide cost effective ways for customers to take matters into their own hands and guarantee stability in an age more and more dependent on the grid. Medical customers, for example, need that energy to live – even a few hours offline could cost lives. Other facilities need electricity for production – thousands of materials could be lost or delayed by power being knocked offline.

One could also take the example of Texas from earlier this year, when Winter Storm Uri knocked out power for millions of Texans over the course of several days. Microgrids and diesel generators, though less economically efficient and more environmentally damaging than microgrids, kept power flowing in certain cases, even as the state’s grid buckled. 

Yet such arrangements also could be abused. “We’ve had microgrids that are not utility delivered that might disconnect from the grid voluntarily a couple hundred times a year because of market price,” Mora said. “When you start doing that, that puts stress on the grid.”

That issue raised the question of how to regulate microgrids. 

“Our rule of thumb is, if a microgrid behaves like a utility in that it is distributing power to more than one customer, it should be regulated like a utility,” Mora said. “If it looks like a utility and it behaves like a utility, it should be regulated like a utility.”

While most panelists agreed there was no easy solution to solve the problems at hand, all agreed that microgrids have a place at the table. As microgrids become more available to multiple uses, their price point could come down, while collaboration could help foster innovation and guarantee their place as part of the solution to energy security.