Key Things to Consider Before Implementing Microgrids

12/9/2024

When evaluating if a microgrid is appropriate for a facility, Miller says key decision makers need to consider why they are deploying a microgrid. What is the main use case? Is it resilience and reliability? Then, they need to think about what else the system can offer: can it trim peak demand and save on demand charges? Can it reduce greenhouse gas (GHG) emissions through reducing consumption during peak-carbon hours? Can it improve the economic propositions of onsite renewable energy, electrification of building systems, or electric vehicle deployments?  

Miller says one good way to think about this is in terms of costs and values. If the microgrid is mainly for resilience and reliability, how many hours per year might uptime be threatened and what is the dollar value of staying online during those hours? How much will the microgrid cost, and what will you get out of it? Be sure to fold in the values of multiple value streams (uptime, GHG savings, utility cost savings, etc.) as well as incentives and tax credits that may be available.  

“Finally, it’s important to figure out just how feasible this all really is,” Miller says. “Do existing systems, controls, electrical equipment, and other constraints permit a straightforward microgrid deployment? Will there need to be major investments made to infrastructure like transformers, electrical distribution systems in buildings, building controls, HVAC systems, etc.? Are there plans to do some of that anyway, and can you fold a microgrid project into existing plans, or at least leave the door open to a future microgrid?” 

The high upfront cost is generally the biggest barrier to microgrid adoption by facilities.  Incentives and tax credits can help, but the microgrid controller and other necessary investments like electrical or controls upgrades can add up fast.  

“System integration can be another big challenge: getting each system to ‘talk to’ every other system it needs to can be surprisingly difficult,” Miller says. “Interconnection with the broader electricity grid, as well as securing permits and navigating federal, state, local, and utility regulations, can be challenging and can require significant time and care.” 

Continued use and improvement 

As Patterson explains, the grid (the sum of all interconnected utility grids) is in transition and has been for almost 20 years now. It started as the U.S. Department of Energy’s “Smart Grid” effort to make it more resilient and efficient.  

“Years later, smart metering, advanced distribution automation, demand response programs to adjust electricity usage during peak demand periods, and the desire to integrate renewable energy, particularly solar and wind power, were added into the Smart Grid charter,” Patterson says. “It was soon realized by grid operators that the variability of new but intermittent renewable energy sources of electricity were problematic to maintaining grid stability and balance, particularly at the grid edge.”  

Put on top of these the challenges of a massively higher demand for electricity to replace an ever-increasing share of fossil fuel use in transportation, mostly electric vehicles, and HVAC —mostly electric heat pumps and water heaters.  

“And the new elephant in the room is the use of new AI and similar technologies related to information and communications systems,” Patterson says. “Therein lies the future role of microgrids. No matter whether located in-front-of or behind the utility toll meters at the grid edge, microgrids are poised to play a critical role in meeting the challenges of this expanding, and increasingly critical set of needs. They bring new capacity, better resource integration, and better load control and peak demand mitigation.” 

The general trend of adding renewable utility scale intermittent power generation will be a factor in microgrid adoption, says Kanoff. The need for more power demand to support data centers also will push large end users to be “islanded” microgrids with their own generation sources.  

“An additional factor is the change over from coal power generation to renewable sources that are less carbon intensive,” Kanoff says.  

In a future with more and more extreme weather events driven by climate change, Miller expects to see a continued rise in interest in microgrid systems.  

“We also expect to see people paying more attention to using these systems to achieve multiple goals at once,” Miller says. “This might look like deploying a microgrid for backup and reliability purposes but using it day-to-day for demand management to reduce utility costs and cut GHG emissions.” 

Costs also have started to come down and Patterson says this will continue as volumes and international competition build in this new marketspace and ecosystem.  

“Microgrids will play a significant role in the future of the world’s energy grids,” he says. “They will interconnect with legacy grids to help transition the entire energy system to a more sustainable architecture and capability. So, when it comes to flexible, independent, decentralized inclusion of renewable energy, higher system resilience and power surety levels, and improved clean energy use and access to both existing and developing economies –microgrids matter.”  

Maura Keller is a freelance writer based in Plymouth, Minnesota.