Microgrids drive a new energy strategy
The steady increase in energy usage across North America is forcing users to contend with high and variable energy costs. Total energy production in the United States increased for the sixth consecutive year in 2016, according to the U.S. Energy Information Administration (EIA). During the same period, electricity generation from wind, solar, and other distributed energy resources also grew, ushering in a new energy landscape.
To control future energy costs, improve resiliency, and become more sustainable, plant managers need a plan. This detailed process is often referred to as an Energy Master Plan, comprised of enterprise-level strategies designed to manage energy costs while also mitigating the risk of downtime from power outages.
Microgrids enable manufacturers to adapt to the new energy landscape, driven by greater decentralization, decarbonization, and digitization of energy. Microgrids are an attractive tool to help manufacturers integrate renewable energy resources as part of an energy master plan.
Microgrids are synonymous with allowing customer-sited generation to work grid-tied and independently of the grid. Microgrids also enhance the resiliency of operations while helping manufacturers generate new value, drive benefits in modernization, avoid costs, and meet new shareholder requirements for sustainability and reporting.
No need to "rip and replace"
One of the most exciting trends in microgrids is mixing the old with the new. Microgrids allow for seamless modernization of aging electrical infrastructure, upgrading a facility’s legacy electrical system to optimize energy use, without needing to "rip and replace" the existing infrastructure. With microgrids, systems can be implemented to minimize downtime, lower costs, and increase sustainability all in a single project. Energy storage increasingly complements the new distributed resources and doubles as further power system backup for added resiliency.
While battery energy storage systems alone work as an excellent anchor resource, battery systems are still relatively expensive unless they can serve multiple use cases. Where electric power and natural gas are expensive, batteries and solar work well financially. Centralized power is 30% to 40% efficient at the point of use, and cogeneration plants often have a 55% to 80% combined efficiency at the point of use. Through microgrids, manufacturers can leverage cleaner and more efficient resources all while using less grid infrastructure and helping these disparate cogeneration resources work in harmony.
Renewables also can be used as a less expensive form of generation as they help establish applications of virtual power plants. These applications innovate by combining variable wind and solar with dynamic load management and storage to present a flatter load curve from the utilities point of view. And storage must be thought of as not just batteries, but thermal inertia and flexibility in loads and processes.
Flexibility in microgrid design is of increasing importance because many plants are in off-grid areas of the world—most notably in fields such as energy production, distilleries, or mining—and it’s just as pivotal for those facilities to remain functional and cost effective as on-grid enterprises. For many plant managers in remote locations, using renewable energy via a solar-assisted microgrids is more cost-effective than transporting other fuel and establishing new distribution and transmission infrastructure.
New, advanced microgrids couple solar photovoltaic (PV) with other distributed energy resources as an anchor resource to island—or separate—from the grid and enhance resiliency, helping to power campuses and small communities independent of the grid during an outage. In addition to the economic benefits, microgrids also contribute to the sustainability of a corporation.
Many Fortune 500 manufacturers have instituted sustainability goals. In fact, shareholder interest in sustainability is another key factor driving microgrid adoption within the new energy landscape. With an increased commitment to sustainability, shareholders require more renewable energy use than ever, and microgrids help incorporate renewables within their budget.
As sustainability becomes a higher priority, shareholders also are requiring accurate measurement of renewable energy usage. Microgrids can integrate advanced monitoring, software and reporting tools to help provide more detailed, accurate reporting and greater understanding of energy spend and usage across the operation.
Additionally, an increased focus on sustainability enables access to "green funds," which provide lower cost to capital for modernization efforts but are only available for manufacturers and other large corporations that can demonstrate social responsibility, primarily through sustainability.
Shifting to renewable-powered facilities seems simple, however manufacturers often face perceived barriers when implementing renewables with legacy infrastructure that contends with contemporary energy requirements. Greenfield manufacturing projects are rare; manufacturers often need to incorporate solar and renewable energy sources within an existing electrical infrastructure to meet peak loads, build employee engagement and satisfy shareholders.
Finally, modern microgrid tools offer additional autonomy and scalability as plant operators modernize operations. Contemporary advanced microgrid tools bring together hardware, software, advanced controls, and electrical distribution into a single-source solution that simplifies the integration and management of renewables and other distributed energy resources.
Though microgrid implementation can seem daunting for facilities that have been operating the same infrastructure for decades, the industry continues to remove the barriers to entry, making it easier to incorporate renewables and enter the microgrid market. New funding mechanisms such as Microgrid as a Service models enable upgrades without upfront capital expenditure. Through advanced microgrid tools, end-users can incorporate more inverter-based resources that enable renewable energy usage and leverage software solutions to better monitor, analyze and report on energy use while also easing scale.
As plant managers look to modernize their plants in all aspects, the way they source, manage, and control energy cannot and should not be ignored. Microgrids are an effective solution to upgrade electrical infrastructure while helping manufacturers to achieve more sustainable business practices—generating tangible value that can be reinvested in other areas of the operation.
Philip Barton is director of the North American Microgrid Competency Center for Schneider Electric.