As we start seeing more distributed energy resources (DER) being planned and deployed, we will see microgrids develop where the asset owner has control of supply side and demand side of the energy equation. Utilities are exploring ways to gain real-time visibility of these microgrids within their distribution grids in order to maintain reliability. Awareness of microgrid models, such as DNV KEMA’s Microgrid Optimization Model, and increasing confidence in the ability to model how microgrids behave in real-time—based on today’s technology and models of future technology performance and costs—allows investors to make prudent asset deployment decisions.
Owners of distributed energy resources have the opportunity to deploy the microgrid concept in order to gain real-time control of these assets, make prudent investment decisions and optimize energy assets in the long-term. Understanding the economics of a microgrid investment and energy operations (in detail) can be crucial to achieving sustainable business objectives. Detailed modeling is the best way to evaluate how critical energy technology can support a number of objectives, such as reducing energy costs, optimizing revenue, achieving zero net energy, minimizing emissions, and maintaining occupant/user satisfaction and comfort. This is a complex problem given the number of different grid technologies available today (building technologies such as advanced lighting and HVAC, advanced automation, general energy efficiency upgrades, electrical and thermal storage, solar PV, CHP) for use not only in facility operation but in energy market participation too. Utilities and market operators need to understand how microgrids will alter their load profiles in response to day-ahead and hour-ahead energy prices, and utilities need to understand the difference between the potential load a microgrid can impose when the sun is not shining, or should there be some failure of the microgrid technology (a forced outage) vs. the normal peak load. In addition, grid operators need to think about the interconnection issues if microgrids are designed to trip off grid at any momentary disruption.
There are a number of benefits that can be derived from a well planned, implemented, and operated microgrid. Some of the key benefits we see in the US today include:
- Improved energy reliability and security of supply: This is especially so where energy is mission critical to the services being provided (i.e., health care, military bases, etc.).
- Net excess energy revenues and efficiencies: Such benefits support funding of new grid investments; this becomes a sustainable master energy plan, and in some cases is self-funded.
- Ability to self optimize assets with full self control of energy operations: This exists in cases where the microgrid operator has both the supply and demand control and responsibility.
- Deferral of infrastructure investments to better match a visible and controllable load profile: The ability to shift the peak and lower the grid imported power through savings and self generation can avoid the need for larger contracts and/or delay the building of new supply side assets.
- Enabled emissions reductions supporting sustainability targets: Where reducing emissions and overall carbon footprint is a key strategy, effective deployment of renewable energy can be achieved with the real-time control with other assets in the microgrid.
- The support of a net zero strategy; and the Microgrid Optimization Model: This allows you to systematically plan and implement steps to achieve such a goal.
- Increased reliability and backup capability: This is supported by optimally sized storage technology.
- Management of generation variability in renewable energy sources.
As we develop more distributed energy resource models and plan more microgrids for developers, we see additional benefits; as a result of this integrated real-time technology and economic modeling. An example is the dynamic price and return on investment (ROI) of photovoltaic(solar PV) applications that allows an investor to plan the investment decision when the future economics project the best ROI in conjunction with LMP prices, demand response (DR), and storage capabilities.
By: Kevin Sullivan, business director, Management & Operations Consulting, DNV KEMA Energy & Sustainability