Renewable Energy Resilience

Nanogrids, Microgrids and Virtual Power Plants

Expert on new energy business models such as nanogrids, microgrids and virtual power plants, covering cutting edge energy and environmental issues for over 25 years.

Postcard from Hawaii to the Nation's Capital

The mood at the second annual VERGE conference in Honolulu, Hawaii last week was upbeat about the future of clean energy, despite pushback on the U.S. mainland. Apparently, those committed to a clean energy agenda, including the private sector, are more motivated than ever to push forward with aggressive programs to bring on-line renewables resources to not only to combat climate change, but to create jobs.

Conference attendees clearly supported the supposition that clean energy is here to stay, no matter what might be unfolding in Washington, D.C.The proposed dismantling of the federal Environmental Protection Agency’s Clean Power Plan and recent withdrawal of the U.S. from the Paris Accord on climate change only seemed to serve as motivation to push forward even harder.

Hawaii is the first (and so far) only state in the U.S. to commit to a 100% renewable energy future. Gov. David Ige of Hawaii didn’t seem to blink in the face of counter currents flowing from the Trump administration. A confessed energy geek, he seemed to take particulardelight in the fact that Hawaii has emerged as a key testing ground for bolstering commitments to infrastructure needed to integrate variable renewables for not only power, but transportation services. Since each island of Hawaii is its own separate electric grid control area, and retail costs are high due to such a reliance upon imported sources of fossil fuel, Hawaii is in a unique spot. The economics here clearly favor renewable energy.

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The Value of Diversity on Corporate Boards - A New Take

I’ve been preaching the value of diversity for quite some time in my specialized field of energy. When it comes to developing a portfolio of energy resources to supply a region, country, state or city, it is never a good idea to put all of your eggs in one basket.

For example, natural gas prices today in the United States are low. One might be tempted to shift one’s supply to natural gas in a major way – and many utilities are doing just that. It is also a resource that is cleaner than coal, and is a more flexible resource. This latter point is an important consideration as we add more variable solar and wind to the energy equation, since natural gas power plants can help fill in the gaps when the shine doesn’t shine or the wind doesn’t blow.

But California ratepayers such as I will see higher bills in 2017 since gas prices have gone up on the West Coast. The best policy in order to hedge one’s bets is to always diversify, albeit intelligently, with a mix of resources so that over the long-term one is not overexposed to risk, but can also take advantage of the see-saw nature of energy markets.

Energy is just one example, but in a business world now driven by new data streams, creative trading strategies on equities and corresponding complexity in understanding future market opportunities, diversity can take on new meanings.

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Winter Season Reveals Value of Next Generation Demand Response

Just a little over a year ago, the underground Aliso Canyon natural gas storage facility began leaking. While the primary concern was how methane emissions might jeopardize public safety, this event also created a crisis in energy supply in southern California. As it turns out, it became the largest methane leak in U.S. history. By some estimates, the leak had the equivalent impact on climate change as burning 1 billion gallons of gasoline. The value of the leaked natural gas has been estimated at more than $21 billion.

The leak from a gas field that supplied fuel for a fleet of fossil fuel plants that served as one of the backbones of the regional power supply also created an ideal market opportunity. The only way to fill in the gaps was through distributed energy resources (DER) that could be mobilized in short order.  Among the innovative solutions are virtual power plants enabled by energy storage.

California moved swiftly. The CPUC made a bold decision calling for a wide range of distributed energy resources (DER) in late May. Fortunately, Southern California Edison (SCE) and industry providers were positioned to move fast, since contracts were already in place for over 260 MW of energy storage, five times the amount SCE had been required to purchase. 

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Why VPP Software Vendors Are Vital to the Success of the Emerging Energy Cloud

The term “virtual power plant” means different things to different people. The concept is really just creative way to imagine the variety of grid services that can be harvested from a plethora of distributed energy resources (DER) that are rapidly populating power grids worldwide.

I would argue that the VPP is the epitome of changes that are transforming relationships between utilities and customers, as well as a host of other market participants that are building real solutions to the pressing energy and environmental challenges facing the world today. Navigant has coined the term the Energy Cloud to describe the evolution of our collective energy future. VPPs are just one aspect of this shift toward smarter, cleaner and smaller power sources being aggregated into real-time solutions that benefit each individual asset owner, while also contributing to the sustainability of existing infrastructure.

Now that hardware assets such as solar PV panels, batteries and other DER are becoming commoditized due to increased market penetrations and creative business models, the key to unlocking greater value from both new and existing DER is software, the fundamental technology driver underlying the VPP market. 

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Has Hitachi Zeroed In On the Most Viable Microgrid Business Model Today?

I had the pleasure of participating in an afternoon long workshop at the VERGE conference in Santa Clara last week. The workshop covered a lot of ground, including offering two different perspectives on microgrids from two leading players: Spirae, a controls and software innovator; and Hitachi, the only company in the world that has declared it has a 100-year plan for“social innovation businesses,” a broad category of solutions that includes microgrids in North America and Asia.

While the workshop covered a lot of ground, perhaps the most noteworthy portion of the program was a presentation by Urs Gisiger, director of project finance for Hitachi Energy Solutions. He directly addressed questions that seem to be a hot topic of conversation at nearly every event that addressed the hype and promise surrounding microgrids and a distributed energy future: How do we finance such projects at a time of great market uncertainty? In other words, what is the best microgrid business model

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Orchestrating Power Networks via Virtual Power Plants

The evolution of energy markets is accelerating in the direction of a greater reliance upon distributed energy resources (DER), whether those resources generate, consume or store electricity.  The new frameworks necessary to manage this increasing two-way complexity are quickly evolving. Nevertheless, strategies are being deployed today all over the globe. 

One such strategy is a virtual power plant (VPP), the concept that intelligent aggregation of DER can provide the same essential services as a traditional 24/7 centralized power plant. The definition of a VPP is fuzzy. In short, it is based on idea that the value of DER must not only provide value to the prosumer – but must be enabled (through technology and regulation) in order  to migrate value upstream to utilities and even transmission grid operators. In other words, they need to rely upon a network orchestrator, a concept that is articulated in a new white paper entitled Navigating the Energy Transformation, The Energy Cloud 2.0 – Building a Competitive Advantage.

Navigant Research published its first VPP report in 2010. Since that time what was once seen as a futuristic scenario fed by a number of experimental pilot projects in Germany, Denmark and the rest of Europe is emerging into a real market that draws upon analogies with companies such as Uber. The network orchestrator driving value for the VPP may not own all of the assets; value is created by organizing these assets in a way that creates real-time physical benefits to the power grid (or in the case of Uber, to people seeking near-immediate transportation services). 

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Do Microgrids Disrupt the Traditional Utility Business Model?

The classic story line about microgrids is that they challenge electric utility monopolies in multiple ways. Up until recently, the vast majority of microgrids deployed in North America, currently a global hotspot for microgrids, were developed by third parties. Not only that, they were designed primarily to offer economic and resiliency benefits to consumers, with the interests of the incumbent utilities almost an afterthought.

That simpleminded view of the world is being challenged by the concept of a “utility distribution microgrid (UDMs),” a concept first put forward by Navigant Research in 2012. Since that time, the number of utilities exploring their opportunities in the microgrid space is growing dramatically.

One could argue that microgrid sprung up as a response to customers not getting what they need from traditional utility service. UDMs turn this premise on its head. They can help utilities manage recent distributed energy resource (DER) employment trends to their advantage. Microgrids owned or operated by utilities can serve the distribution grid first and foremost as well as be a platform for new services for customers.

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How Developing World Is Pushing Innovation in Microgrid Space

Microgrids are being developed in mature industrial markets such as the U.S. to provide premium, high quality clean power to a broad array of customer segments, even more dramatic creativity is occurring on the business model front in developing world markets such as India, Africa and Iraq. Here are three companies moving the needle in terms of technological advances fueling new creative ways to control, finance and implement microgrids.

The first company is SimpliPhi, which got its start in 2002 developing off-grid portable power systems for Warner Brothers and Disney film shoots. The company’s portable power units – “libertypaks” - were used in locations as diverse as the Amazon and New York City. The company then found a home for its technology for the Marine Corp. in forward operating bases in Afghanistan and Iraq, relying upon lead acid batteries and diesel generators, optimized to reduce fuel consumption and save lives. 

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Public Utilities + Solar PV + Energy Storage = Win-Win

The stars appear to have aligned for distributed energy resources (DER) to play an increasingly important role in providing energy services to consumers. Some see this growth in capacity from devices such as solar photovoltaic (PV) panels, fuel cells, advanced batteries, and other forms of DER as the supreme threat to incumbent distribution utilities, echoing the much-ballyhooed “utility death spiral” story line. Others see this evolution as an opportunity for utilities to reinvent themselves, aligning their business strategy and business models with the emerging digital economy.

Either way, it is going to be a bumpy ride into the future. Yet there are signs that it is possible to create win-win scenarios by leveraging the diverse services that energy storage can provide. Advances in software that can optimize DER to provide bidirectional value along with the bridging capabilities that energy storage brings to the market can create order out of what would otherwise be chaos.

Is there a way for everyone to come out as winners? The key is intelligent distribution networks, an ecosystem of solutions that spans concepts such as nanogrids, microgrids, and virtual power plants (VPPs.) These three platforms were described in a previous blog

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Arctic Circle Hot Spot for Renewables

The market opportunity for remote, off-grid power is immense, as was verified in a report released late last year sizing this market including projects that met Navigant Research’s definitions of both nanogrids and microgrids. According to this analysis, the total value of the assets and services that could flow into this huge global market over the next ten years could reach more than $200 billion.

 

As was reported in a previous blog, one could make the argument that Alaska, sitting within the Arctic Circle, is a global leader on remote microgrids, with almost 140 such systems identified in the most recent version of the Microgrid Deployment Tracker representing over 900 MW of capacity. The vast majority of these remote microgrids incorporate some level of renewable energy. In fact, Kodiak Island reached nearly 100% renewable energy generation during 2014. Several local utilities have set goals ranging from 70 or 80% renewable penetration within the next 5 to 7 years

It turns out innovation on renewables and remote microgrids is not limited to Alaska. The Alaska Center for Energy and Power (ACEP) is co-leading a new program to be launched this summer for countries whose borders venture into the Arctic Circle. Dubbed the Arctic Renewable Energy Network Academy (ARENA) program, this program is a formal project under the US Chairmanship of the Arctic Council, with 4 of the 8 countries co-leading (so far), including Canada, Finland, and Iceland, along with the U.S. (Alaska). This program is designed to bring together practitioners from throughout the Arctic to learn from one another with the goal of increasing the number of hybrid-renewable energy systems installed across the Arctic.  “ARENA is focused on the Arctic now, but we are hoping to expand it to other regions in the future, if we are able to find some partners,” said Gwen Holdmann, ACEP director. 

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©2016 Peter Asmus. Photo credit: David Clites. Website by: IMManagers.com