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.

Why Finland May Be Europe's Best Market for Microgrids

While Europe is often held up as a global leader in moving toward a low-carbon energy future, the tightly regulated European Union (EU) markets have several features which severely limit development of microgrids:

·         The focus has been on large-scale renewable energy development such as offshore wind, which requires massive investment in transmission infrastructure.

·         Deployment of distributed energy resources (DER) such as rooftop solar PV has primarily been based on feed-in tariffs (FIT), a business model precluding the key defining feature of a microgrid – the ability to seal off resources from the larger grid via islanding.

·         EU markets are tightly interwoven and methods to address the variability of renewables such as wind and solar lean toward cross-border trading, not localized microgrids.

As the forthcoming update to the Microgrid Deployment Tracker demonstrates, Europe represents approximately 9% of the global microgrid market. The vast majority of microgrids deployed in Europe are on actually islands in the Mediterranean, the Canary Islands off the coast of Spain or projects such as Bornholm or the Faroe Islands of Denmark.

I recently attended the International Symposium on Microgridsin Newcastle, Australia at the CSIRO Energy Centre. One could argue that Australia, is the current global hot spot for commercialization of the Energy Cloud ecosystem. (I have certainly made that argument in the past.)

But perhaps the most surprisingly revelation at the conference was this: a unique confluence of factors make Finland the best opportunity for microgrids in Europe. Finland is not only the global leader on smart meter deployments, with 99% of its 3.5 million customers having access to this technology, it has a deregulated wholesale and retail market that features 83 distribution system operators (DSOs), with the largest distribution networks comprised of 200,000 customers.

Unlike its neighbors, Sweden and Norway, Finland lacks massive hydroelectric resources. What hydro it does have tends to be run-of-the-river systems, and some of the smaller scale systems are microgrid-friendly. But most importantly, Finland is a country that does not fully share the stellar reliability that is associated with the E.U. grid. During blackouts in 2011 and 2012, as many as 570,000 customers lost power for an extended period of time. This outage brought up the issue of the vulnerability of the Finland grid to winter storms due to overhead lines running through deeply forested regions of Finland which can sag from snow.

In a quick response to these power outages, new regulations have been put in place which limit power outages to 6 hours annually for urban residents and 36 hours for rural customers by 2028. In a policy that would likely scare utilities in the U.S., DSO’s are required to compensate customers for power outages. If a power outage lasts longer than 12 hours, the DSO must pay the customer 10% of its annual distribution fee, and compensation goes gradually up to a maximum of 200% with interruptions longer than 288 hours.

Most DSO’s first option to respond to these new reliability regulations is to place distribution lines underground. However, that can be expensive, especially given the low density of some DSO customer bases. According to research performed by Lappeeranta University of Technology (LUT), the lowest cost option for 10 to 40% of the medium voltage branch lines would be low-voltage direct current microgrids. One such LVDC microgrid project, developed by LUT in collaboration with DSOSuur-Savon Sähkö, was developed in 2012, incorporating solar PV and batteries. Though only one other microgrid currently is operating, Finland represents an ideal market for utility distribution microgrids.

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