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.

Paris Postcard: Can the Developing World Do Its Part to Slow Climate Change?

With negotiators gathering in Paris Climate Summit this week, talks will likely be dominated by the need for mega-projects of scale to help stem the rise in global temperatures linked to our deep addiction to fossil fuels. Though there is no doubt that developed economies such as Europe will need large off-shore wind farms in the North Sea and equally massive solar farms in North Africa to reach existing targets, a much more interesting question is this: How can the developing world contribute, given the fiscal challenges facing the Bottom of the Pyramid (BOP) populations?

A quick answer: Through a major scaling up of both remote microgrids and nanogrids.

In a forthcoming report, Navigant Research forecasts the size for both of these off-grid networking platforms designed to increase renewable energy content for off-grid power. Ironically enough, it is here, in the deep jungles near the Equator or the frozen tundra of Siberia, where renewable energy resources such as solar and wind actually reduce energy costs. 

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Will One Company Conquer the Distributed Energy Space?

I have often suggested that I don’t see any single company ever dominating the distributed energy space with networking platforms such as microgrids. My recent Microgrid Leaderboard report, which ranks microgrid developers/integrators that offer their own distributed energy resource (DER) controls platform, underscores this point. All 15 companies that were ranked were, in the very least, contenders, with only three emerging as leaders according to this report’s criteria.

Some disagree. After this report was released, General Electric made a major announcement that raised some eyebrows, launching a new company called “Current,” an aggregation of existing business units currently valued at $1 billion. Jan Vrins, global energy practice leader here at Navigant, suggested in a recent blog this move positions GE in a role of the “network orchestrator,” a business model that may prove to be the most profitable over the long term.

Current is designed to bundle previously disparate business lines offering LED lights, solar PV, energy storage and electric vehicles into a single start-up located within the walls of GE.. Many in the industry are curious as to how this will play out, among them yours truly.

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Transactive Energy: Up in the Cloud with Virtual Power Plants

Much has been made of how changes in the way energy is bought, sold, and managed could spell trouble for utilities.  This is also known as the much ballyhooed theory of the utility death spiral.  Though some dinosaurs may indeed fail, the vast majority of utilities will still be around for quite some time.  Those who will profit the most will be those who understand – sooner rather than later – how new technologies and new markets are transforming the electricity business.

The evolution of energy markets is accelerating in the direction of a greater reliance upon distributed energy resources (DER).  The technologies and new frameworks necessary to manage this increasing two-way complexity remain unclear.  Nevertheless, successful strategies are being deployed today all over the globe.  One such strategy is a virtual power plant (VPP).

VPPs can be viewed as one manifestation of the concept of transactive energy, whereby new technologies such as demand response (DR), solar photovoltaic (PV) systems, advanced batteries, and electric vehicles (EVs) are transforming formerly passive consumers into active prosumers. At the beginning of this year, the GridWise Architecture Council defined transactive energy in the following way:

“Transactive energy refers to technologies managing the generation, consumption or flow of electric power within an electric power system through the use of economic or market-based constructs while considering electric reliability constraints. The term “transactive” comes from considering that decisions are made based on value. The decisions made may be analogous to or literally economic transactions.”

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Microgrids: From Apples to Oranges

The chief challenge with putting together the recently published Leaderboard report on microgrids -- our first ranking of companies active in the microgrid market -- was trying to develop an apples-to-apples comparison. I tried to narrow the field to just developers and integrators with their own controls platforms, but there were still lots of grey areas.

What if we were to turn the general assumption for our leaderboard format on its head? In other words, why not an apples to oranges listing? In this blog, I will go out on a limb and highlight three companies not included in our leaderboard report, but which I think deserves special mention due to their near-term impacts on the overall global microgrid market, regardless of what their role is in this market. In my last blog, I already highlighted two companies, a utility (Commonwealth Edison) and an energy storage and smart grid innovator (S&C Electric) not included in the Leaderboard, both being disqualified for inclusion since the ranking excluded utilities and vendors primarily focused on energy storage integration. 

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Locavolts Unite: Volume I: Fun Facts on Wind Power, Manufacturer Energy Costs, Nuclear Power and Drones

The traditional argument has always been the being green is great, but it costs more. That basic assumption is being turned on its head these days on a variety of fronts.

Here’s just one example. The much ballyhooed federal Environmental Protection Agency (EPA)’s ‘Clean Power Plan” has been assailed by the fossil fuel industry – especially coal – as a disaster for the economy. Consumers would bear the brunt of this transition to cleaner power sources, and our fragile economic recovery would also be jeopardized.

Yet a recent study shows that the cost of natural gas – which currently supplies roughly 58% of California’s electricity supply – would go down, not up, if wind power is substituted for traditional polluting fuels. In fact, the benefit could add up to $20 billion nationwide every year

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Is My Market Forecast Better Than Yours?

My life as an industry research analyst is filled with angst. I get paid for predicting the future, but when microgrids are popping up like mushrooms in places unimagined just a few years ago, how does one stand by one’s Excel spreadsheet?

The issue of the validity of market forecasts came to light recently when Microgrid Knowledge highlighted the wildly differing projections about future market growth for microgrids. It is clear that the ways in which one can size up the microgrid market depends not only on definitions, but also on the robustness of data as well as assumptions as to what counts as potential revenue.

Whereas in some industries there is publicly available data about the number of widgets being sold in world markets, the situation is very different when it comes to microgrids. Consider this: a microgrid is not a single technology. It is a collection of diverse resources that can be deployed for a variety of applications in all shapes and sizes. It can be a relatively simple solar PV system with a lead-acid battery serving an isolated community in the tropics or it can be a large-scale system incorporating utility-scale wind turbines in the frigid outskirts of Alaska wilderness.

When it comes to grid-tied systems, quantifying the potential revenue flowing from deployments is equally problematic. A microgrid designed for military base may have very different costs than one designed to serve mixed customer classes in the name of community resiliency.

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Just Like Hot Dogs, Chicago-Style Microgrids Unique

The market for microgrids is evolving, with many utilities shifting their stance from curious bystanders to active participants. Utilities ranging from Duke Energy to San Diego Gas & Electric are building microgrids, with many others scratching their collective heads as they try to figure out what their role might be.

If we take a bird’s eye view, the East Coast seems to be the hot bed for regulatory reforms to enable microgrids primarily in a deregulated policy environment – i.e. the New York Prize funding for 83 projects being the prime example. California is more focused on long-term planning for a rich variety of distributed energy resources (DER.) The country’s heartland is taking yet a different approach, with microgrids that have much more in common with a utility smart grid innovation.

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Novel Direct Current Architectures Face Challenges in New York, California

If I had to pick two states that are leading the charge on reinventing electric utilities they would be New York and California. Yet even in these state laboratories of regulatory reform, new novel forms of distribution networks often referred to as “microgrids” that rely upon the inherent advantages of direct current are facing obstacles.

The core challenge facing DC distribution networks lies with the need for standards and open grid architectures that can help integrate the increasing diversity of resources being plugged into retail power grids.  This, among other issues, is the focus of the first major conference sponsored by the Institute of Electrical Energy Engineers (IEEE) on DC distribution networks taking place in Atlanta, Georgia on June 7-10th of this year.

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As Goes California, So Goes the Nation - Not!

Living in California, it’s easy to forget that the rest of the world doesn’t always see things in the same way.  Given the ambitious energy and climate change goals outlined in Governor Brown’s inaugural address, on January 5th, this divergence may only grow.

What exactly did the governor propose?  Here is a snapshot summary of targets he set for the state by 2030:

  • Increase from one-third to 50% the portion of the state’s electricity derived from renewable sources
  • Reduce today's petroleum use in cars and trucks by up to 50%
  • Double the efficiency of energy use in existing buildings while also making building heating fuels cleaner.

For investors in and developers of innovative clean energy, transportation, and building technologies, Brown’s targets mean that, more than ever, California will lead the United States in terms of technology development and commercialization of renewable energy, electric vehicles, and smart building automation products. 

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Alaska: World's Market Leader on Microgrids

Rather than viewing microgrids as a threat to public safety due to intentional islanding and/or departing customer load on long-term revenue projections, a small, but growing number of utilities view the microgrid they may own and operate – a utility distribution microgrid (UDM) – as the next logical extension of their efforts to deploy smart grid technology. As I’ve noted earlier, the developed world can learn interesting lessons from the developing world.

Navigant Research’s base scenario shows that the total UDM market represents over $2.4 billion of economic activity today, with the bulk of this investment flowing into projects located in the Asia Pacific region. As has been noted in other Navigant Research reports, North America is the overall market leader. Yet when it comes to utilities, both Asia Pacific and Europe are ahead in near-term deployments and related implementation revenues. All told, this UDM market is forecasted to reach $5.8 billion under the base scenario in 2023, revenue compounded annual growth rate (CAGR) of 10.2%.

However, there is one important exception to this market generalization: Alaska.

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