Microgrids help resilience and solar energy is the cheapest and fastest energy to develop now, but the temptation to redevelop in the old model is strong. Standardization is needed.
Reuters on Monday reported 80% of the island’s power lines are down, and the island is on the brink of a humanitarian crisis. Acccording to the U.S. Energy Information Administration, last year almost half of Puerto Rico’s electricity came from petroleum, more than a third from natural gas, and 17% from coal. Just 2% came from renewable energy.
Modernization has been difficult, as the utility has struggled to manage billions in debt.
“A far more sensible approach — and one that will help the commonwealth recover from its broader financial and fiscal problems while modernizing its costly and outdated electricity system — would be for Puerto Rico to embrace the potential in its abundant solar resources,” said Sanzillo. “Solar energy is cheaper and more resilient. It is a natural fit for a sunny island, and it offers a level of energy security to the commonwealth that it has historically lacked.”
Acccording to the U.S. Energy Information Administration, last year almost half of Puerto Rico’s electricity came from petroleum, more than a third from natural gas, and 17% from coal. Just 2% came from renewable energy.
Modernization has been difficult, as the utility has struggled to manage billions in debt.
“A far more sensible approach — and one that will help the commonwealth recover from its broader financial and fiscal problems while modernizing its costly and outdated electricity system — would be for Puerto Rico to embrace the potential in its abundant solar resources,” said Sanzillo. “Solar energy is cheaper and more resilient. It is a natural fit for a sunny island, and it offers a level of energy security to the commonwealth that it has historically lacked.”
“We also need to invest in clean energy solutions and microgrids that not only protect communities when the centralized grid goes down, but also helps reduce global warming emissions from the electric system,” Clemmer said. “It’s critical that we protect critical infrastructure and vulnerable populations so they’re not left in the dark when these storm hit.”
Clemmer said many states have undertaken grid hardening efforts, particularly in the wake of large disruptive storms.
- Florida’s SunSmart E-Shelters Program supported the installation of solar+storage systems at schools, allowing them to act as emergency shelters. Massachusetts’ Community Clean Energy Resiliency Initiative and New Jersey’s Renewable Electric Storage Initiative are both looking to better support critical resources.
- Following Hurricane Sandy in 2012, the New York State Public Service Commission directed Consolidated Edison to study its system’s vulnerability to climate change.
“A lot of these technologies, processes or solutions, were developed following previous storms,” said Aaronson. “The storm that was perhaps best teacher, in recent memory, was Sandy. And a lot of things you’re seeing from a grid hardening perspective were investments made not long after the devastation from that storm.”
But microgrids, particularly solar generation linked with storage, are unlikely to be quickly installed in areas most significantly impacted by storms. Clemmer said their value is most often considered as standalone microgrids that can function alongside the traditional grid.
“In areas that are directly hit by these storms, where there is a lot of devastation and buildings destroyed, it’s unlikely you’ll be able to provide power to those places,” Clemmer said. “But where they will be beneficial is in areas affected by the outages that are nearby — not sustaining as much damage, but because when the broader grid is down these systems can provide a lot of value.”
Customers seek backup diesel
One solution many customers look to, from residential to industrial and large commercial users, is backup diesel generation. But Clemmer said during Sandy, those systems had failure rates in excess of 50%, the units can face fuel supply issues, and they’re polluting.
That was the case on Ocracoke Island over the summer, where a 3 MW diesel generator that is part of the community’s microgrid failed during an outage.
“Microgrids also provide value when there is not an emergency,” Clemmer said. “Solar PV provides value year-round, even when there is not a catastrophic event. Diesel generators are typically just used when there is an emergency.”
But Aaronson cautioned that distributed resources alone would not provide a solution to storm outages. “A lot of those distributed resources are held up to be some sort of panacea … I’d caution that distributed resources play a part in resilience, but by themselves are not inherently resilient,” he said.
Utilities in Georgia and Florida brought a combined workforce of 60,000 to restore power to almost 8 million customers, he noted.
“You see the value of the grid itself, as a backbone for all of these other technologies,” said Aaronson. “And then if you layer some of these technologies, whether its storage or distributed generation or microgrids, you then see their value to supporting the broader ecosystem. But they are not a panacea in their own right.”
http://www.utilitydive.com/news/mission-impossible-how-utilities-are-minimizing-disruptions-from-inevitabl/505351/
San Francisco studying solar-plus-storage systems to boost local resiliency
- San Francisco city officials are considering installing solar-plus-storage systems at as many as 12 community buildings, the San Francisco Examiner reports.
- Backers of the proposed project say the installations would be designed to provide energy for critical loads for up to five days to help the city survive a major disaster, such as an earthquake.
- Whether or not the city moves forward with the project could depend on costs. Consulting group Arup, hired to study the viability of the solar-plus-storage systems, put the price tag at $40 million.
Much of San Francisco’s current resiliency planning relies on diesel generators to provide electricity should the city be hit by a disaster. But obtaining fuel for those generators could be difficult during a major disaster that disrupts supply chains.
According to a three year study funded with $1.3 million from the Department of Energy and $300,000 in San Francisco city funds, solar-plus-storage installations at community centers would provide fuel-free backup power for critical services such as refrigeration for medical supplies, lighting for shelters, and communications.
It is still unclear, however, how the city would pay for the proposed installations. The $40 million price tag could be reduced to about $26 million, if the city can find a private sector partner for the installations.
“We are still looking forward to working collaboratively with our fellow city agencies to think about how implementation of these projects might fit into the city’s bigger picture around emergency response, resiliency and also bringing more renewables onto our grid,” Department of the Environment spokesperson Peter Gallotta told the Examiner.
Recommended Reading: San Francisco Examiner Study: $40M to install solar-plus-storage systems at 12 SF sites for seismic resiliency
Mini-grids have had their fair share of hype in recent years, so a measure of skepticism is warranted, especially when you consider the multiple challenges that have prevented them from scaling: access to affordable capital, uncertain policies, unpredictable consumption patterns, complex community dynamics, currency risk, high transaction costs for investors, etc. In the words of Frank Bergh, vice president at Sigora International: “A start-up utility is still a jumbo shrimp.”
For the sector to go mainstream, what’s needed for scale can be boiled down to one word: standardization. It’s a boring word, but let’s face it, the energy sector is a subsidized infrastructure business that provides a public good. Access to power can enable many amazing things, but the business of making, moving and selling electrons itself is not particularly sexy. To get to sexy (i.e. reaping the dividends of access to electricity such as improved health and education, greater gender equality, access to clean water or powering enterprise), mini-grids must first scale, and that means sector-building through standardization.
Standardization is needed in (at least) the following 5 areas and, as we explore in the September 2017 newsletter, each one of them is currently being addressed to varying degrees. If it all plays out accordingly, 2018 is shaping up to be a year where the pieces fall into place for scale to start to occur, and for mini-grids to take a central place in the race to end electricity poverty for 1 billion people. “The future of rural electrification is at a tipping point,” says Vivian Vendeirinho, managing director of RVE.SOL and Alliance of Rural Electrification board member. “The private sector can drive the needed change if perceived positively by governments.” Which segues nicely to our list of 5 focus areas:
Messaging and Data: what is a mini-grid? Depending on where you go, you still get different answers. In India, a micro-grid is smaller than a mini-grid, which is different from many other countries, where micro-grids are much larger, often captive systems. Then there are also nano-grids or pico-grids. Some developers refer to themselves as a micro-utility or just a private utility. Yet others suggest “standalone rural electrification grids”. Whatever you call yourself, a sector is only going to scale if it is clearly defined. What are we? What level and type of service do we provide? If the sector isn’t consistent, financial and policy support won’t be either. Just as important, if not more so, is a huge void in useful data, whether it be market size, location of current grids or performance data (see our new infographic). “We need a whole lot more focus on the messaging,” says PowerGen CEO Sam Slaughter, a founding member of the new Africa Mini-grid Developer Association (see our interview with him for more on AMDA). He adds: “There is a lack of information in our sector around what is the current situation on the ground.”
Subsidy Parity: “Public finance is going to be necessary for the long term. Mini-grids are not just about productive use, but about access, which is a public service,” said Xavier Vallve, director of Trama TecnoAmbiental. It’s relatively simple for regulators to figure out how to create parity between subsidies for capital expenditures (CAPEX) made by private developers to build mini-grids, and CAPEX subsidies for the centralized grid. In India for example, mini-grids have been receiving a 30% CAPEX subsidy. How to do the same for operational expenses (OPEX, or the ongoing cost of running a business) is another question altogether. As Slaughter stresses in our interview: “We’re not seeking new subsidies, but to benefit from subsidies that public utilities already benefit from. We want to convince large donors and the governments they support that it is in their interest to subsidize not only the public utilities, which they currently do to a pretty extreme degree, but make that funding similarly available to private utilities to create a more multi-polar power landscape.”
Technology: Today, every mini-grid developer starts from scratch and builds its own design. While customization will inevitably be needed in some cases such as bigger systems, there is huge room for reducing costs through establishing global technology standards and standardizing system configurations. “The smaller the system, the more it makes sense to standardize, which results in high profit increases for systems between 50 kWp and 2000 kWp. For mini-grid systems, this increase would be even more dramatic,” says Martin Baart, CEO of ecoligo. Already, such initiatives as the Rockefeller Foundation-funded research on “Utility in a Box” is driving down CAPEX considerably. And even if there is ultimately no one-size fits all technology solution, there is “much more opportunity for technology standardization than is being exploited in the market today”, says Alexia Kelly, CEO of the Microgrid Investment Accelerator (MIA).
Policy: Countries like India and Nigeria, together home to about 40% of the roughly 1 billion people globally without electricity, are stepping up with national mini-grid policies (see a more detailed look here in our September newsletter), as are some sub-national governments, helping to end doubt around tariffs, grid extension and oversight. The mini-grid sector, through collective action and pro-active engagement with regulators and policy-makers, must work to get other countries do the same. “Policy, regulatory and enabling environment are critical and will continue to be,” says MIA’s Kelly.
Finance: Finally, the lack of the above 4 standardizations has left commercial capital almost completely on the sidelines. But exciting developments (discussed in our newsletter here) are taking place that offer a uniform platform to standardize projects for investors, developers and vendors. And important new vehicles like MIA are emerging to prime the pump for bigger ticket investments.
Learn more in the newsletter, and if you have thoughts please share them with us at [email protected]