Will Microgrids Threaten Utilities?

Most of us in the electric energy sector in the developed world tend to think of electricity as a basic human right, with instant availability at any hour. We are accustomed to having affordable, reliable electric service that's provided by highly interconnected power systems. Now we are moving toward more efficient service as a result of smart control of transmission and distribution systems, with smart metering offering new consumer services. For nearly a century, our prosperity and economic growth have depended on availability of reliable and affordable electricity.

Access to electric energy is an "indispensable element of sustainable human development," according to the International Energy Agency. Without access to modern, commercial energy, poor countries can be trapped in a vicious circle of poverty, social instability and underdevelopment. About 1.6 billion people -some 25 percent of the world's 6 billion-plus population - have no access to electricity.

Focusing on achieving safer and more equitable societies can expand economic opportunities for those living in such substandard conditions and the companies that can provide them with assistance. The best way to achieve these interlinked goals may well be through deployment of microgrids.

A microgrid is a system appropriate for community use. It is a composition of technologies including generation, storage, load management that depends on automation and energy efficiency.

The energy market in the United States is going through an evolution. New wind farms and solar farms have been contracted by major utilities to address increased energy requirements in California. Many wind advocates argue large-scale storage is the answer, but initial analysis has shown large-scale, bulk storage of electrical energy is problematic and expensive. An equally important concern is the construction of large-scale, long-distance transmission power lines to move power from remote bulk renewable resources into the urban areas that comprise the load centers.

We will soon see the emergence of economically viable electric distribution and operation systems occurring that are veiled to the utility. These are the microgrids of the future.

As the developing world solves its energy access problem using microgrids, the technicians specializing in them will eye this growing domestic market opportunity. Microgrids perform complex system-control functions, such as dynamically adding or removing new energy resources without modification of existing components; automating demand response; autonomous and self-healing operations; connecting to or isolating from the transmission grid in a seamless fashion; and managing reactive and active power according to the changing need of the loads. This is the very nature and operation of large utilities. They do this work every day, but not with respect to customer-owned assets.?

Individual microgrids can be viewed as cells that network to form a collaborative power system. Each cell addresses a local focus, yet is available to support adjacent cells with power generation for the purpose of demand response or failure recovery. The adjacent cell concept presents an opportunity for each microgrid operator to generate revenue by bidding excess generation capability into the wholesale energy market or potentially by collaborating directly with a neighboring cell.

A new service model will come, providing control to manage power stability by analyzing and orchestrating voltage level consistency, voltage frequency stability and the underlying power signal phase relationships. Providing control to manage the microgrid digital infrastructure and its associated distributed energy generation, storage and loads requires analyzing a broad set of operational parameters and system-wide state variables. These parameters include dynamic price and performance attributes of the distributed energy generation, as well as information reflecting the energy consumption, cost, and environmental and reliability desires of the distributed loads.

As national renewable energy integration efforts expand that are similar to the efforts described, technology deployments of large-penetration microgrids will mutually support each other across many states to meet their goals more economically and with less risk.

A new utility business model must evolve in response to microgrid emergence. Central renewable generation has a limited future if large-scale, cost-effective storage isn't found soon. That model embraces utility-owned microgrids.

Utilities must consider owning and operating consumer distribution assets, rather than allowing them to emerge invisibly to the grid.

The call for dynamic and distributed control methodologies, not only within microgrids but also across multiple networked microgrids, presents new technical challenges along with expanding economic opportunities. Energy production by distributed resources can provide stabilizing effects for the national power grid. 

However, integrating the management and control of distributed resources into large-scale renewable energy markets suggests that end-to-end control systems are needed to manage the assets in real time. Cell-based and network-based microgrids will evolve, creating an entirely new market for energy production and consumption. Achieving this modern power system goal will depend on existing state incentives but require the utility to consider its role. If microgrids are entirely owned by others, not utilities, the utility market will shrink.

Consumer ownership of renewable energy, electric vehicle storage and Internet-controlled building automation will force the utility to consider its role in the future. As microgrid development matures to address the energy poverty problems for developing countries, the domestic market will be seen as fertile soil for new opportunities. Microgrids will be owned by the consumer, completely invisible to the utility. 

The utility will note reduction in demand, day by day. Who will pay the asset costs? What will happen to electric rates? Which utilities will survive? A natural evolution toward microgrid deployment either owned by consumers or by utilities will result, each by their own accord. Remaining relevant in this future is up to the utility.

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