New York’s plan to bootstrap microgrid developments across the state has drawn a lot of interest from numerous players over the past few years. That includes universities and communities seeking to green their energy mix and keep the power on during future storms, utilities like Consolidated Edison that want to use distributed energy assets to support their grid needs, and grid giants like Siemens and General Electric that want to supply the technology to make it all happen.
Now it’s the target of a new breed of energy player -- the independent microgrid developer. That's the plan that utility and power generation giant Exelon and transmission project developer Anbaric laid out earlier this month, when they announced they’ve joined forces to develop microgrid projects in New York state.
The partners are now identifying customers for plans to develop five microgrid projects in Long Island, New York City and upstate, from 10 to 200 megawatts in size, at sites ranging from skyscrapers, hospitals and factories to universities and municipalities. And unlike almost all the microgrids that have been built so far, these new projects will be integral parts of the state’s broader electricity grid and energy markets, Anbaric CEO Ed Krapels told me in an interview this week.
“Let’s start with the proposition that every energy or electricity contract is a bundle of values,” he said. “There are energy prices, capacity requirements, all the ancillary services. Our starting point is that some areas will lend themselves well to the development of a different form, a different organization, than we’ve seen in the past. That’s what we’re calling a microgrid.”
In other words, “the foundational principal of all of our microgrids is that they’re in the utility system,” he said. “We’re not a believer in islanded microgrids” -- although keeping critical facilities up and running during storms or blackouts will be an important role they can play. But that's just the starting point for building a "dispatch stack" of services these microgrids can provide to the local distribution utilities they're connected to, as well as the markets run by grid operator NYISO.
Anbaric has developed several major transmission projects in New York and New England, but new power lines aren’t going to meet all the region’s energy needs, he said. “Non-transmission alternatives” like microgrids could help avoid or defer expensive grid investments, which is how Con Ed is justifying its plan to replace about $1 billion in substation upgrades in Brooklyn with a set of investments in utility-owned and independently operated distributed energy resources.
Microgrids could also aggregate and optimize the value of distributed energy resources (DERs), whether that’s distributed generation fromsolarPV to backup generators, energy efficiency and demand response capabilities that reduce consumption to match grid needs, or energy storage systems that bank and deliver power to manage peak capacity constraints or keep the power on during grid emergencies.
Part of the challenge is creating a technology platform that can optimize that interplay. “We can provide the operating system to allow hundreds of microgrids to ‘plug and play,’ like Microsoft and Apple provide software platforms and apps,” he said -- a task that could be helped along by systems like the microgrid controller that Commonwealth Edison, the Chicago-area utility owned by Exelon, is developing with a Department of Energy grant.
That's also important for turning these aggregated microgrid capabilities into grid value. New York’s Reforming the Energy Vision (REV) proceeding is attempting to transform energy regulations to allow distributed energy resources to play an integral role in the state's energy markets. But Anbaric and Exelon are planning to create microgrids that can work within the existing regulatory construct, rather than waiting for the REV process to unfold before starting, Krapels said.
At the same time, Anbaric and Exelon want to play a role in one of New York's early-stage efforts to study what microgrid services are worth on a broader scale: the New York Prize community microgrid competition, which is providing up to $40 million in state funding to support feasibility studies for up to 30 community microgrid projects in grid-constrained parts of the state. Earlier this month, New York started accepting proposals for projects seeking a share of that prize money earlier this month, and Anbaric and Exelon are now in the process of submitting proposals to the competition, he said.
One big question for independent microgrid developers is whether they'll be welcomed by the utilities they’re being connected to. Exelon doesn’t own distribution utilities in New York, allowing it to operate as an unregulated energy company. That could put it in competition with Con Ed and other New York utilities that are looking to develop their own microgrid-as-a-service offerings, paid for through customer rate cases.
“Our guiding principle in doing this is to always work with and be respectful of the local utility,” Krapels said. “I think Con Ed is pretty open and self-confident about its ability to manage microgrids developed by other people, because they’ve done it for years." New York state has two dozen microgrids built around combined heat and power (CHP) systems for hospitals, universities and large-scale housing and commercial developments like Co-Op City in the Bronx, for example.
At the same time, the new breed of microgrid that Anbaric and Exelon are envisioning will likely require more complex contracts and ongoing operations agreements than those governing traditional CHP-based systems, he said. “What I think will happen is that microgrid operators everywhere will negotiate arrangements with existing utilities, under the supervision of the utilities,” he said. “And there will be settlements, and some the utility will be happier with than others.”
As for how the partners will work with microgrid systems vendors such as Siemens and General Electric, "we would be their customer," he said. "They’re trying to figure out who might want to put their arms around the whole thing, and promise security, stability and performance," which is the role that Anbaric and Exelon want to play. “We are the responsible party from a financial point of view, and we manage all those assurance relationships with the vendor if something goes wrong.”
All of this presumes that Anbaric and Exelon will be able to deliver on a long list of complicated tasks that go into making a successful microgrid. These include financing the installation or assuming the ownership of existing on-site energy systems, knitting them into an integrated whole, keeping them running smoothly for decades, ensuring the energy savings and reliability that individual sites demand, and successfully delivering the grid-facing services that will bring in additional revenues to bolster the business case.
In other words, for this new microgrid model to move from concept to reality, “we have to prove that a microgrid is better than traditional deployment,” he said, “and we have to bring sufficient proof to get people to sign a contract.”