A newly launched effort of BAE Systems that's employing one of San Diego Gas & Electric's former smart grid gurus is now seeking to build and own "microgrid" projects across the country.

Balance Energy is a San Diego-based initiative of the U.S. arm of British defense contractor BAE Systems PLC. Though it has a short history, it launched its plans with great fanfare Tuesday in an after-hours presentation at the GridWeek conference in Washington, D.C.

"We supply end customers with renewable energy, and package it up into a microgrid," Terry Mohn, Balance Energy's chief innovation officer, said Tuesday.

Mohn until recently held the title of Technology Strategist for Sempra Energy, the parent company of utility San Diego Gas & Electric (see Smart Grid Q&A: Terry Mohn).  

So perhaps it's not surprising that Balance Energy's first project is intended to be with San Diego Gas & Electric.

Mohn described it as a $212 million project aimed at providing the University of California at San Diego with its own microgrid – a self-contained electricity generation and distribution system that can serve as an island of stability amidst a wider-scale power grid.

San Diego Gas & Electric is seeking a $100 million Department of Energy smart grid grant for the project. That grant would include grid-scale battery storage and homes equipped with networked energy-saving devices and includes SAIC, Qualcomm, Intel, IBM, Cisco, General Electric, and U.C. San Diego.

U.C. San Diego would serve as a test-bed for Balance Energy, Mohr said. But he'd like to see the model replicated at college campuses, business parks and other entities that could see a value in insulating themselves from the grid's fluctuations in energy prices and reliability.

Siemens and startup Viridity Energy have said they'll partner on such projects, and Duke Energy is working on a microgrid pilot project in its headquarters city of Charlotte, N.C., which it calls a "virtual power plant" linking solar power, battery storage and homes linked with smart meters and in-home energy control networks (see Sequentric Working on Duke Pilot Project).

Some of them have already received funding from the DOE. Fort Collins, Colo. has landed $4.8 million in smart grid demonstration grants for its FortZED project, which stands for Fort Collins Zero Energy District (see Green Light post). And the Illinois Institute of Technology is getting $5.4 million for a similar project at its Chicago campus, which it calls a "perfect power prototype." (See DOE Hands Out $47M For Smart Grid Demos).

But those projects were already slated to receive their funding. Newly announced projects, on the other hand, have already asked for far more money collectively than the $3.9 billion that the DOE has available, meaning that competition for funding will be fierce (see Green Light post).

San Diego Gas & Electric has already asked the DOE for $30 million to build a utility-wide communications network – and while it has an impressive list of partners for both proposed projects, so do many other applicants (see Green Light post).

BAE, for its part, joins fellow defense contractors Lockheed Martin, Raytheon and Boeing that are entering the smart grid space, though those companies have primarily cast themselves as system integrators and providers of security for smart grid deployments (see Defense Contractors Pursue the Smart Grid).

Still, microgrid projects seem to be a natural for military contractors, since military bases could be seen as one of the "critical assets" that need to keep the power on in case of natural disruption or intentional attack.

Lockheed has said it is working on several microgrid projects, and the Department of Defense has given General Electric $2 million to build a microgrid for the U.S. Marine Corps base in Twentynine Palms, Calif. (see Green Light post).

Interact with smart grid industry visionaries from North American utilities, innovative hardware and software vendors and leading industry consortiums at The Networked Grid on November 4 in San Francisco.