Last week, S&C Electric Company, the big Chicago-based provider of grid-switching and protection gear, communications, and battery systems, acquired IPERC, a New York-based maker of military-grade microgrid software and control devices. The purchase was made for an undisclosed sum. This week, we caught up with the two companies to learn more about the partnership and how the two companies' technologies fit into the mix of hardware, communications and software that goes into running a modern-day microgrid.
S&C rarely buys other companies, but it has worked with IPERC, or Intelligent Power & Energy Research Corporation, for more than half a decade, and they’ve been co-developing projects for more than a year, said CEO Kyle Seymour, in a Tuesday interview. That makes their relationship more of an old-fashioned courtship, versus a whirlwind romance.
This isn't the biggest microgrid M&A deal we've seen -- Southern Company's $431 million acquisition of Power Secure takes that prize, to the best of our knowledge. Still, it represents an interesting crossover of two key categories of technologies required to make microgrids work.
“We’ve always done microgrids in some form or fashion over the years,” whether at hospitals, colleges, or military installations, he said -- a market the company shares with larger grid equipment providers such as Siemens, General Electric, Hitachi and Schneider Electric. “But the advent of distributed energy, with renewables and energystorage has kind of kicked it into high gear.”
GTM Research projects that U.S. microgrid capacity will reach 4.3 gigawatts by 2021, making for a rapidly growing market. A significant portion of that will be made up of legacy combined-heat-and-power (CHP) systems, and still more will have fossil-fuel-fired backup generation as an anchor generation resource. But the more advanced customers are looking at solar PV, batteries, plug-in electric vehicles and other distributed energy resources (DERs) to play a role.
“We made it a strategic priority a couple of years ago to build a business around microgrids,” said Seymour. “One of the things we were missing in that is the microgrid controller” -- a term that includes the software to monitor, manage and control the generators, batteries, circuits and other pieces that make up a modern-day microgrid.
IPERC got its start in 2004 developing hardware and software to support power supplies for military command posts and supply depots, mobile sites that “at the drop of a pin, have to move to different locations and reconfigure," said CEO Darrell Massie. That forced the company to work outside the centralized server framework used by many other microgrid controllers, enlisting "swarm intelligence" to enable each device to share its data and computational capabilities with the others in the network. “Each of our controllers works on its own and acts like a colony of bees,” he said.
That work led to more stationary projects at Joint Base Pearl Harbor-Hickam and Camp Smith in Hawaii and Fort Carson in Colorado, under the DOD’s Smart Power Infrastructure Demonstration for Energy Reliability and Security (SPIDERS) program. The program has been a major channel for military microgrid developments over the past few years. These are complex low- and medium-voltage projects, with multiple interfaces to the grid, scores of generators and critical loads to back up, and a legacy of outdated software and control gear to integrate with, Massie said.
“These are not cookie-cutter systems -- they’ve been kludged together by their owners over the years,” he said. At the same time, the military is highly sensitive to risk, and willing to pay for the redundancy and resiliency to reduce it. “Some of our projects include high-level command posts, nuclear command authorities. These folks just can’t lose power. If they lose it for a blip, they get excited,” he said. On the civilian side, “We’ve done a wastewater treatment plant, and they know if they lose power for 5 minutes, they’ll get an EPA fine of $50,000.”
It's not cheap to set up your building or campus to power itself. A good rule of thumb is that it would be at least $1 million per megawatt of load being supported, based on the costs of generation, integration and management. “There are just a ton of projects out there to be quoted, but the translation into real orders and products is a small subset of that,” Seymour said.
Going to market with IPERC has helped reduce complexity and improve efficiency in separating the wheat from the chaff, and either one may serve as the prime contractor for the deals they put together, he said. S&C isn’t looking at a “microgrid-as-a-service” type offering at present, he added. But it is working with IPERC on projects involving complex ownership and responsibility structures, such as military bases that have more than 40 official partners involved.
“Our largest share of business is still on the main grid,” he noted -- S&C provides its gear for utilities around the world. This helps it manage the microgrid-grid interface on behalf of commercial and industrial customers, municipalities and military bases. At the same time, some of its microgrid work has been with utilities, as with its participation in Oncor’s project in Texas.
“But what we see over time is a blurring of the lines between the main grid and the interconnected microgrids, depending on who owns them, who operates them, and how they interact with each other,” he said. “It’s important for us to be on both sides of that as that future structure emerges.”