Microgrids For Facility Power

Look to ESCOs when evaluating feasibility of this distributed energy resource for your site.

By Dr. Timothy D. Unruh
From the August 2021 Issue

When an unexpectedly fierce winter storm blew over Texas in February 2021 it turned the sunny plains into tundra, and nearly collapsed the state’s electrical grid. A subsequent report from the University of Houston estimates 69% of Lone Star State residents lost their heat and light, and 49% lost running water during the days-long saga. The full impact is still uncertain, but includes at least 210 lost lives and perhaps $200 billion to $300 billion in economic damage.

The extreme weather events of recent years and their attendant energy disruptions have impacted tens of millions of Americans nationwide, and most recently in the Pacific Northwest, where record high June temperatures this year precipitated rolling blackouts.

(Photos: Getty Images / Petovarga)

Extraordinary storms are now becoming ordinary, and with the acceleration of climate change more will need to be done to strengthen the grid against weather-induced failures. Managers of mission critical facilities need to go a step further by assuming breakdowns will occur and planning how to maintain continuity of operations within their facilities.

Backup power equipment is now commonplace in most significant facilities, but additional protection can be attained through a smart microgrid that coordinates facility energy consumption and manages demand across a campus.

As defined by the U.S. Department of Energy (DOE): A microgrid is a network of distributed energy resources and loads that can disconnect and re-connect to the larger utility grid as a single entity, allowing the connected loads to be served during utility outages. Microgrids can also be found in remote locations where they may not be connected to a larger grid. Some standby/backup generators are configured to connect/disconnect and operate independently from the utility grid during an outage.¹

A typical use case might involve a university campus that draws 10 MW of power from the larger distribution grid during normal operations and has a backup power system complete with diesel generators, on-site solar panels, and battery storage that together comprise 5 MW of capacity. A microgrid in this context would add a layer of automated efficiency so that, in the event of an outage, low-priority users like stadium lighting would automatically be disconnected from the backup system as power is rerouted to where it’s needed at the cafeteria, dormitories, and other integrated facilities where uninterruptible performance is critical.

Backup power systems in their own right are an important investment, although it would be cost prohibitive to stockpile enough generators to supply every building and device on campus. Instead, the microgrid concept uses resources more efficiently on both the supply and consumption sides to ensure that facilities can maintain operations. Benefits on the supply side can include the installation of new variable renewable power assets or limited capacity clean energy storage systems and coordination with other distributed energy resources (DERs) already in place for standby power or distribution. On the consumption side, smart building controls help microgrids better manage system loads and further reduce power use, generating operational energy savings under normal conditions while shoring-up resilience against unanticipated disruptions.

Evaluating Feasibility Of Microgrid

Owners that stand to benefit from a microgrid may face uncertainty about budgetary impacts. Financial mechanisms commonly used by government organizations could provide one solution.

Public facilities have a long history of using Energy Savings Performance Contracts (ESPCs), which can leverage the future energy savings of a microgrid to finance over a fixed contract term the facility upgrades needed to develop, integrate and operationalize it. These performance contracts are organized with Energy Service Companies (ESCOs), which provide both the financial guarantee to lenders that future operational energy and maintenance savings will cover the asset’s lifecycle costs, including the services needed to implement the installation and operation of a microgrid.

Though similar to backup power systems there are circumstances in which a microgrid may not be the appropriate solution for achieving an institution’s building energy efficiency, reliability, and resilience goals. In other words, there are scenarios where the energy and maintenance savings a microgrid installation would accrue are insufficient to cover the project’s life cycle costs.

Facility managers should consider working with an accredited ESCO to address the particulars of their goals, specifically whether their target energy efficiency, reliability, and resilience enhancements can be met by augmenting existing backup power systems or installing new ones altogether.

To that end, prospective parties must make three basic determinations for their backup power system: the size of their ordinary operational loads, the minimum load necessary to maintain mission delivery during utility outages or other disruptions and, finally, the capacity of their existing backup power systems to accommodate that minimum load during periods of disruption.

With these three data points, an ESCO can help prospective parties to consider the advantages a microgrid may offer their site over a backup power system.

Consider a rural hospital increasingly prone to outages due to wildfires, floods, or other natural disasters. This hospital must be able to supply backup power to care for current patients in the event of an outage. If the hospital’s backup power can only accommodate the loads of certain buildings, then beds would need to be consolidated in those supported facilities. However, the hospital has the dual need to be able to scale, sustain, and distribute backup power to accommodate the influx of patients that those outage-causing natural disasters are bound to bring.

An ESCO can work with a facility manager to evaluate the likelihood those dual needs coincide, the costs associated with that coincidence, and whether a buildout of new backup power capacity, integration of existing backup capacity with new controls or distribution assets, or installation of a complete microgrid is not only the most appropriate solution for reliability and resilience, but also whether that solution is subject to payback via an ESPC. For managers of, say, corporate office buildings or retail centers in those same outage-prone rural areas, the calculus is obviously different.

This, of course, is not an exhaustive list of the considerations for facility managers investigating the feasibility of a microgrid. In most cases, the advantages of a regular backup power system, a system supplemented by microgrid components, or a complete microgrid will be determined by their life cycle costs to the organization. What’s clear, however, is that guaranteeing building performance is paramount, and the selection of available solutions is not binary. It is increasingly complex, as this year’s freeze in Texas and scorching in the Pacific Northwest have shown. And ESCOs are here to help.


¹ https://doe.icfwebservices.com/microgrid

MicrogridsDr. Unruh is the Executive Director of the National Association of Energy Service Companies and former Deputy Assistant Secretary of Renewable Power at the Energy Efficiency and Renewable Energy (EERE) Office of the U.S. Department of Energy.

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