This post is intended to provide an introduction to concepts related to renewable energy + microgrids. Learn more by visiting Schack’s YouTube channel to view Spring 2021 faculty seminar, “Powering the Digital Economy: Renewable Energy and Microgrids” featuring Professor Robinson (REIT Center), Professor Kwatinetz (Urban Lab), and guests from Hannon Armstrong (NYSE: HASI) and Scale Microgrid Solutions.
Introduction
While many national and regional electrical grids are now powered in part by renewable energy, the majority still depend on nuclear and fossil fuels to deliver the bulk of their power. Conversely, microgrids make heavy use of renewables such as photovoltaics and wind turbines to generate energy used within a specific building or development, which enables them to power their systems and operate without adding to the demands of the wider electrical network.
Excess energy generated on small-scale systems can be stored on-site for later use or it can be fed back into wider power grids when necessary. Enterprises are quickly catching on to the clear environmental benefits and reduced operating costs associated with microgrids and localized energy production, and developers are beginning to integrate systems from forward-thinking manufacturers and tech entrepreneurs alike.
On-site energy production and storage enables new development to become self-sufficient and help fill in the gaps arising on overstretched electrical grids. The use of advanced microgrids will contribute to achieving emission-free buildings while better insulating large urban areas from potential power failures or blackouts.
How Microgrids Work
Microgrids are becoming increasingly important as the world’s demand for energy rises. As the name suggests, microgrids are small-scale electrical networks that operate independently or in tandem with large-scale electrical supplies to meet the increasing need for electrical energy. Energy is delivered to the end-user through complex transmission and distribution systems, also known as the grid. Different sources of power generation improve the microgrid’s reliability.
The microgrid can operate independently or it can be connected to a larger utility power grid. The ability to operate independently from a larger grid is what makes the microgrid an invaluable tool. Inertia is only one of several grid services that help maintain power system reliability. Understanding the role of inertia requires understanding the interplay of inertia and these other services, particularly primary frequency response, which is largely derived from relatively slow-responding mechanical systems. This video further illustrates the concept:
Microgrids and Commercial Real Estate
Microgrids are essentially a smart energy upgrade that represents a way to add value to properties. These upgrades relieve strain on the existing energy infrastructure and provide a clean solutions for economic development opportunities.
Key Benefits
A microgrid improves electric reliability
Electric reliability has received the most attention since 2012 when Superstorm Sandy left nearly eight million people without power. Some outages lasted two weeks or more. Power outages are not merely an inconvenience, they are dangerous too. Microgrids keep the power flowing by disconnecting (known as “islanding”) from the central grid when it begins to fail. The microgrid’s generators then serve customers until power is restored on the central grid.
A microgrid enhances resilience/recovery
Closely related to electric reliability is the idea of energy resilience. While reliability is about keeping the power on, resilience describes the ability to avoid power outages in the first place or recover quickly if they do occur. In some cases, a microgrid immediately restores power to an entire building or operation, leaving occupants barely aware a disturbance occurred.
Lower energy costs for consumers and businesses
Microgrids can reduce costs and provide a revenue stream for their customers. They reduce costs through the efficient management of energy supply. They supply revenue by selling energy and services back to the grid. Additional economic benefits are realized through joining utility demand response programs or by participating in state and federal clean energy programs, such as state renewable portfolio standard initiatives or federal production tax credits. Some states also have grant programs specifically for microgrids.
In areas where electricity costs are high, such as the Northeast and California, microgrids may consistently provide energy at a lower cost. In return, microgrid customers enjoy the benefits of reliable, clean energy at a low price.
Environmental impact and clean energy
Businesses and communities establish clean energy goals to conserve energy and reduce the environmental impact of their power generation. Microgrids can make use of a variety of green power generation technologies such as solar, wind, fuel cells, and energy storage technologies to achieve these goals. Microgrids intelligently integrate renewables into the energy mix and seamlessly balance renewable energy’s variable output with traditional generation assets. As a result, the microgrid overcomes the downside of solar and wind energy, which is they only generate power when the wind blows or sun shines. Advanced microgrids can be programmed to achieve specific sustainability goals, such as using the least amount of carbon resources possible.
Conclusion
With access to renewable energy as more of a corporate focus, microgrids could become a key selling point in attracting new tenants. Green buildings are imperative in today’s environmentally conscious world and companies’ corporate social responsibility initiatives. Also, there is upside for real estate with multiple buildings on one plot of land since the stability and security offered by long-term, fixed electricity prices would help manage operations more efficiently. This will give companies a consistent supply of green energy and offer price certainty. Energy market analysts estimate that microgrid power generation has increased 5x since 2012 levels. With an increasing number of innovations coming to market, we could see entire cities and urban areas powered very differently in the years ahead.
Learn more
Bloomberg New Energy Finance The Bloomberg New Energy Finance resource provides data and reports including notes, commentaries, and forecasts yearly for the financial and technological trends influencing emerging energy updates
Energy Sage Energy Sage’s “About Solar” resource for consumer information on Solar PV
GreenTech Media (GTM) GTM provides information resources for market research, industry news, and events in the global electricity sector
Microgrid Knowledge Community solar microgrid business models
National Renewable Energy Laboratory Inertia and the Power Grid: A Guide Without the Spin
Scale Microgrid Solutions Industry news and information related to financing and selecting the right resources for microgrid projects
Solar Energy Industries Association (SEIA) SEIA acts as the national trade association for the US to educate the public and represent organizations that are dedicated to the solar energy industry
Smart Electric Power Alliance (SEPA) SEPA is a non-profit organization that focuses on research and education of clean energy including solar energy, energy storage, demand response, and technology
Utility Dive Utility Dive provides industry news updates relating to energy and power generation, transmission & distribution, solar & renewables, energy storage, efficiency & demand response, distributed energy, regulation & policy, technology, and corporate news