Beyond backup power

The State of New York kicks off a competition that highlights the multi-faceted benefits of microgrids

What’s your idea of a microgrid? A power system for an island, or a remote industrial site like a mine? Or maybe it’s a network set up to serve a large campus like a university or hospital complex.

Of course all of these are examples of microgrids, and there are others too. The main benefit and defining feature of each, though, is usually reliability and specifically the ability to stay up when the surrounding grid goes down. Promoting renewables and energy storage might factor in as well, but typically when you hear about a microgrid project, the force of the business case lies in keeping the power flowing inside the electrical “walls” of the microgrid’s own area.

That concept is beginning to look more and more provincial as microgrids continue to mature. New York state recently kicked off a competition aimed at funding innovative microgrid projects across the state, and the evaluation criteria extends well beyond the classic definition.

According to the initiative’s web site, “desirable project attributes” include the usual suspects with regard to incorporating distributed energy resources and smart grid technology, but projects should also:

• Demonstrate practical business models that demonstrate value for utility customers, third parties, utilities, and the bulk power system
• Lead to competitive markets that account for utility costs and revenues and demonstrate new variable pricing structures
• Engage local officials and local citizens in the design of their upgraded energy infrastructure while meeting community needs of safety and resiliency

This is a much more expansive view of what a microgrid is and what it can do. Indeed, some of the first projects to win funding for feasibility studies in the first round of the competition represent much more than simply backup power.

For example, the Buffalo Niagara Medical Campus (BNMC) in Erie County, New York is looking to integrate solar PV with an existing combined heat and power (CHP) system to boost efficiency. The project also seeks to test a new business model in which a third-party operator runs the microgrid under a performance-based contract with BNMC. National Grid, the local grid operator, is working with BNMC toward the ultimate goal of creating a microgrid that can facilitate participation in supply and capacity markets.

New York’s initiative is only just getting under way (the application period closed on May 15), and there will be many more projects that receive funding under the program. While it remains to be seen what the long-term economics will be, this effort should serve as notice that we are headed toward a more integrated microgrid concept.

Photo: solar PV panels cover the parking lot at ABB’s facility in San Luis Potosi, Mexico.