C2ES, GW examine how to deploy more microgrids for reliability, resilience, renewables

Press Release
March 8, 2017
Contact: Laura Rehrmann, rehrmannl@c2es.org, 703-516-0621

C2ES, GW examine how to deploy more microgrids for reliability, resilience, renewables

WASHINGTON – Microgrids can reduce emissions and improve the reliability and resilience of the electricity system, but more effort is needed to overcome financial and legal hurdles to accelerate their deployment.

In a new brief, Microgrid Momentum: Building Efficient, Resilient Power, the Center for Climate and Energy Solutions (C2ES) and The George Washington University (GW) outline the opportunities and challenges of successful microgrid deployment, and suggest strategies for moving forward.

The report is being released today at a 9 a.m. event at the GW Law School being live streamed. Experts from AECOM, the D.C. Department of Energy and Environment, Duke Energy, NRG Energy, Schneider Electric North America, and Urban Ingenuity will discuss the benefits of microgrids and examples of where and how they have been successfully deployed.

Microgrids can run on renewables, natural gas-fueled combustion turbines, or emerging sources such as fuel cells or even small modular nuclear reactors. They can power anything from a hospital to a university to a neighborhood.

Microgrids currently provide a tiny fraction of U.S. electricity (about 1.6 gigawatts GW, or less than 0.2 percent), with most projects concentrated in seven states: Alaska, California, Georgia, Maryland, New York, Oklahoma, and Texas. But capacity is expected to more than double in the next three years as communities explore ways microgrids can improve resilience and reliability, increase efficiency, better manage electricity supply and demand, and reduce greenhouse gas emissions.

Each microgrid’s unique combination of power source, customer, geography, and market can make financing projects a challenge. And the existing legal framework lacks definitions and guidelines that would facilitate deployment, according to the brief.

Among the potential solutions outlined in the brief:

  • Public-private partnerships could play a growing role in overcoming financial hurdles. Mixed ownership microgrid projects, which can include money from public institutions, utilities, and private entities, have increased from nearly zero in 2013, to a projected 38 percent of the market in 2016. Recent examples include microgrid partnerships at Peña Station Next in Denver, Colorado, and two government facility microgrids in Montgomery County, Maryland.
  • States can facilitate microgrid development. Some states, including California, Connecticut, Massachusetts, New Jersey, and New York, have created clean energy banks, grants, or other funding opportunities for microgrids. For example, New York has established a $40 million grant program to create community microgrid projects.
  • A clearer legal framework is needed to define a microgrid, and set forth the rights and obligations of the microgrid owner. Most states lack even a legal definition of a microgrid, and regulatory and legal challenges can differ between and within states. Issues to resolve include the rights and obligations of microgrid owners to their customers and the interconnected utility, cost allocation, and access to wholesale power markets to sell excess electricity or other services.
  • Linear programming models can help focus proposed projects on cost savings, emissions reductions, or independence from the macrogrid. These models can also be used to forecast or estimate cash flows and financing needs and determine strategies for managing power supply and demand. They could also be useful during a project’s development and operational phase.

“Today’s microgrids, incorporating cleaner technologies and more diverse customers, can be a key component of tomorrow’s more resilient, efficient and low-emissions electricity system,” said report co-author Doug Vine, senior energy fellow at C2ES. “We need the finance community, service providers, and government and regulatory agencies to develop the frameworks and policies that can foster microgrid development.”

“Microgrids aren’t a typical infrastructure investment for utilities, and the power industry hasn’t been structured to help non-utilities invest in them,” said co-author Donna Attanasio, senior advisor for energy law programs at The George Washington University Law School. “Microgrids exist in a complicated legal space and we’ll need to work on legal definitions, market access, and their relationship to franchise rights to get more projects underway.”

“Each project’s starting point is likely to be unique,” said co-author Ekundayo Shittu, assistant professor at George Washington University School of Engineering and Applied Science. “We developed a model that helps project developers test many technology combinations to determine the optimal resource mix of their intended system design. With additional work, the model could be fine-tuned to help better estimate project cash flows and returns, costs, and emissions, making it easier to find financing.”

Read the brief.

About C2ES: The Center for Climate and Energy Solutions (C2ES) is an independent, nonpartisan, nonprofit organization working to forge practical solutions to climate change. Our mission is to advance strong policy and action to reduce greenhouse gas emissions, promote clean energy, and strengthen resilience to climate impacts. Learn more at www.c2es.org.

About GW Law: Established in 1865, The George Washington University Law School is the oldest law school in Washington, DC. The school is accredited by the American Bar Association and is a charter member of the Association of American Law Schools.

About SEAS:  Founded in 1884, the mission of the School of Engineering and Applied Science (SEAS) of The George Washington University is to serve the global community by providing high quality undergraduate, graduate and professional educational opportunities; and stimulating and promoting innovative fundamental and applied research activities. Learn more about all the schools at George Washington University at: https://www.gwu.edu/