WHITEFISH, MT / ACCESSWIRE / November 24, 2014 / Most people remember the Northeast blackout of 2003 that affected some 55 million people in the United States and Ontario, Canada. In that case, a software issue in an alarm system in a control room of FirstEnergy Corp. (NYSE: FE) was cited as the source of what could have been a localized blackout that cascaded for hundreds of square miles. There has also been the stark awareness of weakness in the power system through superstorms, such as Hurricane Sandy that bombarded the East Coast last year, signaling that the problem actually runs deeper and points to an aging national electricity grid system that can leave the U.S. susceptible to power outages. Greater recognition of potential outages, whether completely justified or not, of an overworked grid, cyberthreats, brutal weather and even things like squirrels (yes, squirrels) are helping spawn acceptance of new technologies and microgrids that give communities more control of power while reducing stress on the existing grid. As the grid evolves into being less centralized, conglomerates involved in utilities such as General Electric (NYSE: GE) will certainly play a role, but a bigger upside may reside in smaller companies with green technologies, including solar plays SolarCity (NASDAQ: SCTY) and First Solar (NASDAQ: FSLR) and Combined Heat and Power firms like Tecogen (NASDAQ: TGEN) in a multiple-win for more consistent power and reduced emissions.
What Can Knock Out The Grid?
Not to spread fear, but people need to be aware of a gamut of arguments as to why changes need to be made in the existing grid structure. In March, the Wall Street Journal reported that the U.S. could face a nationwide blackout if only nine of 55,000 electric-transmission substations failed on an extremely hot summer day, citing research by the Federal Energy Regulatory Commission (FERC), although federal officials were careful to warn that the analysis could overstate the vulnerability of the national grid.
The website UtilityDive last month cited former FERC Chairman Jon Wellinghoff as saying the microgrids and grid diversity are essential to U.S. energy security and protecting against the loss of a single component, albeit via a planned attack or accident, spreading into a larger blackout. Given the conflict in the Middle East, some pundits have warned that the grid could be a target or terrorists, namely the radical group Islamic State of Iraq and Syria (ISIS). "Inadequate grid security, a porous U.S.-Mexico border, and fragile transmission systems make the electric grid a target for ISIS," said Peter Pry, one of the nation's leading experts on the grid, in a Washington Examiner article in September.
In April, Nicholas K. Akins, Chairman, President and CEO of American Electric Power (NYSE: AEP), testified before the Senate Energy and Natural Resources Committee that the reliability of the grid was tested, and narrowly passed, in January as the arctic weather of the polar vortex pushed winter peak load to a record level. "This country did not just dodge a bullet – we dodged a cannon ball," Akins stated. To be clear, Mr. Akins was making a case on overall policy to ensure grid reliability, not a granular case for microgrids or alternative energy, but his comments add color as to how the existing grid is testing its limits.
The UtilityDive article also notes how rodents can wreak havoc on the grid, citing a squirrel causing an outage in Rhode Island. Sound isolated and freakish? It's not, as published in a New York Times article penned by Jon Mooallem in which Mooallem said squirrels were responsible for at least 50 power outages in 24 states from Memorial Day to August that affected tens of thousands customers. Other reports show animals to spark (pun intended) many more outages.
Microgrids: Helping Alleviate Perceived and Real Threats
Now, the grid threats should be taken completely in context, as stopping a teething wild animal from chewing through a power source is obviously a unique challenge and while cyberattacks on the grid could be disastrous, they are exceptionally difficult and would require extensive resources well above and beyond your typical Internet hack to pull off. Weather and overall stress on an aged grid system are viable concerns everyday, though. Microgrids and on-site power systems can serve as options to avert some of these general worries.
In short, microgrids are smaller versions of a city or national grid that have technologies to generate (and sometimes store) their own electricity. They don't necessarily have to be completely disconnected from the national grid, instead blending power as required. Staying connected means that microgrids can draw from the bigger grid when economically reasonable and in times where local generating assets aren't sufficient for demand or, conversely, feed power back to the gird. Overall, they can reduce stress on the traditional grid by a drawdown in usage, while increasing reliable, consistent power within the microgrid network.
Declining solar costs have created new opportunities in the energy space as consumer interest rises, helping prove the efficiency and potential of solar power systems being stitched to the grid, although regulatory hurdles are still tall to cross on that matter. To understand growing installations, consider that SolarCity, the largest rooftop solar installer in the U.S., could boast 168,339 customers at the end of the third quarter this year, compared to 92,998 at the start of 2014 as it aims for a goal of one million customers by 2018. While not exactly in the same vein as microgrids at this moment for distributed energy, SolarCity's figures demonstrate the growing acceptance and economic viability of solar power systems today as compared to even a year ago. More specific to microgrids, SolarCity has a growing number of energy storage installations featuring Tesla (NASDAQ:TSLA) batteries, digital controls, real-time communications and inverters that can convert battery DC power to AC power for the grid that could serve many needs. How this plays out in the future is yet to be determined, but microgrid applications as well as feedback to the grid to reduce electricity travel distances and improve reliability appear in the mix.
One of the keys to bringing microgrids and "personal electricity" (which could actually be considered the smallest form of a microgrid) to prominence is the economics to consumers, which SolarCity is overcoming by launching MyPower, a financing plan that allows homeowners to lease its systems with little or no money up front, part of a new business model dubbed Microgrid-as-a-Service.
Solar companies cannot be shy about shouldering upfront costs to develop a footprint and microgrid systems, especially if they want to penetrate foreign markets where some 1.3 billion people (largely Africa and India) don't have access to electricity. First Solar (NASDAQ: FSLR) and SunEdison (NYSE: SUNE) are looking to electrify the Indian markets with microgrids. First Solar, one of the largest solar panel suppliers in India, is reported by Clean Technica to be launching a pilot project to help set up microgrid solar power projects in the country. This followed SunEdison announcing a new project that will install 241 kilowatts (kW) of solar photovoltaic microgrids with battery storage in 54 remote Indian villages, bringing cost effective electricity access to 7,800 off-grid individuals.
Combined Heat and Power, or CHP, systems also can sit at the center of microgrid systems, with different technologies and fuel sources used to generate electricity. Peter Asmus of market research firm Navigant Research, believes that "CHP will be the leading distributed generation choice for microgrids in terms of capacity over the next five to seven years," according to Thomasnet.com. Navigant forecasts that microgrid market revenue will jump from under $10 billion in 2013 to more than $40 billion by 2020, partially because microgrids "require greater investment than previously recognized." Asmus doesn't stand alone for CHP potential; Alex Kragie, the former Deputy Chief of Staff at the Connecticut Department of Energy and Environmental Protection, said he thinks “CHP is one of the most appealing generation solutions when it comes to microgrids, for the simple reason that it reuses waste heat, making it one of the most efficient generation technologies."
CHP is founded on the premise of creating two forms of energy from one source. The range of sources can be vast, including biogas and oils, but the most common is natural gas. The gas is used to power an engine to create electricity with nearly every bit of the heat generated by the engine captured and recycled for another energy need, often hot water, space heat of even for chiller systems. This tried-and-true means of creating two types of energy is far more efficient than conventional methods used by utilities (i.e. coal, nuclear), while significantly reducing emissions. Applications are starting to be employed, including Connecticut awarding $18 million in funding for microgrid projects, some of which incorporate CHP systems. Governor Dannel Malloy has recommended an addition $30 million in funding over the next two years for the state's microgrid program as it works to "modernize and harden our infrastructure to withstand severe weather" and "protect residents and vital public services even when the power goes out," according to Malloy.
Those wondering what a small CHP system looks like can take notice of the Tecogen InVerde 100 CHP unit shown in the aforementioned UtilityDive article. Tecogen has taken the idea of CHP energy production with emission reduction to new levels with its InVerde Ultra 100, being the first and only natural gas engine-driven CHP system able to operate under the extremely low levels of regulated pollutants allowed by the distributed generation regulations for Southern California enacted in 2008, based on the California Air Resources Board (CARB) standard published the previous year. The InVerde Ultra 100 is rated at 100 kW continuous electrical output, while simultaneously producing 6.7 therms per hour of hot water (230 degrees Fahrenheit). The systems are scalable, able to be installed in a building block format to meet demand. When all the recoverable heat is used, the overall efficiency of the module reaches 90 percent.
Typically these units are tied into the grid to maximize efficiency, meaning that calibrations are set to using 100% of the thermal energy (essentially eliminating an expense by using the free heat byproduct of creating electricity) with any remaining electricity demand pulled from the grid. In the case of a grid outage, the systems have fail-safe technology that detects the grid blackout, immediately increasing electricity output until the grid reconnects, at which time the system powers back to normal mode.
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The Natural Progression
The national electricity grid has its problems, but it is overall an engineering and operational wonder that has been remarkably stable for the last century; there's no real criticism that can come on the historic front outside of a blip here and there. However, technology has a way of natural progression and as it so happens is coming at a time of need to provide even more reliable power to a growing world with an unquenchable thirst for electricity. A paradigm change of this magnitude doesn't happen overnight and it won't happen with the grid either, with still only a miniscule fraction of nation's power coming from outside the utility grid. Don't expect solar or CHP to take big chunks of market share from utilities in the near future, although small pieces are valuable enough to stakeholders. Broadly speaking, a slow shifting of the industrial order looks to be taking its course with microgrids and alternative energy sources serving a valuable benefit globally to better ensure a constant supply of electricity, reduce our pollutive footprint and bring power to people that go without now.
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