New Generation of Microgrids Hampered by Outdated Utility Rules

Reader Contribution by Ted Flanigan and Ecomotion
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Microgrid at Alabama Power’s Smart Neighborhood
Photo by Oak Ridge National Laboratory

Peter Asmus, Research Director at Guidehouse Insights, has been tracking the development of microgrids for over a dozen years. He’s written more than 100 articles on microgrids. In a recent episode of The NetPositve Podcast, he talks about the genesis of microgrids. For the most part, they originated out of necessity in the developing world. Many, if not most, microgrids in the world today are not connected to the grid.

But now, microgrids are coming of age in the “developed world” where there is a grid. They operate in parallel with the grid for resilience. Asmus noted that initially Europe scoffed at that concept because its grid was so reliable. But today, given extreme climate events throughout the world, including recent and devastating flooding in Europe, and thanks to dramatic drops in solar and storage prices, coupled with smart control technologies, microgrids make sense in many applications and locations. In some cases, they can pay for themselves through daily operations. They can be financed. Microgrids have come a long way.

What is Holding Microgrids Back in North America?

In the podcast, Asmus talks about barriers to the implementation of microgrids. He characterizes the state of microgrids as “inching along to full commercialization.” He notes that yes, there’s lots of activity. Lots of microgrid projects are providing values. But he explains that microgrids are held back in some ways.

Outdated utility rules. Deployment is still hampered to some extent by old-school, monopoly rules, like the “over the fence” rule. In most states, you cannot run a line over the fence and power your neighbor’s property. Not even during an outage. That will change in time.

Interconnection challenges. Another factor at play is a utility culture inherently rooted and opposed to distributed generation and storage and, by extension, microgrids. Differing rules and varying decisions on interconnection has challenged timely engineering and installation. The engineers that install and hook up microgrids say that we need to clarify and ease the interconnection process. Asmus notes that we are moving toward modular microgrid architecture, plug-and-play style, and all UL listed and approved, to make interconnection as smooth process.

Failure to account for full value. Regulatory proceedings are underway, but policies are not yet set on how to fully capture the value of microgrids to society as a whole. Asmus explains that it’s not just the value of a microgrid to the winery, or warehouse, or wealthy homeowner, it’s also about community resilience and grid support. To spread the costs of microgrids, the multiple values of microgrids to the specific site, utility, and community need to become embedded in policy and ultimately in tariffs.

Microgrids Advancing, but Slowly

As of April 2021, and according to Microgrid Knowledge, lawmakers in 20 U.S. states had introduced 69 microgrid-related bills in legislatures. This has been driven by the need for grid modernization, energy resilience, and by extreme weather events, fires, floods, heat waves, cold plunges.

Barriers aside, there is great proof that there’s lots going on in the microgrid space. Asmus points to incredible technological advances in the years that he has been tracking microgrids: Solar costs are way down, storage costs are following a similar trajectory. Controls have dramatically advanced. Asmus says that they’re the key technology to making microgrids work, orchestrating sophisticated energy-management protocols.

So, are we inching along, or are we charting a radically different power course? Perhaps some of each. To fully attain the value of microgrids, based on currently available technology, we need to move faster. No more mobile generators (Morbugs), mostly diesel, to respond to climate-induced harsh realities and PSPS events.

We need clean energy resilience. We need modular and carbon-free solutions. Easy to permit and to interconnect. We need to be able to finance these systems and their values for “energy as a service” and “resilience as a service.”

Editor’s note: For an example of a utility-supported microgrid that is fully functional, take a look at Reynolds Landing — Alabama’s “Smart Neighborhood” — as a community microgrid initiative that has the potential to power our future.

Ted Flanigan runs EcoMotion, a California-based company with the mission of the cost-effective greening of cities, corporations, and campuses. He has dedicated his career to finding win-win solutions that create financial and environmental benefits while fostering a sustainable society. Connect with Ted on Facebook and Twitterlisten to The NetPositive Podcastand read all of his MOTHER EARTH NEWS posts here.


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