DENVER — Renewable- and natural gas-powered microgrids are supplanting diesel generators, but “public purpose” microgrids are struggling because of high costs and the lack of a widely accepted metric for resilience, speakers told the National Association of Regulatory Utility Commissioners’ Summer Policy Summit.

Allan Schurr, chief commercial officer for microgrid developer Enchanted Rock, said his company has found success developing projects for commercial and industrial customers that value continuous operations.

“Some are manufacturing sites, where it’s very costly if they lose power for even a few minutes. Others are critical infrastructure, like water utilities that need continuous power to maintain pressure in their system. Some are retailers like Walmart that want to be part of the community and being open all the time; hospitals, health care. There’s a standard out there that’s becoming more and more common: that if you can have no outages, why shouldn’t you have no outages?” he said. “The grid can’t keep up with all of those expectations.”

Schurr’s company builds microgrids powered by natural gas or renewable natural gas, “a vast improvement,” he says, on the environmental impact of diesel generators that such customers have used historically.

“We also can provide economic efficiency because those assets can be dispatched. A few hundred hours a year are all that’s needed in order to provide … grid services revenue [that] allows us to get that price below the price of diesel.”

Enchanted Rock has about 210 microgrids in Texas, 97% of which were available during the winter storms that left millions without power for days.

“Microgrids helped save part of the rotating outages in Texas. We were delivering about 450 MW into the ERCOT grid to try and alleviate some of the pressure on the grid,” he said. “The price of power in the Texas winter storm were $9,000[/MWh] for eight straight days. Microgrids could have been fully financed and paid for in that week.”

Pacific Gas and Electric (NYSE:PCG) has connected diesel generators at dozens of substations to supply electricity during wildfires. “During the public safety power shutoffs in 2020, it did keep electricity flowing for thousands of customers,” California Public Utilities Commissioner Genevieve Shiroma said. (See Calif. Rushing Microgrids for Fire Season Shutoffs.)

Valuing Community Resilience

But the math is harder to pencil out for public-purpose microgrids, said Suzanne Mora, director of utility initiatives and analysis for Exelon (NASDAQ:EXC).

“Microgrids are costly. It’s hard to make a value proposition work, and part of the reason for that is we don’t really have a clear understanding of how to value community resilience,” she said. “The No. 1 benefit that’s offered by a microgrid is resilience, and yet we don’t really have a metric that’s accepted by everybody to give a value to” it.

Commonwealth Edison’s microgrid in the Bronzeville section of Chicago, the U.S.’ first utility-operated microgrid cluster, “works economically [only] because of the significant money that came from the U.S. [Department of Energy] and grants,” she said. “So, it’s still not a proof point for the economics of public-purpose microgrids.”

The microgrid includes 750 kW of solar and a 500-kW battery system with a four-hour run time. In January, ComEd, a unit of Exelon, chose Enchanted Rock to provide 5.5 MW in natural gas-fired generation to ensure the complex maintains power during any grid interruption.

On the bright side, Mora said, utilities, the Electric Power Research Institute and DOE’s National Laboratories “are getting very close to being able to come up with metrics that are acceptable to all in terms of assigning a value to resilience.”

FERC Order 2222, which requires RTOs to open their wholesale markets to distributed energy resources, will help by adding new revenue streams, she said. “But it adds to the complexity of how you regulate [microgrids] and how you operate them.”

Mora said microgrids that have more than a single customer should be regulated like a utility.

“I don’t think a microgrid is a reason to set aside the other regulatory constructs that are very important to [state regulators’] charter to protect customers,” she said. “Our rule of thumb is if a microgrid behaves like a utility — in that it’s distributing electricity to more than one customer — it should be regulated like a utility.”

Mora said regulators need to find a balance between allowing microgrids to offer grid services when they’re not in island mode and preventing them from shifting costs to other distribution customers.

“We’ve had microgrids … in our service territories that might disconnect from the grid voluntarily 100 times a year based on [arbitraging against the] market price,” she said. “It puts stresses on the system … and it has the opportunity to start doing some cost shifting if you’re not appropriately taking care of the distribution system costs associated with allowing that.”

If a microgrid is designed with more generation than its clients’ load, “then you have a microgrid that’s out there looking for customers,” raising the threat of grid defection, she added. That “has implications for the customers who can’t defect from the grid.”

Another challenge is the variety of microgrids. “When you see a microgrid, you’ve seen one microgrid. They’re all different, and we can learn from each and every one of them,” she said.

The New Jersey Board of Public Utilities’ microgrid definitions, she said, have been useful in providing some structure for classification. The BPU defines three types of microgrids based on their interconnection to the grid:

• Level 1: a single customer microgrid, such as a solar PV system, combined heat and power or fuel cell system, that serves one customer through a single meter which is connected to and can island from the distribution grid.
• Level 2: a single customer/campus setting that includes a single or multiple DER systems connecting multiple buildings but is controlled by one meter at the point of common coupling, which is connected to and can island from the distribution grid.
• Level 3: serves multiple customers that are not on the same meter or on the same site as the DER.

“I went through an exercise in the District of Columbia where we had a working group looking very closely at microgrids. It was kind of like trying to saddle a unicorn. You know, you’ve heard about them; you’re never sure that you’ve actually seen one; … you’re not 100% sure what the measurements are and how they operate. I think trying to come up with classification schemes is great. And I think the New Jersey one allows that level of flexibility that just about anything that would come up would fall into one of those three” categories.

Megan Levy, local energy programs manager and energy assurance coordinator for the Wisconsin Public Service Commission’s Office of Energy Innovation, said microgrids are “part of the solution” in ensuring resilience.

“Energy security is diversity in resources,” she said. “The most important thing is the partnerships and the coordination and continuing to innovate. We’ll figure this thing out. I just don’t think we quite have yet.”