Generally, in a microgrid, you would have a combination of installed equipment that act as energy producers such as solar panels, turbines, generators, wind, etc.; energy consumers, which are the loads you need electricity to operate; and prosumers that are resources like battery energy storage systems that both consume electricity to store and later “produce” energy when they discharge.
These distributed energy resources (DERs) coordinate together to serve the facility load and, potentially, even participate in larger, external energy markets by potentially reducing utility consumption when a demand response signal is received or by exporting excess solar energy to the grid in exchange for energy credits on their bill. The DERs can also be islanded from the grid and act as a mini-utility for a specific site in the absence of service from a centralized utility.
Because of the localized nature of microgrids, they can be designed and programmed to operate in a way that is customized and optimal for the local facility’s energy use, which can provide added efficiencies and cost savings
Solar PV technology has advanced rapidly in both cost and efficiency. The cost of installing PV has dropped about 20% in only the last five years, and premium production PV panels have now topped the 20% efficiency benchmark. In addition to solar, energy storage technologies continue to proliferate and improve. Along with more traditional lithium ion batteries, the storage market now includes other chemical makeups, electrolyte flow batteries, electrolyte “bath” batteries, and even flywheel-based kinetic storage mediums. Many of these batteries can provide at least 80% efficiency over a full charge-discharge cycle and a useful life of a decade at price points that are cost effective from a return-on-investment standpoint.
Though solar and wind are the two most commonly talked about green energy production technologies, renewable energy sources continue to proliferate, including biomass, geothermal, and hydro-based generation. These resources can be deployed at utility scale (large wind and solar farms, for example) as well as within microgrids to provide a growing amount of energy generation outside of the traditional sources of coal or natural gas. As the price of renewable energy sources continue to drop and their efficiencies continue to rise, they will displace more and more traditional generation, reducing greenhouse gas emissions and other waste and preserving our planet’s non-renewable resources.
With the rise of renewable generation, utilities have faced several challenges: providing proper interconnection with residential rooftop PV and other microgrid installations, balancing the grid with a mix of steady traditional generation and an increasing amount of fluctuating renewables; the economic and political burden of occasionally having to curtail large amounts of excess power; and pressure from government and regulatory bodies to participate in incentive programs to further increase renewable penetration. To help start the renewable revolution, many states and utilities provided net-metering programs, which provided energy credits for solar generation exported to the utility grid, but as more renewables have come online, this strategy has become more difficult to manage as the curve of the typical load profile across the utility has changed.
In response to this changing load curve, utilities have begun shifting their “peak” rates later in the day to match the period of the highest net load, when energy consumption has increased but solar generation is tailing off. What this means is that sites that have done will economically with solar-only installations are now providing less value because the peak demand seen by the utilities is now during the peak pricing period as well.
It is the combination of this shift in the peak-pricing time of use as well as the aging transmission infrastructure that makes a coordinated microgrid not only more economically feasible but, in many cases, a necessity. In order to avoid the highest demand charges a utility will levy, facilities must find a way to shift their load profile to avoid the evening peak consumption. This kind of load shifting—and peak demand shaving—can be accomplished by pairing solar generation with an energy storage medium. In this configuration, some of the solar generation that would normally flow back over the meter onto the utility grid for net-metering credits (or even be curtailed if net metering is not allowed), now goes to charge energy storage.
Though there are losses in charging and discharging energy storage, these are more than made up for if the battery is charged from an inexpensive renewable resource and discharged during a peak demand period for the utility.
In a combined solar and storage microgrid, the challenge is how to operate these assets in the most cost-effective way for your objectives. While much value can be derived from merely charging storage from excess solar and then discharging during peak utility hours, even this simple algorithm raises more questions: How much storage should be installed? Would it be beneficial to install more solar now that the excess generation can be used for more than rolling back the meter? Would it be valuable to sometimes charge the battery overnight during off-peak hours? How can one ensure enough available capacity to consistently drive down monthly peak demands even during a string of cloudy days?
Some of these questions around sizing can be answered by tools like CleanSpark’s mVSO product that can model different combinations of DER. These tools use a library of equipment and a provided facility load profile to simulate equipment operation within a typical meteorological year to provide sample energy mix profiles like the charts shown above. These tools also provide detailed energy and cost savings metrics as well as overall financial projections.
But once the optimal mix of DERs has been established, microgrids require either local or cloud control to make the DERs behave in an optimal way under changing energy generation from the solar assets or fluctuating load as well as updates in the utility rate structures and incentive program rules. Control algorithms run the gamut from simple set-and-forget to those like CleanSpark’s mPulse Max product, which uses patented forecasting techniques and advanced local intelligence to dynamically modify DER interaction due to changing weather, site, and utility conditions.
The bottom line is that energy storage can be a valuable addition to a renewable energy developer’s toolkit and provide significant value to end consumers, utilities, and everyone in between.