ransil2018c.pdf

Report 1.3: Microgrids

by
Alan Ransil

Updated December 21, 2018

Protocol Labs, MIT
Thank you to Edwin Fonkwe Fongang, MIT and Typhoon HIL, for help understanding microgrid control systems

1. Introduction

Microgrids are local installations typically connecting one or multiple generation sources with some set of loads. They range in size, from tiny off-grid solar home systems (SHSs) to power infrastructure spanning a university campus or military base. Many are grid-connected, enabling owners to consume inexpensive electricity from the larger Generation, Transmission, Distribution and Retail (GTDR) power system while providing redundancy in the case of outage. Many such systems also allow local generation sources to sell power into the GTDR system. Microgrids offer their owners control over their own electrical destiny in exchange for the cost of installing and maintaining parallel electrical infrastructure. They are deeply connected to the proliferation of distributed energy resources (DERs), as they offer DER owners the ability to optimize energy use in order to monetize distributed assets. As DERs continue to become cheaper, along with improvements in the interoperability of microgrid components, the extra cost associated with microgrids should fall. If this coincides with more expensive or less reliable centralized power, the value proposition of a microgrid is likely to appeal to an ever-increasing circle of users. In such a future, the power system may transform from today’s centralized GTDR model into a decentralized network of local microgrids.

Navigant research, which regularly publishes a microgrid deployment tracker, has found that there are 2,258 projects worldwide in Q4 2018 representing 19.6 GW of planned or installed capacity. While this represents a fairly small fraction of total electrical infrastructure (the US alone has 1.17 TW nameplate capacity installed), it is expected to continue growing rapidly at about a 15% annual rate. Navigant has also found that the majority of installed microgrids are in North America but that growth is broad-based. These numbers include both grid-connected and remote systems, but do not include very small installations such as individual solar home systems.

2. Driving forces for adoption

2.1. Outage avoidance

It was estimated in 2006 that power outages cost the US economy $79B annually (2002 dollars) in lost productivity. As shown in the report, these costs are borne predominantly by businesses. A recent update to these estimates found that the cost of sustained interruptions may be higher than initially thought by 25%, implying the total cost of interruptions to be $115B in 2015 dollars. The annual expense for a business can be high, estimated to be $9,373 on average for each industrial customer. This creates an economic incentive commensurate with the cost of a microgrid for individual businesses to invest in equipment that would help avoid these losses. Some facilities such as hospitals and military bases have additional power reliability requirements going beyond lost productivity. All of these needs are major driving forces behind the installation of microgrids.

On a systems level, microgrids are frequently touted as a way to ‘harden’ infrastructure against natural disaster. This is because microgrids provide the basis for a more distributed electrical architecture with fewer critical failure points than the centralized GTDR model. When nearby infrastructure is damaged, many microgrids are capable of operating in ‘island’ mode as a self-sufficient system. This contrasts with power transported from long distances through transmission lines, in which a failure at any point along the line can cause substantial outages in whatever city or region the line supplies.

In addition, a network of microgrids able to perform load balancing locally is less susceptible to cascading failure than the bulk power system is. These cascading failure events, in which an outage in one area causes power to be re-routed and the resulting surge overwhelms additional infrastructure, are responsible for some of the most widespread power outages. This failure type has been at the center of the largest blackouts in history, such as the 2012 blackouts which left 670 million people without power in northern India. This failure type is the direct result of a centralized GTDR system. With more microgrids managing distributed assets, less power would be transported over long distances which would make cascading failure less likely.

The resiliency benefits of microgrids were highlighted during Hurricane Sandy in 2012 when eight million customers experienced power outages. Much of downtown Manhattan went dark, but isolated pockets - such as the NYU campus - maintained power due to microgrids capable of responding to outages by operating as islands. Another notable area of New York that maintained power is Co-Op City, a large housing development with a combined heat and power (CHP) cogeneration facility. Working microgrids also contrasted with failed GTDR infrastructure during Hurricane Irma in the Caribbean and the California wildfires.

Puerto Rico’s power infrastructure was severely damaged by Hurricane Maria in September 2017. The existing GTDR system was highly centralized, with one transmission line encircling the island. There has been substantial government and private support for building a more decentralized power infrastructure going forward, making extensive use of connected microgrids. As one notable example, a large power distribution company AES has issued a proposal to rebuild Puerto Rico’s power infrastructure as a collection of interconnected ‘minigrids’.

2.2. Generation Cost

Aside from resilience, microgrids including distributed generation allow their owners access to inexpensive power which can often be sold into the bulk power system when generation outstrips local demand. Historically, the Public Utility Holding Companies Act of 1978 (PURPA) played a significant role in the development of grid-connected microgrid systems by allowing non-utility owners of generation capacity access to power markets. Whereas investor-owned utilities are subject to strict SEC regulation, PURPA defined a set of rules by which power installations meeting efficiency and size requirements could register as Qualifying Facilities exempt from oversight as a utility. PURPA furthermore required utilities to buy power from these facilities at the utility’s own avoided cost (roughly the cost at which they would alternatively have been required to purchase power in wholesale markets). This opened up a new value stream for companies and institutions considering installing a microgrid with an efficient generation source. This policy especially led to the growth of energy-efficient CHP plants, producing both electricity and heat for local buildings. These became common generation sources for local microgrids.

More recently, a group of companies have focused on developing software solutions that allow DER owners to maximize their profits by selling power into the grid. These companies aggregate DERs similar to demand response providers discussed in the report.

Looking forward, the falling cost of solar is expected to be another driving force for the installation of microgrids. Increasingly, low power purchase agreement prices demonstrate solar to be cheaper than any other generation options in many regions. In the AES proposal to build connected ‘mini-grids’ in Puerto Rico, it is suggested that using solar generation is a cost-effective option and cheaper than the cost of fuel over a ten year period. Solar can be installed cost-effectively over a range of installation sizes smaller than traditional utility-scale power, and microgrids are the means by which owners gain access to the benefits of on-site generation.

2.3. Government programs

Increasingly, a driver in microgrid installation is a set of government incentives to promote DERs and microgrids specifically. These policies have taken the form of government-supported research, policies to remove barriers, requiring the private sector to install DERs, and direct support through incentives. Both the US and the EU have invested in microgrid research as this technology has become increasingly part of a broader plan for improved power grid resilience. In particular over the past decade it has become clear that the control systems required for a cybersecure and resilient network of microgrids will be necessary in future systems with two-way power flows and need to be developed. The Smart Power Infrastructure Demonstration for Energy Reliability and Security (SPIDERS) project funded demonstration projects at three DoD sites in the US.

Regulatory action has both removed barriers for microgrid installation and required private entities to install microgrids or DERs in some cases. An early case of this was Texas HB 1831 and 4409 which required some new buildings to consider microgrids and DERs as an option during planning. Recently, CA SB1339 has streamlined interconnection standards and requires public utilities to accommodate grid-connected microgrids in a timely manner. Another major change in CA is the CA 2020 green building standard requiring new homes to install solar power, which will dramatically increase the number of DERs in the state. Puerto Rico has also recently adopted microgrid standards defining interconnection rules.

In addition, many states are directly supporting microgrids. These include the NY Prize program, which awards communities grants in order to plan and install microgrid systems. Florida has committed $10M to microgrid support. Connecticut has set aside $15M for microgrid development, attaching financing to property rather than individual owners using Commercial Property Assessed Clean Energy Financing (PACE). Other programs include the Massachusetts microgrid program and New Jersey TransitGrid.

3. System design and variations

It’s an industry truism that ‘if you’ve seen one microgrid... you’ve seen one microgrid’. The requirements for different microgrid systems span a vast range based on the specific requirements of a project. In particular the size of the system, the generation and storage resources it connects, the multiplicity of subsystem controller standards and the amount of pre-existing infrastructure vary greatly. As a result, system engineering and component integration are a significant fraction of microgrid installation costs. Efforts to standardize both hardware and control systems will be discussed below.

Generally to be considered a microgrid a system must incorporate distributed generation and load, and present itself to the main grid as a single entity. It should be capable of operating independently when power from the main grid is lost, protect its loads and assets from faults, assure power quality within its boundaries, and perform some degree of internal optimization (for example, cost optimization) in order to control its distributed assets.

3.1. Grid connected systems

3.1.1. Grid connected systems in the developed world

Grid-connected microgrids of the past few decades have largely existed to provide heat and power to factories. Three quarters of microgrids in the US are powered by natural gas. More than half of these are combined heat and power installations, which are predominantly industry owned. Among these industries chemical manufacturing, oil refining, and paper production are well-represented. These privately financed industrial microgrids fulfill an economic value proposition for their owners combining value derived from:

• A reliable electricity supply used to avoid shutdowns during power failure
• Efficiency gains due to the use of waste heat in CHP installations
• Lower power prices through the avoidance of transmission and distribution charges
• Revenues from selling excess electricity into the larger power system

Notably, these industries have not installed microgrids or DERs due to a desire to be ‘green.’

In contrast with natural gas powered microgrids, more solar powered microgrid capacity is planned than is currently in operation. This represents a recent shift towards solar powered microgrids. The shift is driven partially by the falling price of solar and storage, and partially by other factors such as incentives for clean energy generation.

A major consideration in AC microgrids as compared to the bulk power system is system inertia. The bulk power system has a high inductance, leading to a high reactance to resistance X/R ratio of about 4. This inductance is the result of the long lengths of conductive cables making up power lines, as well as the coils of wire in generators. As a result, the inertia in the bulk power system is high and transients due to individual devices and events are easily absorbed. This high X/R ratio also results in a need to synchronize the frequencies of the bulk power system and generators for efficient injection of power.

This high X/R ratio is not typically true of microgrids, where much smaller system sizes lead to lower inductance. In addition, microgrids making use of DC generation and storage sources such as solar cells and batteries rely on inverters for power injection. Inverters use an internal switch in order to convert a DC voltage source to a 60 Hz (or 50 Hz) signal, followed by a bandpass filter in order to improve waveform quality.

Another issue connected with islanding is the interaction of islanded microgrids with the main grid during restoration of normal operations. This is particularly relevant for small installations such as grid-connected solar home systems, which line workers may be unaware of when working on downed power lines. The concern is that islanded systems may result in unexpected live wires, exposing work crews to risk of electrocution. As a result, anti-islanding provisions have been legally adopted and written into inverter standards. This has caused controversy, as homeowners with solar power should be able to use their solar panels even when the main grid is down.

3.1.2. Grid connected systems in the developing world

The cost of outages is significant in the US and Europe, but it can be greater in developing countries where outages are more frequent and more severe. In Bangladesh, outages cost the economy 3% of GDP per year. In some cases, the reliability of delivery is so terrible that it is a significant barrier to connecting to the grid in the first place. A correlational study found that for every 1% improvement in reliability in Kenya the number of grid connections increases by 0.67%, indicating that individuals would be more willing to connect if reliability were better.

A recent report by the Rocky Mountain Institute examined interconnected microgrids as a cost-effective way of expanding access to reliable power in Nigeria. It found that due to low collection rates and low uptime on distribution networks, distribution company revenues are significantly lower than costs; indeed the company loses about $18/year per connected customer. By installing local microgrids connected to the distribution system and charging to service them, reliability to the end user would be significantly improved and distribution company losses could be mostly eliminated.

3.2. Off grid systems

A major set of use cases for microgrids is remote areas without access to centralized GTDR infrastructure. It may not be economically viable to run power lines to remote areas, or people living or operating locally may want the benefits of electricity infrastructure and have to pay for it themselves. Military forward operating bases frequently have no centralized grid access. Mobile platforms such as ships require microgrids. The components used to build these systems vary from equipment borrowed from the distribution system, to the more specialized kit needed to interface with shipboard controls.

Additionally, small off-grid solar home systems (SHSs) are frequently an economical way to provide lighting and other basic electrical services in remote areas. This is a rapidly growing industry active in Latin America, Sub-Saharan Africa, and Southeast Asia. Almost one billion people worldwide lack access to an electric grid. Their energy needs are largely met through burning biomass, kerosene, and diesel. Many of these people cannot afford to purchase a solar home system outright, but they are able to spend on the order of $10 per month purchasing electricity that would otherwise be spent on kerosene and diesel.

4. Interoperability

4.1. Microgrid controllers and standards

Microgrid control systems are an active field of academic research. Given some set of optimization criteria that may include power quality, reliability, generation cost, individual personal preferences, carbon emissions, and control signals from third-party aggregators given a say over individual assets, these systems aim to optimize device behavior. At a high level, it is unclear how microgrids of the future may want to balance these different demands.

Even when the desired optimization behavior is agreed on, there are a wide array of methods being developed in order to achieve them. Strategies developed for implementing microgrid control systems include centralized controls based on linear and non-linear optimizers, swarm and multi-agent algorithms, and various machine learning techniques. Crucially, the types of high-level behavior desired aren’t agreed upon beyond some basic functions such as assurance of power quality metrics and the ability to switch between islanded and grid-connected modes. As such, the IEEE standards defining microgrid controllers and testing procedures are extremely general aside from these basic functions.

4.2. Modular microgrid systems

A major barrier to microgrid installation is that each system must be independently designed based on the specifics of a project. Because equipment coming from different vendors may not be interoperable, significant effort must be expended both choosing components and configuring them to work with each other. Companies are attempting to overcome these problems by developing modular components that scale more gracefully.