Microgrids offer potential for greater energy reliability

Easy to miss in the flurry around the Two Storms Panel report earlier this month was an idea called microgrids.

A jargony techno-term, a microgrid is a small electric grid with its own generation source. It normally operates linked to the main electric grid, but when that suffers widespread interruptions, as Connecticut’s did during Tropical Storm Irene and the October snowstorm, a microgrid can automatically isolate itself and keep running.

“All the pieces have been tried that we need to put together,” said Dan Esty, commissioner of the state Department of Energy and Environmental Protection. “Just not at the scale we’re talking about.” The department has been ordered by Gov. Dannel P. Malloy to explore how the state would create microgrids to be better prepared in an emergency.

The scale the administration wants is to keep obvious critical facilities — hospitals, police and fire stations, water and waste water systems and prisons — running. But it also wants microgrids to address other problems that were acutely apparent in both storms. Folks without power often had nowhere to go to replace rotten food, buy water, fill their cars with gas or get additional medication because commercial areas also went dark. And businesses, especially manufacturers, who were forced to shut lost thousands of dollars.

Pilot project plans are at their earliest stages, but Esty said the state already has identified about 300 sites — 120 critical facilities and about 180 town centers and commercial hubs. He expects to have several projects in place in 2013, if not earlier.

“I have already had a half a dozen mayors call and say that they’d like to be microgrid guinea pigs,” Esty said.

Bristol Mayor Arthur Ward, whose city of 61,000 got “slammed,” in Ward’s words, in both storms was among them. “I’d love to,” he said. “Absolutely. I think it’s something that everybody should take a clear look at.”

Aside from keeping the juice flowing during the next Irene, there are multiple layers of benefits state officials think microgrids can achieve, though there are also multiple challenges.

On the benefits side, the way Esty and many others envision it, a microgrid could finally make that link officials have long sought between cleaner, more sustainable energy and Connecticut’s key stationary fuel cell builders — Fuel Cell Energy in Danbury and UTC Power in South Windsor. Fuel cells are considered low emission, typically using non-renewable natural gas to create the hydrogen needed to produce power.

While there are many fuel cells scattered around the state powering schools, manufacturing and commercial facilities and government buildings, more than 90 percent of both companies’ business is not just out of state, but out of the country, often in huge grid generation fuel cell plants in places like South Korea.

Esty and the experts he is drawing on from the University of Connecticut School of Engineering and the Connecticut Center for Advanced Technology think fuel cells and/or natural gas turbines would be ideal for microgrids in the state. They are reliable — unlike solar that only operates during the day. And their relatively small physical footprints are suited to a crowded state like Connecticut.

Both generation options offer the economic bonuses of design and construction jobs. Fuel cells also mean massive production ramp-ups that would result in more tax revenue as business grows.

Many questions to resolve

But there are many unknowns, starting with the question, who pays?

Bonding is one way, though not the top choice among Malloy administration budget hawks. Municipalities might have to kick in some money. There is an energy improvement district option in which those who benefit from the facility in effect tax themselves to pay for it. And there are private investment models. All of the above is possible in various configurations, along with federal tax credits and grants from other sources.

There are governance issues — who runs the microgrids and how do they dovetail financially with the main grid?

“The main issue is that there is no policy,” said Peter Asmus, a microgrid expert and senior analyst at Boulder, Colo.-based Pike Research. “There are no microgrid laws; no regulations anywhere in the U.S. governing microgrids.”

Pike estimates there are 270 microgrids worldwide. In the U.S. Asmus points to University of California at San Diego — a microgrid that can generate 42 megawatts with a mixture of natural gas turbines, solar, a 2.8 megawatt fuel cell manufactured by Fuel Cell Energy and other sources. (Rule of thumb is that one megawatt powers 1,000 average homes.)

There are a few templates around Connecticut that may provide clues as to how microgrids could work. Yale University in essence has two microgrids, two duel-fuel (natural gas or oil) cogeneration facilities (meaning they make electricity and steam for heat and hot water). One handles the central campus; the other, the medical school.

“We might need to do load-shedding to meet the convenience needs of campus, but we certainly can meet emergency needs,” said John Bollier, associate vice president for facilities. “In an emergency we are far, far better off.”

Late last year Central Connecticut State University in New Britain added a 1.4 megawatt fuel cell from Fuel Cell Energy to its existing 2.5 megawatt cogeneration plant, a couple of months too late, however, for the snowstorm. “If we had the fuel cell, it would have pretty much operated the whole campus,” said plant facilities engineer Rob Gagne.

Perhaps more instructive, however, is how CCSU funded the fuel cell. A roughly $9 million project, it is owned by Greenwood Energy, which financed what is officially known as New Britain Renewable Energy LLC mainly with equity capital, some funding from the Connecticut Clean Energy Finance and Investment Authority, plus about a 30 percent federal tax credit. Greenwood has a 10-year contract to sell power to CCSU.

Project stalled in Stamford

Those are the sorts of financial models the state is banking on, literally, to gird the microgrid concept. On the municipal level, however, they’ve had a rocky start.

As mayor of Stamford, Gov. Malloy instituted an energy improvement district with the intention of developing a microgrid to service the Government Center initially. Washington, D.C.-based microgrid developer Pareto Energy was hired to own the generation facilities and sell the power to Stamford, but the change in city administration has left that project slowed, if not stalled.

Neither did another potential Pareto project in Ansonia come to fruition, though Shalom Flank, Pareto’s chief technology officer and microgrid architect, said since the storms, a number of Connecticut municipalities have contacted Pareto.

“What’s really missing is the high-profile demonstration project which we thought Stamford was going to be,” Flank said.

Fuel Cell Energy President and CEO Arthur “Chip” Bottone said that during a recent visit from Esty, he told the commissioner the timing was right to attract private capital for microgrid projects.

“Technically and practically it’s not challenging as long as you pick the right projects to do,” he said. “That’s the secret sauce here.”

But there are hurdles — namely the availability of adequate natural gas mains, not always a given in a state that is highly oil-dependent.

“Careful planning will be needed,” said Mike Glynn, marketing and communications director of UTC Power, which is working on a project to power part of UConn. “This will be leapfrogging us into being one of the most green states in country.”

In concept, microgrids are easy to suggest, said Joel Rinebold, director of energy initiatives at the Connecticut Center for Advanced Technology. “In reality it’s certainly challenging because you have to both balance generation with a load that wasn’t intended to be served by that particular generation,” he said. “But the challenges are not large enough to use as an excuse not to investigate this.”

He and others also noted the high cost for fuel cells in particular and expressed hope that increased purchases for microgrid projects would help push those prices lower.

Esty, for his part, admitted there would be a price difference, but said to think of it as an insurance premium — what you’re paying to not go down when there’s a crisis.

“Then the economics look better,” he said. “And it’s not a very big premium you have to factor in to begin to see the microgrid option as cost-effective.”