Microgrids are key to future energy strategy

As the U.S. Senate prepares to take up the climate bill, power companies anticipate a provision that would limit power plant emissions and impose a federal standard requiring a significant use of renewable energy resources.  However, many experts agree that bringing our aging power transmission and distribution infrastructure into the 21st century, a task that could take decades and cost in excess of $100 billion will present a stumbling block to delivering a significant amount of renewable energy.

Are the goals of the climate bill no more than unfunded mandates that the power industry cannot afford to implement?  Not if they look to microgrids as a part of the solution.  Microgrids could enable us to fast track implementation of renewable energy sources, reduce greenhouse gas (GHG) emissions, lower overall energy costs, create more green jobs, and improve the critical reliability and security of our electric grid.

Consider the challenge:  in the last decade, we have seen a 60 percent increase in electric usage for the average U.S. household.  The overload to our nation’s grid system results in power outages and disruptions costing the economy $104 to $164 billion a year. In August 2003, a massive, cascading electrical power failure took out New York City and a broad region from the Mid-Atlantic States to the Northeast. In June 2008, a power outage struck downtown D.C. and knocked out the White House. 

Grid stress is a real problem.  In addition to the economic threat there is a potentially greater national security risk. The electric grid includes thousands of miles of transmission lines, power plants and substations. Utility reliance on Internet-based communication for their move to smart grid technology makes the system vulnerable to hackers. In April 2009, for example, U.S. intelligence officials reported evidence of cyberspies penetrating the U.S. electrical grid. The intruders buried but did not activate disruptive software programs. 

A new architecture of peer-to-peer power networks known as Microgrids is emerging.  Microgrids can meet both environmental and national security challenges through the introduction of “on-site power” – local power solutions developed for local needs under local control.  Microgrids operate in parallel to the utility grid.  They often utilize natural gas or renewable energy sources, such as solar, geothermal or biomass power and are ideal for high-use building clusters, (hospitals, office complexes and data centers.) The buildings remain connected to the utility grid but by generating their own power they reduce reliance on the grid and can even send surplus power back into the grid.

In a power outage or disturbance, a microgrid can separate from the utility grid. Members of the microgrid retain power availability, avoiding blackouts and lost productivity. With the power source located on-site, microgrids are less vulnerable to cyber attacks on the grid since they do not rely on transmission lines and have the security of redundant systems.

Microgrids have a range of benefits. Central plants are at best 35% efficient because of line losses and smoke stack waste heat.  Microgrids have no line losses and can capture surplus heat and use it to warm and cool buildings, making them up to 85% efficient.  Each project creates hundreds of local green jobs. Through the use of renewable sources and recaptured heat, microgrids generate an estimated 48 to 50 percent reduction in GHGs and can save from 10 to 12 percent in energy costs.  Equally compelling: the average microgrid takes 18-24 months to construct, meaning that we can implement the climate bill’s proposed renewable energy mandates on the timetable that both the President and Congress are proposing.  Furthermore, the reductions in energy costs and enhanced efficiency of microgrids mean that they pay for themselves in five to ten years.

The American Recovery and Reinvestment Act of 2009 includes a strong focus on renewable energy. However, only $11 billion in stimulus funding was allocated to modernize the nation’s electrical grid and that focused primarily on smart meter technology.  Microgrids are, in fact, the ultimate “smart grid” and the federal government should jumpstart the adoption of microgrids by directing stimulus funding to the design and development of microgrid projects, particularly those involving military bases and other critical infrastructure. The government could achieve this through additional stimulus funding and by creating federal policies that simplify the procurement process for these projects.
Microgrids have the ability to address our nation’s energy crisis by reducing the power load on our national grid, reducing national security risks and providing clean energy resources that are more reliable and cost less. What are we waiting for?

Guy Warner is a leading economist and the founder and CEO of Pareto Energy a company that provides counsel in the design, development, funding and maintenance of microgrids.