Old Microgrids are inefficient, with high operating costs.
Microgrids in the past were required for islands, secure military facilities and remote sites that needed power, but lacked a convenient grid connection. Diesel generators were a preferred option. The problem with diesel generators is they need to run all the time which means they need maintenance and fuel. Diesel power generation is much less thermally efficient than central station power, so these high operating costs provide an incentive to consider other options for power generation like wind and solar. The problem with wind and solar is matching the load to the wind or sun. While it may be possible to shift some loads to the times when sun and wind are available or accumulate thermal energy for later use, there is an obvious need to store energy when it is available and use it later. Battery technology, and particularly lithium batteries, has greatly reduced the cost and increased the performance of electric energy storage. Batteries make the grid control problem much easier and can greatly facilitate the integration of non-dispatchable renewable generation.
New Microgrids provide a compelling business case.
In the US we have three large grids and Europe has the largest grid in the world. These strong central grids depended on large central station power, but the decline of coal and nuclear power is reducing the spinning reserves on the grid that we depend on for reliability and base load. Renewables and natural gas are the largest source of new power generation. New load following natural gas turbines help compensate but batteries can respond some 10 times faster than gas turbines to load changes and flywheel storage is even faster. While pumped hydro is still the leading grid energy storage technology, batteries packaged into a container can be easily sited and quickly deployed at smaller sites. Pairing batteries with local solar fields or wind turbines naturally leads to a microgrid as the best way to maximize the utilization renewables and avoid curtailment or the need for peaking power plants.
The challenge for ISO’s (independent system operators) is to coordinate many microgrids to operate as part of a stable macrogrid. Where microgrids can operate in island mode, they provide resilience that reduce the dependence on transmission lines and add the security of local back up power. Solar PV at the residential level is increasingly leading to small microgrids or nanogrids. There are plenty of future opportunities to includes microgrids and nanogrids into larger interacting control systems with the necessary financial arrangements to allow smaller players into the many different energy markets.
In places where there is no strong central grid like India, businesses and factories can lose power for hours at a time. These businesses and factories can keep running if they have their own electric power supply and a microgrid to coordinate it. As more businesses build microgrids they can stabilize the macrogrid by providing various ancillary services like load following, frequency control, or power factor controls.
In Puerto Rico, Hurricane Maria took out the grid on the whole island. What is emerging is a replacement grid designed with inputs from many of the top power experts from the US including PREPA, the Puerto Rico Energy Commission, the U.S. Department of Energy, the Electric Power Research Institute, NYPA, Consolidated Edison, Edison International, the Long Island Power Authority, the Smart Electric Power Alliance, Brookhaven National Laboratory, the National Renewable Energy Laboratory, the Grid Modernization Lab Consortium, and Pacific Northwest National Laboratory. Hospitals, police and fire stations, emergency shelters, communications infrastructure, water treatment plants, airports, sea ports, and commercial and industrial centers will operate in isolation as microgrids. The typical arrangement is solar PV, batteries and a diesel generator. It is interesting to note the sophistication of the new control systems involved. They are using synchophasors and smart meters at key locations to gather data, they are building more sophisticated SCADA controls that coordinate microgrids, and control schemes for load shedding, curtailment, battery management, and integrating battery systems to maintain ancillary services like so-called spinning reserves. They are using intelligent switches that can detect a short circuit, block power flows to the affected area, communicate with nearby switches to reroute power around the problem. There is a combination of hardening for future CAT4+ storms and a distributed grid architecture that provides resilience to protect their battered economy.
In many cases local entities have funded and constructed the renewable generation. Government tax incentives and feed in tariffs have played a role. The entities responsible for power reliability have recognized the benefits that batteries can provide, and there are many government incentives to kick start the addition of batteries on the grid, in a similar way as wind and solar where given a boost. A key point is the cost of on-shore wind and solar have dropped essentially reaching grid parity. With lithium strongly in the lead there are massive new battery factories under construction to support electric cars and grid storage. The expectation is that battery prices will fall significantly. This new distributed generation and distributed energy storage is what makes microgrids happen.
For more detailed information please refer to the ARC study on Microgrid Automation.