Microgrids have a critical role in transforming energy systems by contributing to the energy 5Ds—decreasing consumption, decentralization, decarbonization, digitalization, and disintermediation. Contact online >>
Microgrids have a critical role in transforming energy systems by contributing to the energy 5Ds—decreasing consumption, decentralization, decarbonization, digitalization, and disintermediation.
Microgrids are a type of distributed energy system that can be connected to the main regional or national electric grid (synchronous with the grid). Or it can be disconnected and operate autonomously (island mode). A microgrid is a localized group of interconnected loads and distributed energy resources (e.g., renewables) within clearly defined electrical boundaries (e.g., cities, communities, campuses) that act as a single controllable entity. It is established primarily for local reliability, resilience, and operational economics.
A related setup called minigrid uses similar technology and components. Though referred to interchangeably with microgrids, minigrids are actually a distinct subset of microgrids. These isolated, small-scale distribution networks are essentially a microgrid disconnected from larger electric grids, which provide power to a localized group of customers and produce electricity from small generators, often coupled with energy storage systems.
Currently, majority of the world''s microgrids are in North America and the Asia and Pacific region. Most of the capacity in the Asia–Pacific is in the People''s Republic of China and Japan.
This is an adapted summary of the Asian Development Bank''s Handbook on Microgrids for Power Quality and Connectivity, which serves as a guide to evaluate the feasibility of microgrid systems in enhancing power supply quality and connectivity. The handbook includes information about on-grid microgrids for urban and industrial applications, prevailing business models, case studies of microgrid deployment, and emerging trends that could shape the future of this sector.
Microgrid projects in developing countries can provide gains and benefits beyond solely the energy access benefit that remote off-grid minigrids provide. A key benefit that is often overlooked by policymakers is the collateral benefit of reliability and resilience of electricity supply that grid-connected microgrids, especially commercial and industrial microgrids, can provide. This is especially important as a disaster resilience strategy, particularly in the context of increased risk of natural disasters because of climate change.
Microgrids must have the ability to maintain a balance between available supply and desirable load demand through careful marriage of supply and demand combined with intelligent control. The main components of a microgrid are (i) local generation, (ii) end-use loads and demand-side energy management, (iii) energy storage, (iv) microgrid monitoring and control system, (v) utility interconnection, and (vi) other components like power electronics and protection.
In terms of design architecture, microgrids can be classified in two ways—by their control approach, and by their power technology. Under the control approach, there can be centralized and decentralized management systems based on number of entities responsible for decision-making processes and a single point of failure. Under power technology, the microgrid systems can be alternating current, direct current, or hybrid systems.
From a project management perspective, the conceptualization, evaluation, design, construction, and commissioning of a microgrid follows the same broad stages as other infrastructure projects with similar stakeholders. In the case of an existing facility or brownfield microgrid, the pre-project evaluation begins with the assessment of current situation, followed by high-level assessment for both brownfield and greenfield projects.
The subsequent project feasibility study should typically consider the applicable policy and regulatory framework, renewable energy resource assessment, assessment of site conditions and site selection, technical viability, financial viability, and financing structure.
The business models employed for grid-connected microgrids (including technology, financing, and stakeholders) to meet relevant pricing options and financing implications can be: (i) customer-owned (up-front capital investment), (ii) renewable energy service company (RESCO)-owned, (iii) utility-owned, (iv) cooperative-owned, (v) community-owned, (vi) pay-as-you-go (typically rural remote minigrids), and (vii) remote (off-grid).
The choice of business model, through which the microgrid asset is built, operated, and maintained, is an important pre-development consideration irrespective of technology choice. Business model choices are typically between up-front capital investment model and RESCO model. Within the RESCO model, variations exist, such as build-own-operate, build-own-operate-transfer, lease-to-own, and power purchase agreement models.
A financial and economic analysis of microgrids requires a study of their benefits and costs to the microgrid owner or operator, the utility or distribution network operator, and/or the end user. Microgrid value is typically shared among utilities, end users, third parties, or co-owners depending on the ownership and operating model. Financial analysis of different kinds of business models are conducted using a combination of these various methodologies—net present value, financial internal rate of return, and sensitivity analysis.
Microgrids are poised to play a big role in the electricity ecosystem of the future with decarbonization, digitalization, decentralization, and non-wires solutions being its key attributes. They could help address today''s energy challenges, including an optimized way to access reliable, resilient, clean energy that can defer or replace the need for specific equipment upgrades, such as new transmission lines or transformers, by reducing the load at substation or circuit level.
While there is also a case for continued addition of transmission line capacity, particularly in the context of high-level penetration of renewable energy (which are almost always intermittent) to be the backbone of the electricity system, the following also need to be considered:
However, as a holistic strategy, if the intent is to increase the level of renewable energy penetration in the grid, then adding transmission capacity needs to be considered in the context of, and as a complement to, grid edge investments in distribution networks and microgrids.
Microgrids also hold key relevance to the transportation sector, which consumes over 30% of primary energy. Electrifying only a small percentage of this in the coming years would translate to significant capacity. A decentralized infrastructure will allow the many actors in the electric vehicle (EV) ecosystem to capitalize on the flexibility of EVs—one promising way to do this being "vehicle-to-grid" (V2G), wherein EVs can sell demand-response services to the power grid.
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