Building a Microgrid Incrementally to Avoid Breaking the Budget

Michael Bakas, executive vice president of distributed energy systems at Ameresco, and Will Agate, president & founder of NetZero Microgrid Solutions, offer ideas on how to build a microgrid incrementally. Both Bakas and Agate are featured panelists at Microgrid 2018 this week in Chicago. Their companies have been working together on one of the largest public microgrids in the United States, located at the Philadelphia Navy Yard.

Below is an excerpt from a recent conversation with Bakas, Agate and Elisa Wood, Microgrid Knowledge’s editor-in-chief.

Wood: Mike, we last spoke in November at Microgrid 2017 in Boston, not long after several severe hurricanes struck the U.S. Now, here we are six months later, coming out of a harsh winter in the Northeast — where Ameresco is based. How is this severe weather affecting interest in microgrids?

Bakas: The activity level has increased exponentially. Not just among those in private industry — who we are having one-on-one conversations with — but in the public sector as well — as indicative of the RFP activity. And it’s not just because of the weather, which definitely created an increased interest in microgrids.

How ironic is that at Microgrid 2017 in November, I talked about Delta reporting in the press that it was taking a $150 million pre-tax hit because of a power outage in 2016. And then one month after Microgrid 2017, Delta reported it would have to take another $50 million pretax hit because of another power outage at the Atlanta airport. One has to ask, just how much of this could have been avoided if an investment was made (a fraction of this loss) into resiliency? I don’t mean to pick on Delta or Atlanta. Unfortunately, they happen to be recipient of a difficult situation. The important thing is that we are seeing many becoming proactive to avoid a repeat of history.

Wood: Since the Atlanta outage, there does seems to be more interest in airport microgrids. What other types of energy customers are now pursuing microgrids?

Bakas: There is a tremendous amount of interest across multiple segments, including universities and mixed-use development led by master planners. Many owners (and developers) of campus complexes recognize that having a microgrid is a great attraction for potential tenants, such as data centers, medical institutions, or other mission critical facilities that want to be part of a hardened power system. These master developers also appreciate the ability to continue to expand generation incrementally as their developments expand over time.

Wood: Build a microgrid with incremental expansion of generation? How does that work?

Bakas: For instance, at the Philadelphia Navy Yard, we went commercial in 2017 with our 6 MW peaking plant, which was comprised of three engines (versus one) integrated into the microgrid. At the time, that is what our client needed. By spreading the capacity over multiple generators we increased the overall reliability of the supply through redundancy.

As we were commissioning the project, the development continued to experience material load growth. To meet this need, we expanded our peaking plant by another 2 MW. As their development continues to expand and grow, they can add more capacity to the microgrid.

Agate: Yes, the smartest thing to do when considering a microgrid platform is tackle what you can tackle. I call it designing for the ‘foundational microgrid.’ Put a system in place that has the essentials, the smart meters, the communication system and a microgrid system controller, with at least one [generation] asset. If you get that established and you build it in the right way, you can expand upon it over and over again.

Wood: I’ve heard you use the term “running an extension cord” as part of this project. What does that mean? Can you give us a hypothetical?

Bakas: I keep going back to the basic premise…customers must place a value on resiliency for these projects to materialize. For instance…the grid goes down, and someone from a pharmaceutical company in the Navy Yard drives by a retail store that is connected to the microgrid. The store’s lights are on, so the person from the pharmaceutical company calls up PIDC [the master developer of the Navy Yard] and complains. “Why aren’t my lights on?”

The response from PIDC is simple: “Well we offered you our resilience service for a fee, and you didn’t take it. The store took the service and that’s why their lights are on and business is as usual for them — unlike your facility.”

That type of event incentivizes the pharmaceutical company to reconsider the service, for a fee, weighed against productivity disruption.

Wood: You’ve caught them at the right time, when they see the value. And then the master planner can incrementally add generation to serve the new customers as they join?

Bakas: Yes, as the growth happens we can continue to add generation. You’re not biting off more than you can chew at the start. You can take baby steps so as not to break the budget by building a much larger plant (more than the short-term load needs) and hoping they come.

Wood:  So this becomes a way to set the resiliency value?

Agate: Yes, the market sets the value. Resiliency can be thought of in a very similar way to thinking of generation and storage opportunity — with the proper foundational microgrid you can add on different areas and degrees of resiliency based on what your client (i.e.: the market) requires.

Bakas: How do you assign a value to resiliency? — that will always be, at the end of the day, a key factor for any project moving forward. There is a point where the end user has to decide what that service is worth to them.

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