Minnesota Microgrids: Barriers, Opportunities, and Pathways toward Energy Assurance (Part 1)
Volume 5, Issue 9

A. Microgrids and the Minnesota Energy Assurance Plan

The Minnesota Department of Commerce (Commerce), Division of Energy Resources, commissioned the Microgrid Institute Team, managed by Burr Energy LLC, to prepare a White Paper to identify regulatory barriers to and opportunities for microgrid development for energy assurance in the state of Minnesota, with recommendations to address barriers and identify pathways to facilitate microgrid development. This project was made possible by a grant from the U.S. Department of Energy and the Minnesota Department of Commerce through the American Recovery and Reinvestment Act of 2009 (ARRA).

Scope of Study

Regulation and Policy: Review applicable State, Federal, and regional laws, regulations, rules, incentives, siting and permitting requirements, and practices affecting microgrid development, ownership, and operation. Analyze policies and policy gaps, and discuss how they prohibit or discourage microgrids, or, conversely, how they support microgrids.

Interconnection Standards and Practices: Identify Minnesota standards and practices involving interconnection, interoperability, and control of distributed resources. Compare and contrast these policies with the most current Federal and industry standards. Identify differences affecting microgrid development and optimization in utility systems.

Contracting, Risk Assessment, and Financing: Discuss how traditional contracting, risk assessment, and financing practices apply to microgrids. Analyze Minnesota policies that affect microgrid development, valuation, and access to third-party capital.

Prospective Microgrid Capacity: Research and model potential electric load available to microgrids within the state of Minnesota and segment potential load by user groups. Discuss assumptions and limiting factors affecting derived potential capacity, as well as such factors as fuel supply and access to infrastructure.

Renewable Microgrid Prospects: Identify renewable resources in Minnesota potentially available for use in microgrid applications. Discuss relevant trends in technologies and resource options, and examine economic and operational factors influencing prospects for renewable microgrids in Minnesota.

Microgrid Policy Roadmap: Recommend and explain policy steps that would help capture the benefits of microgrid development for Minnesota residents, and assist in their safe, cost-effective implementation and integration into the utility system.

B. Microgrid Drivers and Enabling Factors

Numerous factors are driving increased interest in microgrid solutions – not only in Minnesota and the United States, but around the world. The key factors are:

• Energy Assurance: The need for stable and sustainable energy supply at sites deemed critical for public services and safety, especially during wide-scale outages and natural disasters
• Reliability: The need for greater resilience and reliability at high-priority commercial, industrial, military, and other sites, where outages can cause serious disruption, risks, and financial costs
• Clean Energy Development: Public policy goals for increasing utilization of renewable resources, improving system efficiencies, and reducing greenhouse gas (GHG) emissions and other environmental effects of energy services
• Economic Development: Imperatives for encouraging and facilitating economic development, attracting new businesses, creating jobs, and advancing technology capabilities
• Disruptive Technologies and Forces: Transformative industry trends that make distributed generation (DG), energy storage, and energy management technologies more useful and cost-effective for a wider range of applications, which increasingly could challenge the traditional utility business model
• Local Self-Reliance: Energy end-users’ interest in alternative service models, especially those that enhance local self-reliance, environmental quality, and economic health

Minnesota’s Energy Assurance Plan process provides a strong context because microgrids represent one of many tools available to policy makers, community leaders, and the energy industry for improving the ability to maintain critical community services during emergencies. Microgrids that can operate in isolation from a utility grid can help communities’ efforts to recover from natural disasters and restore normal operations – both in public infrastructure and economic activity. Specifically microgrids could provide energy assurance for critical sites, such as police and administrative facilities, hospitals, and public shelters, when disasters trigger cascading effects in interdependent systems and sectors.

Thus energy assurance goals provide a useful framework for studying and promoting microgrids. And other factors, including clean energy goals, technology transformation, and economic development opportunities, can be combined with energy assurance to establish a strong framework to support microgrid development.

However, microgrids face serious impediments in Minnesota. Many of these involve policy barriers and uncertainties. But just as importantly, the microgrid platform remains a technical and economic work in progress. Although microgrids of some description have been operating for decades, the integrated, flexible, fully featured microgrid concepts that have sparked the keenest interest today are almost nonexistent outside of laboratories and limited demonstration projects. Very few operating examples today demonstrate the full scope of services and capabilities envisioned for advanced microgrids.

Most microgrids, however, are substantially more modest in their design capabilities and operating attributes. For example, some islandable backup power systems might be described as microgrids, but they are incapable of any function besides maintaining some level of operations during an outage or a load-shedding call by the utility. Other microgrids operating today are actually off-grid systems, and therefore incapable of doing anything except maintaining limited service for specific dedicated loads.

Microgrids are neither a pipedream nor a passing phenomenon. In addition to the few advanced microgrids operating in the United States today, dozens more are in development in this country. Tens of thousands of U.S. sites are available for potential microgrid development as technologies and business models mature.

Importantly, the microgrid concept itself is highly flexible and adaptable, accommodating an extremely wide range of possible applications and solutions. Microgrids don’t rely on any one technology pathway for future success; if CHP hits a plateau, PV and batteries will continue improving, for example. And energy management software and smart grid control systems used in microgrids continue advancing separately for a wide range of utility, industrial, and military applications.

Moreover the microgrid topology can be applied in countless different scenarios, scaling from the very small to the very large. Solar-powered, 150-kW community energy systems in developing countries apply simple microgrid systems to deliver minimal power to users who otherwise rely on burning kerosene for lighting. Large industrial CHP systems, up to 100 MW (or more) in generating capacity, could become more cost-effective and useful with the addition of microgrid systems. College and corporate campuses are being considered for microgrid deployment, with some already operating and others being designed and built today.

Beyond the concept of a microgrid for a single facility or campus, a few utilities are considering designs that would create islandable loops within an existing distribution system, adding DG and energy management systems to create a microgrid within the architecture of the macro grid. Proposals for community microgrids envision the creation of energy improvement districts and cooperative associations, combining the diverse resources and requirements of clustered facilities and customers. And some future concepts for industry transformation suggest that microgrid topologies could scale up – and out – in nested and connected circles, providing layers and webs of integrated generation and energy management systems that could seamlessly exchange resources and support each other through system disturbances and imbalances.

All of these approaches represent forward pathways for microgrids, and development along any path will bring technology advances and best practices that support the others. For this reason, the microgrid concept almost certainly will prevail to eventually reach its ‘plateau of productivity.’ Indeed, it could be the foundation of a new industry, with economic development and competitive benefits far greater than its perceived niche status today might suggest.

Part 2 of this article will appear in the next Global Renewable News, March 11.