Fundamentals of Microgrids

Fundamentals of Microgrids
Development and Implementation

Edited by
Stephen A. Roosa
First edition published 2021
by CRC Press
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 Dedication

This book is dedicated to my three wonderful children,

Sarah, Daniel, and Maryelle. They have grown into caring
and responsible adults. I know that during their lifetimes,
they and others like them will continue work to help ensure
the sustainability of our planet. After all, we must focus our
efforts on creating a better world for future generations.
Contents
Preface...................................................................................................................... xv
Acknowledgments..................................................................................................xvii
Editor Bio................................................................................................................xix
Contributors ............................................................................................................xxi
List of Acronyms ................................................................................................. xxiii
Introduction..........................................................................................................xxvii

Chapter 1 Introduction to Microgrids .................................................................. 1

What Are Microgrids?..........................................................................1
Standalone Power ............................................................................2
Distributed Energy Resources......................................................... 3
Why Would You Need a Microgrid? ............................................... 4
Types of Microgrids ........................................................................6
How Does a Microgrid Help?.......................................................... 8
Advantages and Disadvantages of Microgrids.....................................9
Advantages of Microgrids ............................................................. 11
Disadvantages of Microgrids......................................................... 12
Summary ............................................................................................ 13
References .......................................................................................... 15

Chapter 2 Environmental Drivers for Microgrid Development.......................... 17

Introduction ........................................................................................ 17
The Hydrocarbon Age Has Arrived ................................................... 18
Carbon Dioxide Emissions ...........................................................20
International Policies—Kyoto and the Paris Agreement .............. 22
Carbon Management—Adapt or Mitigate? ...................................24
Costs of Reducing Greenhouse Gas Emissions.............................25
Potential for Reducing Carbon Emissions.....................................26
The New Economics of Coal Plants.............................................. 27
Transitioning to a Low-Carbon Economy..........................................28
Greenhouse Gas Reduction Strategies .......................................... 29
Other Environmental Concerns..................................................... 30
Microgrids Are One Solution ........................................................ 32
Conclusions ........................................................................................ 33
References ..........................................................................................34

Chapter 3 The Roots of Microgrids .................................................................... 37

The Early History of Microgrids........................................................ 37
Hydropower Microgrids ................................................................ 37
The World’s Largest Microgrid in 1883 ........................................ 38
vii
viii Contents

Alternating Current ............................................................................ 39

Combined Heat and Power................................................................. 39
Mill Towns as a Model for Today’s Microgrids ............................40
Ships Are Microgrids ......................................................................... 41
Building-Scale Nanogrids ................................................................. 42
Sustainable Buildings .................................................................... 42
Green Building Assessment Methods ...........................................44
Zero Net Energy Buildings............................................................44
Nanogrids ..................................................................................... 45
Regional Grids....................................................................................46
The Role of Transportation Systems ..................................................48
Summary ............................................................................................ 50
References .......................................................................................... 51

Chapter 4 Traditional Electrical Supply Systems ............................................... 53

Supplying the Electric Grid................................................................ 53
What Is the Electric Grid?............................................................. 53
Categories of Energy Resources ................................................... 54
Traditional Sources of Grid-Supplied Elecrical Power...................... 56
Large Hydropower ........................................................................ 56
Coal-Fired Electrical Power ......................................................... 57
Natural Gas-Fired Electrical Power ............................................. 58
Diesel Generation .......................................................................... 59
Nuclear Power ...............................................................................60
Problems with the Electric Grid......................................................... 62
Security Issues............................................................................... 62
System Ineffciencies and Power Outages .....................................64
Environmental Issues .................................................................... 65
Regulation of the Electric Grid ..................................................... 65
Connecting Microgrids with the Grid................................................66
Summary ............................................................................................ 67
References .......................................................................................... 68

Chapter 5 Microgrid Architecture and Regulation............................................. 71

Features of Microgrid Architecture ................................................... 71
Microgrid Operational Confgurations.......................................... 71
Planning for Electrical Distribution Systems ................................ 73
Alternative Architectures for AC and DC Microgrids.................. 75
Components of Microgrids................................................................. 76
Power Sources ............................................................................... 76
Point of Common Coupling........................................................... 77
Microgrid Power Management Systems........................................ 77
Categories of Loads....................................................................... 79
Energy Storage Systems ................................................................ 79
Contents ix

Advanced Microgrids......................................................................... 81
Microgrid Regulations and Standards................................................84
U.S. Clean Air Act......................................................................... 85
U.S. Public Utility Regulatory Policies Act (PURPA) .................. 85
IEEE Standard 1547-2018 for Interconnection and
Interoperability of Distributed Energy Resources with
Associated Electric Power Systems Interfaces.............................. 86
IEEE P1547.4-2011 Guide for Design, Operation, and
Integration of Distributed Resource Island Systems with
Electric Power Systems ................................................................ 87
IEEE P2030.7-2007 IEEE Standard for the Specifcation of
Microgrid Controllers ................................................................... 87
IEC 61727 International Electrotechnical Commission’s PV
System Requirements .................................................................... 87
Microgrid Standards Being Developed ......................................... 88
Summary ............................................................................................ 88
Acknowledgments .............................................................................. 89
References .......................................................................................... 89

Chapter 6 Linking Microgrids with Renewable Generation............................... 91

The Impact of Renewable Energy ...................................................... 91
Renewable Generation for Microgrids ............................................... 93
Small Hydropower Systems...........................................................94
Biomass Energy............................................................................. 95
Landfll Gas Extraction ................................................................. 95
Solar Energy (Thermal).................................................................97
Solar Energy (Photovoltaic)........................................................... 98
Wind Power ................................................................................. 100
Geothermal Energy ..................................................................... 100
Waste-to-Energy ......................................................................... 102
Comparitive Cost of Generation Systems ........................................ 103
Summary ......................................................................................... 105
References ........................................................................................ 106

Chapter 7 Energy Storage Technologies for Microgrids................................... 109

Energy Storage Solves Problems...................................................... 109
Electrical Energy Storage................................................................. 110
Mechanical Energy Storage ............................................................. 111
Pumped Storage Hydroelectricity ............................................... 111
Compressed Air Energy Storage ................................................ 114
Flywheel Energy Storage ............................................................ 116
Electrical/Electrochemical Energy Storage ..................................... 116
Lead-Acid Batteries..................................................................... 117
Lithium-Ion Batteries .................................................................. 117
x Contents

Sodium Sulfur Batteries .............................................................. 118

Vanadium Redox Batteries .......................................................... 119
Zinc-Air Batteries........................................................................ 119
Hydrogen Energy Storage ................................................................ 120
Thermal Energy Storage .................................................................. 120
Summary .......................................................................................... 121
References ........................................................................................ 123

Chapter 8 Hybrid Generation Systems for Microgrids ..................................... 125

Energy Resources for Microgrids .................................................... 125
Hybrid Generation Systems.............................................................. 126
What Are Hybrid Power Systems? .............................................. 126
Advantages of Hybrid Generation ............................................... 128
Examples of Hybrid Generation....................................................... 129
Diesel and Renewable Hybrid Systems ...................................... 129
Natural Gas and Renewable Energy Systems.............................. 129
Solar and Wind Power ................................................................ 130
Solar and Geothermal Energy ..................................................... 131
Nuclear and Renewable Energy................................................... 133
Fuel Cells and Renewable Hybrid Generation ............................ 134
Renewable Co-Generation........................................................... 135
Summary .......................................................................................... 136
References ........................................................................................ 137

Chapter 9 Community and Local Microgrids .................................................. 141

Community Microgrids.................................................................... 141
Drivers for Community-Scale Microgrids .................................. 141
U.S. Municipal Renewable Energy Goals .................................. 142
Types of Microgrids ......................................................................... 143
Mobile Microgrids....................................................................... 144
Local Service Microgrids............................................................ 144
Military Microgrids..................................................................... 145
Industrial Microgrids................................................................... 146
Utility Distribution Microgrids ................................................... 147
Campus Microgrids ..................................................................... 148
Virtual Power Plants.................................................................... 148
Examples of Community and Local Microgrids.............................. 150
Kodiak Island .............................................................................. 150
Borrego Springs Microgrid ......................................................... 151
Long Island Community ............................................................. 152
Summary .......................................................................................... 153
References ........................................................................................ 154
Contents xi

Chapter 10 Ghana’s Transition to Renewable Energy Microgrids...................... 157

Ishmael Ackah, Eric Banye, Dramani Bukari, Eric Kyem, and
Shafc Suleman
Introduction ...................................................................................... 157
Access to Electricity in Africa .................................................... 157
Ghana’s Renewable Energy Act .................................................. 158
Microgrid Solar PV System Viability in Ghana .............................. 158
Perspectives on Microgrids .............................................................. 159
Energy Requirements of Rural Communities ............................. 163
Methodology ................................................................................... 164
Discussion of Findings ..................................................................... 165
Microgrid Policy and Regulation in Ghana ................................ 165
Private and Government Microgrid Systems .............................. 165
Capacity and Reliability .............................................................. 166
Technologies ............................................................................... 166
Tariffs and Rates ......................................................................... 167
Impact of Microgrid Development................................................... 167
Impact on Expenditures for Fuel ................................................. 167
Impact on Women ....................................................................... 168
Impact on Education.................................................................... 168
Conclusions and Recommendations................................................. 168
Conclusions.................................................................................. 169
Recommendations ....................................................................... 170
Acknowledgments ............................................................................ 170
References ........................................................................................ 171

Chapter 11 Local Energy Supply Possibilities—Islanding Microgrid

Case Study........................................................................................ 173
István Vokony, József Kiss, Csaba Farkas, László Prikler, and
Attila Talamon
Introduction ..................................................................................... 173
International Overview..................................................................... 174
Guaranteed Service Levels.......................................................... 176
Construction Aspects................................................................... 176
Planning Principles...................................................................... 177
Operational Aspects .................................................................... 178
Local Solution: Container Microgrid ............................................... 179
Container Microgrid Assessment ............................................... 180
Decision Support for Software Development................................... 182
Cost of Network Development Alternatives..................................... 183
Summary .......................................................................................... 185
Acknowledgments ............................................................................ 185
References ........................................................................................ 185
xii Contents

Chapter 12 Energy Blockchain—Advancing DERs in Developing Countries ......189

Alain G. Aoun
Introduction ...................................................................................... 189
Blockchain Opportunities for Energy Trading................................. 190
DER Challenges in Developing Countries....................................... 192
Incentives for Developing Countries ................................................ 193
Blockchain and Smart Meters ..................................................... 193
Smart Contracts and P2P Energy Trading .................................. 194
Energy Backed Currencies .......................................................... 195
Blockchain for Electric Vehicle Charging................................... 196
Key Challenges and Barriers............................................................ 197
Conclusion ........................................................................................ 198
Acknowledgments ............................................................................ 199
References ........................................................................................ 199

Chapter 13 Smart Microgrids ............................................................................. 201

Introduction ...................................................................................... 201
Smart Microgrids and Their Benefts............................................... 201
Advanced Microgrids ..................................................................202
Advanced Remote Microgrids.....................................................202
Mandatory Microgrid Features ..............................................202
Preferred Microgrid Features .................................................203
Differences between Smart Grids and Smart Microgrids .......... 203
Benefts of Smart Microgrids .....................................................204
Technologies Used for Smart Microgrids ........................................205
Sensor Systems ...........................................................................205
Advanced Metering Infrastructure..............................................206
Technologies ................................................................................206
Residential ..............................................................................207
Commercial ...........................................................................207
Electricity Distribution ...........................................................207
Examples of Smart Microgrids ........................................................207
Projects Under Development .......................................................208
Projects Deployed........................................................................209
Use of Renewable Energy Technologies ......................................... 210
Sustainable Smart Microgrids ..................................................... 210
Managing Multiple Renewable Microgrids................................. 211
Policy Concerns................................................................................ 212
Conclusions ...................................................................................... 213
References ........................................................................................ 214

Chapter 14 Scoping the Business Case for Microgrids ..................................... 217

Introduction ...................................................................................... 217
Business Case for Renewable Energy-Based Microgrids ................ 217
Contents xiii

Creative Approaches to Project Financing....................................... 219

Cap and Trade Programs ............................................................ 221
Renewable Energy Certifcates.................................................... 223
Global Environmental Facility and Clean Development
Mechanism ................................................................................. 223
Build-Transfer Agreements .........................................................224
Peer-to-Peer Trading ................................................................... 225
Ways to Combine Project Financing and Delivery .......................... 225
Public–Private Partnerships ........................................................ 226
Energy Savings Performance Contracts ..................................... 229
Challenges to Microgrid Development ............................................ 230
Policies in Flux ............................................................................ 231
Development and Scalability Issues ............................................ 231
Controller Technologies............................................................... 232
Electricity Pricing ....................................................................... 232
Cost of Generation Systems, Integration, and Maintenance ....... 233
Cash Flow Analysis for a Microgrid Project.................................... 235
Summary .......................................................................................... 239
References ........................................................................................ 241

Chapter 15 It’s Back to the Future with Microgrids ........................................... 245

It’s All About Providing Electricity ................................................. 245
Bright Future for Microgrids ......................................................246
Creating Smart Microgrids .........................................................246
Development of Distributed Energy Resources ..........................248
Emerging Electrical Generation Technologies................................. 249
Wave Energy Systems ................................................................. 249
Tidal Power.................................................................................. 251
Stirling-Dish Engine ................................................................... 252
Electricity Generated Using Hydrogen ....................................... 253
Small-Scale Nuclear Reactors ..................................................... 254
Plasma-Arc Gasifcation ............................................................. 256
Developing Applications for Microgrids.......................................... 257
Artifcial Intelligence .................................................................. 257
Wireless Energy Transmission ................................................... 258
Conclusion ........................................................................................ 259
References ........................................................................................ 259

Index...................................................................................................................... 263
Preface
It seems like a long time ago when I frst became interested in how we as a civiliza-
tion might begin the process of weening ourselves off fossil fuels. Moving forward
required an agenda that necessitated development on many fronts. This personal
journey has been about energy conservation, energy effciency, improved technolo-
gies, sustainability, and environmental improvements. It has focused on the types of
policies we pursue and infrastructure we develop.
For me, solutions are found in congruent policies, programs, and technologies.
Policies are established by governments and organizations. They set the goals and
establish the tone of the agenda. Programs reinforce the policies by creating a sup-
portive infrastructure that enables the policies to be communicated, funded, and
subsidized. When the technologies are advanced and deployed, exciting things begin
to happen. They are the creative endeavors of mankind that solve problems and pro-
vide needed services.
When I frst started to understand the literature on the subject of microgrids,
it seemed that most articles were too basic to be useful and most books were so
detailed that only electrical engineering professionals could comprehend them.
The authors often missed the policy aspects of microgrid deployment and failed to
address the diversity of modern microgrids and their topologies. Microgrids were not
being addressed as a new paradigm in the delivery of electricity. It gave me the idea
that there was a need for a book about microgrids that could be understand by those
who weren’t necessarily engineers but would provide the fundamentals for those
who were. It was this essential concept that lead me to pursue this project.
Fundamentals of Microgrids: Development and Implementation is about the
structure of successful technological systems and how microgrids offer solutions
for the future of local electrical generation. Microgrids in my view are the ultimate
manifestation of the ideal of energy independence. They offer electricity to all tak-
ers, especially those with hopes of using renewables to generate local power, not
totally dependent on the grid. They provide a multitude of potential solutions with
the opportunity to do more with fewer resources. They bring electricity and its ben-
efts to those in remote places and create stronger communities. The beauty lies in
their adaptability and diversity.
Microgrids suggest that perhaps we already have the tools available to impact
and resolve some of the key energy and environmental issues we face. If so, it is
a matter of resolving where and how to deploy them. This creates lots of exciting
opportunities for designers and engineers. To aid in this process, there are models
and templates that we can learn from. This book is about these models and how we
can organize the technologies available to provide infrastructure solutions that will
become tomorrow’s energy supply mechanisms.

xv
Acknowledgments
During the course of my career, I have had opportunities to learn and share experi-
ences with people who helped me understand how important it is to offer solutions to
problems. In this endeavor, I have been humbled by what I could learn by studying
the works of those who knew more than me about certain topics, such as microgrids.
It is diffcult to count the number of people who have helped in this pursuit, but many
are found in this book’s chapter references.
I must thank Al Thumann, Barney Capehart, Victor Ottaviano, Bill Payne, who
all have passed on, for their insights, support, and friendship. I miss them all. Others
who have helped in the past are Wayne Turner, Eric Woodruff, Bill Kent, Samer
Zaweydeh, Fred Hauber, Michelle Whitlock, Joy Maugans, John Gilderbloom, and
Steven Parker, who all have supported or assisted with my journal articles and books.
I also thank the folks at Taylor & Francis Group, LLC who supported this proj-
ect since the onset and believed that a book on this topic was not only timely but
worthwhile.
My sincere thanks to all the contributing authors. Their contributions helped
defne areas of microgrid development that clarifed situational applications. Without
their aid this project would have lacked a well-rounded perspective. I also thank
the students and professionals who have taken or supported my many seminars in
renewable energy and microgrids over the last ten years or so. It was in those seminar
sessions that many of my ideas about microgrids were initially presented, discussed,
reevaluated, and fnally congealed into terms that can be presented in a manner wor-
thy of being published. I wish them well.

xvii
Editor Bio
Dr. Stephen A. Roosa, Ph.D., CEM, REP, BEP, CSDP, has over 35 years of experi-
ence in commercial energy management, energy engineering, and performance con-
tracting. During his career he has been the corporate energy manager for a Fortune
100 company and has worked in various capacities with a number of energy services
companies. His past experience includes thousands of energy studies and over $250
million in energy conservation, energy management, and performance contract proj-
ects that were developed for his customers.
Stephen is a former President of the Association of Energy Engineers (AEE). He
currently serves as its Director of Sustainable State and Local Programs, and as the
Chair of both the AEE Certifed Sustainable Development Professional Board and
the AEE Renewable Energy Professional Certifcation Board.
Stephen holds a Ph.D. from the University of Louisville, a Master of Business
Administration from Webster University, and a Bachelor of Architecture from
the University of Kentucky. He co-instructed his frst graduate-level course at the
University of Kentucky at the age of 19, implementing its frst course in the use
of the built environment as an educational medium. He has since taught graduate
and undergraduate courses and professional certifcation courses and workshops
throughout the U.S and in India, Saudi Arabia, Jordon, Kuwait, South Africa, and the
Dominican Republic. Stephen is a Certifed Energy Manager, a Certifed Sustainable
Development Professional, a Certifed Building Commissioning Professional, a
Certifed Measurement and Verifcation Professional, a Certifed Energy Monitoring
and Control System Designer, a Certifed Demand Side Management Specialist, a
Certifed Building Energy Management Professional, a Certifed Renewable Energy
Professional, and a LEED Accredited Professional.
Stephen is the Editor-in-Chief of the International Journal of Strategic Energy
and Environmental Planning, a bi-monthly academic and professional journal. He
is also on the Editorial Board of the International Journal of Energy Management.
His published books include International Solutions to Sustainable Energy, Policies
and Applications and The Sustainable Development Handbook. He was the Editor-
in-Chief of the Energy Management Handbook, 9th edition. He has published over
50 journal articles relating to energy conservation, energy engineering, energy man-
agement, alternative energy, and sustainable development.
Stephen has received numerous related awards during his career including the
AEE International Energy Manager of the Year Award, the U.S. Army Corps of
Engineers National Energy Engineers Systems Technology Award, the U.S. Army
Energy Conservation Award, and the U.S. Joint Chiefs of Staff Citation for Energy
Management. He is a member of the Energy Manager’s Hall of Fame and a two-time
recipient of the Rockefeller Family Funds, Energy, and Environmental Education
Award.

xix
Contributors
Ishmael Ackah (Ph.D.) is an energy economist with experience in public service
and academia. He has worked as the head of policy unit at the Africa Centre for
Energy Policy, where he coordinated research on accountability and transparency in
petroleum revenue management. He is currently the local content offcer at Ghana’s
Energy Commission.

Alain Aoun received a Master of Science (2006) in industrial and power engineering
and Masters of Engineering in electrical engineering (2007) and renewable energies
(2018). He is presently the managing director of Alain Aoun and Partners, an engi-
neering frm located in Lebanon that specializes in lighting, electrical, and energy
systems. Alain Aoun is currently accredited with seven certifcations from the AEE
(CEM, BEP, CBCP, CEA, REP, CMVP, CLEP) and is a certifed energy manager
trainer. He is currently pursuing a Ph.D. in energy management.

Eric Banye is the sector leader (agriculture) and national project coordinator for
the Voice for Change Partnership Program at the SNV Development Organization,
Ghana. He has 14 years of experience in project management and project development.

Dramani Bukari is a senior energy advisor at the SNV Development Organization.

He is a Ph.D. candidate at the Kwame Nkrumah University of Science and Technology.
Dramani has facilitated major seminars including the World Bank’s clean cooking
seminar. He is an energy analyst with expertise in energy policy, energy modeling,
small energy systems, project management, and economics.

Csaba Farkas was born in Berettyóújfalu, Hungary, on September 5, 1987. He received

his Ph.D. from the Budapest University of Technology and Economics, Budapest in
2017. He is a senior lecturer at the Department of Electric Power Engineering and a
network modeling engineer at the Hungarian Transmission System Operator MAVIR.
His research interests include the computer simulation of electric power systems.

József Kiss received his Master of Science in electrical engineering from the BUTE
in 2011. He is an assistant lecturer with the BUTE Department of Electric Power
Engineering. His interests include power quality, network losses, renewable energy
integration, and smart grids.

Eric Kyem is a head of department (economist) with the Energy Commission,

Ghana. He is also the administrator of the electricity market oversight panel of
Ghana (EMOP), an institution mandated by law to supervise the administration and
operation of the Ghana Wholesale Electricity Market. Eric has worked successfully
in various capacities in various organizations in the United Kingdom. He has expe-
rience in energy sector reforms and regulation. Eric holds a Master of Science in
economics from the University of Surrey, UK.

xxi
xxii Contributors

László Prikler received his Master of Science in electrical engineering from the
Technical University of Budapest in 1986, where he is currently an academic staff
member in the Department of Electric Power Engineering. Mr. Prikler is a member
of IEEE Power and Energy and Industry Applications Societies and the Hungarian
Electrotechnical Association. He has received the Chapter Regional Outstanding
Engineer Award of IEEE, Region 8. He is an honorary member of International
Conference on Power Systems Transients (IPST) Steering Committee and served
as chair of the European EMTP-ATP Users Group Association. He has co-authored
more than 60 technical papers and 40 research reports. His research and develop-
ment competence and interests include insulation coordination, analysis, simulation
and measurement of power system disturbances, modeling and simulation of distrib-
uted energy systems, and the grid impact of electric vehicle infrastructure.

Shafc Suleman (Ph.D., ERP) is a lecturer at the Institute for Oil and Gas Studies,
University of Cape Coast, Ghana. Shafc specializes in energy, sustainable develop-
ment, and energy risk management. He has been involved in teaching, research, and
consultancy services in energy and other related areas.

Attila Talamon received his Ph.D. in 2015 with research focusing on the Hungarian
possibilities of low-energy buildings. He received a Master of Science in mechanical
engineering from BUTE. He joined the Student Association of Energy in 2007; he is
currently a senior member. He is a member of several professional organizations. He
holds certifcations as an energy auditor and building energy specialist. He has been
involved in several international scientifc projects as a leading expert. Since 2009
he has been lecturing on subjects related to renewable resources and building energy
at BUTE and the University of Debreceni Egyetem (DE). He is currently with Szent
István University. He is also a research fellow with the Centre for Energy Research,
Hungarian Academy of Sciences.

István Vokony received his Master of Science in electrical engineering and his
Ph.D. from the Budapest University of Technology and Economics (BUTE) in 2007
and 2012, respectively. He is a senior lecturer with the BUTE Department of Electric
Power Engineering. He is a former offcer of the AEE Hungary student chapter. His
interests include system stability, renewable energy integration, energy effciency,
and smart grids. He is the corresponding author for this article.
List of Acronyms
AC Alternating Current
AI Artifcial Intelligence
AMI Advanced Metering Infrastructure
BESS Battery Energy Storage System
BEMS Building Energy Management System
BMS Battery Management System
BREEAM Building Research Establishment Environmental Assessment
Method
CAES Compressed Air Storage
CCGT Combined-Cycle Gas Turbine
CCS Carbon Capture and Sequestration
CCX Chicago Climate Exchange
CDM Clean Development Mechanism
CEER Council of European Energy Regulators
CER Certifed Emissions Reduction
CERTS Consortium for Electric Reliability Technology Solutions
CFI Carbon Financial Instruments
CHP Combined Heat and Power
CIGRE International Council on Large Electric Systems (Fr.)
CPS Clean Peak Standard
CSP Concentrating Solar Power
CUF Capacity Utilization Factor
DC Direct Current
DDC Direct Digital Control(s)
DER Distributed Energy Resources
DERMS Distributed Energy Resources Management Systems
DESS Distributed Energy Storage Systems
DG Distributed Generation
DMG Dynamic Microgrid
DoE Department of Energy (U.S.)
DR Demand Response
DSO Distribution System Operator
DSOC Dynamic Stochastic Optimal Control
EDA Energy Daily Allowance
EES Electricity Energy Storage
EMS Energy Management System
EN European Norms
EPS Electric Power System
EPA Environmental Protection Agency (U.S.)
ERCOT Electric Reliability Council of Texas
ES Energy Storage
ESCO Energy Service Company

xxiii
xxiv List of Acronyms

ESMAP Energy Sector Management Assistance Programs

ESPC Energy Savings Performance Contracts
ESS Energy Storage Systems
EV Electric Vehicle
FAST Feeder Automation System Technologies
FERC Federal Energy Regulatory Commission
FESS Flywheel Energy Storage System
GEDAP Ghana Energy Development Access Project
GEF Global Environmental Facility
GHG Greenhouse Gases
GdV Gorona del Viento
GOCO Government-Owned Contractor-Operated
HES Hybrid Energy Systems
HFC Hydrofuorocarbon
HOMER Hybrid Optimization of Multiple Energy Resources (software tool)
HP Horse Power
HRES Hybrid Renewable Energy Systems
ICE Internal Combustion Engine
IEC International Electrotechnical Commission
IECC International Energy Conservation Code
IED Intelligent Electronic Devices
IEEE Institute of Electrical and Electronics Engineers
IRENA International Renewable Energy Agency
ISO Independent System Operator
IT Information Technology
JIT Just in Time
kW Kilowatt
LED Light Emitting Diode
LEED Leadership in Energy and Environmental Design
LFG Landfll Gas
LFGTE Landfll Gas-to-Energy
LI Lithium Ion
LICMP Long Island Community Microgrid Project LICMP
LV Low Voltage
MEMS Microgrid Energy Management System
MW Megawatt
MMTCE Million Metric Tons of Carbon Equivalent
MPPT Maximum Power Point Tracking
MSW Municipal Solid Waste
MV Medium Voltage
MW Megawatt
M&V Measurement and Verifcation
NARUC National Association of Regulatory Utility Commissioners
NaS Sodium and Sulfur
NG Natural Gas
List of Acronyms xxv

NRECA National Rural Electric Cooperative Association

NREL National Renewable Energy Laboratory
N-R HES Nuclear-Renewable Hybrid Energy System
OECD Organization for Economic Cooperation and Development
OFGEM Offce of Gas and Electricity Markets
OSG On-Site Generation
O&M Operation and Maintenance
OTEC Ocean Thermal Energy Conversion
P2P Peer-to-Peer
PCC Point of Common Coupling
PESD Portable Energy Storage Devices
POI Point of Interconnect(ion)
PPA Power Purchase Agreement
PURPA Public Utility Regulatory Policies Act (U.S.)
PV Photovoltaic
QECBs Qualifed Energy Conservation Bonds
RAPS Remote Area Power Supply
RDEG Renewable Distributed Energy Generation
RE Renewable Energy
REC Renewable Energy Certifcate
RET Renewable Energy Technology
RGGI Regional Greenhouse Gas Initiative
RMS Root Mean Square
RNG Renewable Natural Gas
RPS Renewable Portfolio Standard
SAPS Stand-Alone Power System
SCADA Supervisory Control and Data Acquisition
SDG&E San Diego Gas and Electric
SEM Subjective Evaluation Method
SGIP Smart Grid Interoperability Panel
SHS Solar Home Systems
SEPA Smart Energy Power Alliance
SPS Stationary Power Systems
TANGEDCO Tamil Nadu Generation and Distribution Corporation
THD Total Harmonic Distortion
TOU Time of Use
TRC Tradable Renewable Certifcate
TS Total Solids
TVA Tennessee Valley Authority
UCSD University of California at San Diego
UNT Uniform National Tariff
UPS Uninterruptible Power Supply
USC University of the Sunshine Coast USC
US-CERT United States—Computer Emergency Readiness Team
USD United States Dollar
xxvi List of Acronyms

VPP Virtual Power Plant

VRB Vanadium Redox Batteries
VRE Variable Renewable Energy
WFP World Food Program (a UN initiative)
WTG Wind Turbine Generators
ZNE Zero Net Energy
Introduction
The fourth industrial revolution is associated with the global trend toward decentral-
izing energy grids. Within this context, microgrids are seen as a solution to how
renewable electricity can be provided to local areas. Fundamentals of Microgrids:
Development and Implementation provides an in-depth examination of alterna-
tive microgrid energy sources, applications, technologies, and policies. This book
considers the fundamental confgurations and applications for microgrids. It is
a research-based work that discusses the use of microgrids as a means of meet-
ing international sustainability goals. It focuses on questions and issues associated
with microgrid topologies, development, and implementation. Technologies are dis-
cussed that are relevant to microgrid components and electrical generation systems.
It considers both renewable and non-renewable generation systems as they apply
to microgrids. Key themes include microgrid technologies, drivers for microgrids,
types of microgrids, their components, confgurations, and applications. Below is a
summary of chapter content.
Chapter 1 provides a brief introduction to microgrids. It provides answers to the
fundamental questions energy managers and other professionals want to know about
the basics of microgrids. What are microgrids? When and why are they needed?
They are often seen as solutions to improve electrical system resiliency and disaster
response, and to reduce costs. How is this accomplished? This chapter begins by dis-
cussing the differences between conventional electrical power delivery systems and
microgrids. The chapter provides defnitions of microgrids and identifes the basic
types of microgrids and the fundamental differences in microgrid types. Distributed
energy resources are defned, standalone generation systems are described, and a
typical microgrid confguration is provided. It describes what microgrids are and
details the basics of how they work. An overview of the benefts of microgrids and
their disadvantages is offered.
Chapter 2 offers an assessment of environmental drivers for microgrids. Our
patterns of energy use since the early 1900s have contributed to the environmental
pollution that is problematic today. With the arrival of the Hydrocarbon Age, fossil
fuel consumption is increasing. How we use energy, and the types of energy we use,
are both key to efforts to mitigate the environmental impacts of fossil fuel use. Like
large-scale electrical grids, microgrids use fossil fuel-fred generation, renewable
generation, and often both.
Developing sustainable policies requires foresight. Are microgrids a solution for
some of the environmental issues associated with fossil fuel combustion? This chap-
ter considers greenhouse gas-induced climate change as one environmental driver
for using renewable energy resources in microgrids. The potential and costs of reduc-
ing greenhouse gases, while diffcult to estimate, are considered. The economics of
developing coal-fred plants is becoming more and more unfavorable. It seems more
coal-fred thermal plants are being demolished or adapted for modifed use than
are being constructed. Options are being considered to enable a transition to a low-
carbon economy. Examples include reducing use of targeted fuels, improving plant

xxvii
xxviii Introduction

and transmission system effciencies, and fuel substitution. The transition to a low-
carbon economy is congruent with the development of microgrids. Also explored are
additional environmental problems that include the emissions of criteria pollutants
which reduce regional air and water quality. This chapter concludes with an optimis-
tic forecast that microgrids have a place in solving key environmental issues.
Chapter 3 considers the roots and early history of microgrids. How did microgrids
originate and evolve? This chapter traces the history of microgrids beginning with
Thomas Edison’s frst microgrids in the U.S. Early microgrids were developed using
both hydropower and fossil fuels. By the late 1880s, there were over 200 hydro-
power-driven microgrids in the U.S. Combined heat and power systems were co-
located to provide electricity and heat to communities and factories. One example is
the 1883 South Exposition in Louisville, Kentucky, which demonstrated the largest
to-date installation of incandescent light bulbs invented by Thomas Edison and the
frst use of electric trollies. Westinghouse built an alternating current hydroelectric
power plant on Niagara Falls and transmitted electricity 20 miles to Buffalo, New
York. Combined heat and power systems grew to developing company and factory
towns in the early 1900s.
This chapter describes models of microgrids that originated from marine appli-
cations and buildings. Ships are microgrids. Buildings that power themselves are
considered to be nanogrids, a smaller version of a microgrid. Models for microgrids
include marine examples such as military and cruise ships, residential nanogrids,
plus green and net zero energy buildings. From these humble roots, microgrids have
the potential to revolutionize our thinking about how buildings function and to dis-
rupt the electric utility industry. Providing alternatives to fossil fuels for transpor-
tation systems is challenging. Today, the electrifcation of vehicular transportation
systems provides justifcation for contemporary examples of microgrids.
Chapter 4 discusses traditional electrical energy systems and the development of
large nation-scale generation systems. The electric grids of today consist of gener-
ating stations that produce electrical power, transmission lines that carry power to
demand centers, and distribution lines that connect individual customers. These sys-
tems might use a wide array of generation including large hydropower, conventional
fossil fuel systems, nuclear power, and in some cases renewable energy.
Central power stations typically rely on a single type of fuel for generation. Large
central systems supply electricity power to consumers—a one-way model of dis-
patching power with inherent limitations. Developing problems with the electric
grid include security issues, power disruptions, ineffciencies, environmental issues,
and regulatory concerns. These problems have contributed to a complex system of
electric regulation by federal, regional, and local governments to manage policies
for generation, distribution, and sale of power to consumers. The regulatory envi-
ronment often creates multiple complications and hurdles for distributed energy
resources when interconnecting with the existing power systems and national grids.
Overcoming these issues leads to successful microgrid development.
Chapter 5 evaluates microgrid architecture. It begins by describing microgrid
operational confgurations. How are grid-interconnected microgrids different from
those that are not interconnected? This chapter details the key components of off-grid
and grid-connected microgrids including centralized, decentralized, and distributed
Introduction xxix

systems. There are several basic components of microgrid architecture. Most impor-
tantly, microgrids must contain the equipment necessary to generate electricity, loads
or uses for the power generated, other assets, plus a microgrid power management
system. Their topologies often include some form of energy storage system which
does not necessarily need to be internal to the microgrid. They may be confgured
to allow the host electric grid, if interconnected, to serve as a storage system. Within
the microgrid there must be a set of electricity-consuming devices that dictate the
loads placed on the microgrid. Finally, grid-connected microgrids require a utility
interconnection to enable the microgrid to exchange power with the larger utility net-
work. Microgrids connect to large grids at the point of common coupling. Seen as a
beneft of microgrids, their decentralized confgurations have greater resiliency than
centralized systems since their more diverse portfolio of production options provide
generation redundancy.
Microgrid architecture confgurations include models for various types of AC
and DC electrical power generation and local distribution. Advanced microgrids are
a subcategory of microgrids with defned characteristics, some similar to conven-
tional microgrids but with enhanced capabilities. There are ways that microgrids can
interconnect with other microgrids to improve operations and resiliency. Microgrids
create a special regulatory issue as many states and local governments have not yet
adopted regulations for their design and implementation. Some have no legal defni-
tion for a microgrid. However, many have regulations concerning the development
of distributed energy resources and guidelines concerning utility interconnections.
This chapter identifes and describes important microgrid regulations and standards.
Chapter 6 links microgrids to renewable energy solutions as distribution-scale
technology options. How are renewables linked to microgrids? Alternative and renew-
able energies refer to electricity or heat generated from renewable sources plus energy
substitutes and various conservation methodologies. Renewable energy resources have
important policy, environmental, and economic impacts. They can be developed to
effectively reduce greenhouse gas emissions in a sustainable manner and this is often
cited as a driver for microgrid applications. Technology options for distributed gen-
eration include small hydropower, biomass energy, landfll gas extraction, geother-
mal energy, wind power, hydrogen fuel cells, solar thermal, and photovoltaics. Each is
explored in the context of microgrid applications. All can be used to provide electri-
cal generation for microgrids. The costs of renewable generation have been declining
which opens new markets and provides increasing opportunities for deployment.
Chapter 7 considers the technical aspects of electrical energy storage systems.
The storage of electricity creates interesting problems since electricity must be used
the instant it is generated and cannot be directly stored. Technologies for storage
change electricity to another form of energy and then regenerate power. What types
of energy storage work best for microgrids? Examples of mechanical storage sys-
tems include pumped hydro, fywheel, and compressed air storage technologies.
Electrochemical systems often used for microgrids encompass lead-acid, lithium-
ion, sodium-sulfur, vanadium-redox, and zinc-air batteries. Other types of energy
storage include chemical storage, biological storage, and thermal energy storage.
In particular, molten salt storage systems are found in solar thermal microgrid
applications.
xxx Introduction

All forms of electrical energy storage are limited by their capabilities, capaci-
ties, storage durations, and round-trip effciencies. The technical and market barriers
associated with distributed electrical storage are considered in this chapter along
with ways for resolving these barriers. Storage systems can help microgrids become
more responsive to utility demand programs and apply time-of-use rates to reduce
electrical peak demand costs.
Chapter 8 rigorously examines hybrid energy generation technologies. How
is hybrid generation defned? Hybrid generation systems from the perspective of
microgrids involve the use of multiple generation and storage systems. The genera-
tion technologies used in microgrids have shortcomings which must be addressed
to successfully apply microgrids. An important feature of microgrids are the mix
of energy resources used in their designs for electrical generation. Some microgrids
use multiple electricity generation technologies such as combinations of renewable
fuels and fossil fuels. The idea is to fnd creative solutions to overcome shortcomings
inherent in the use of any single fuel, thus meeting the goal of providing stable and
resilient power.
There are innumerable combinations of generation systems that are possible. A
few examples include combining diesel with renewable energy, combining solar
thermal or photovoltaic with wind power, and using fuel cells or nuclear energy
with renewables. Renewable co-generation and trigeneration systems are available
for microgrid deployment. Storage technologies are often included as a key compo-
nent of hybrid systems.
Chapter 9 considers local and regional microgrids. What causes communi-
ties and local organizations to consider a microgrid? Drivers include the desire for
an independent power supply, the need to lower electricity costs, or the desire to
improve resiliency. The ability to introduce renewable energy generation to meet
sustainability goals is also cited. This chapter discusses community microgrids,
campus microgrids, industrial microgrids, and military microgrids. It provides
examples and case studies along with real-world microgrid applications. Case exam-
ples of microgrids that are considered include those serving Kodiak Island in Alaska,
Borrego Springs in California, and Long Island in New York.
Virtual power plants, a special class of microgrids, are defned and discussed.
They typically aggregate supply side resources, and often use a diverse pool of
renewable distributed energy generation and wholesale renewable energy sources.
Chapter 10 considers small-scale rural mini-grids in developing countries as a
solution for communities that are sparsely populated and located far from grid con-
nections. These challenges have led to increased interest in off-grid and mini-grid
solutions. Countries such as Ghana are not an exception to this trend.
How are microgrids successfully deployed in developing countries? This chapter
highlights the viability of solar PV mini-grids for rural electrifcation in Ghana by
analyzing the regulatory and fscal situation. It offers recommendations for a sup-
portive renewable energy and mini-grid regulatory framework. To these ends, this
chapter provides a case study that examines the mini-grids deployed by the govern-
ment and private investors and assesses the differences in tariff structures, customer
services, and reliability. The fndings indicated that expenditures on electricity using
mini-grids were lower compared to the alternative of using kerosene and dry cell
Introduction xxxi

batteries. It was also determined that solar photovoltaic (PV) mini-grids developed
by private businesses offer viable solutions for rural communities. Examples of the
socioeconomic benefts of providing solar-generated electricity to rural communi-
ties include savings on fuel, improvements in the welfare of women, and educational
benefts such as increased hours of learning. For rural areas fscal incentives are
needed to seed private sector investments in mini-grids. This chapter is authored by
Ishmael Ackah, Eric Banye, Dramani Bukari, Eric Kyem, and Shafc Suleman.
Chapter 11 discusses microgrid islanding. There are locations (e.g., on remote
islands, in mountainous areas) where the only way to provide electrical power is to
establish local energy systems. What are the characteristics of island microgrids and
what makes them successful? Local island microgrid solutions can be competitive in
cases where the synchronous network is available, but new approaches are needed
for economic reasons. One catalyst for this new approach to microgrid deployment
is the growing renewable generation industry.
This chapter provides an in-depth island microgrid case study which considers
the possibilities of local energy supply systems. In this chapter, service quality is
analyzed, construction and operational requirements are cited, and through on-site
measurements, a renewable energy mix optimizer application is introduced. Based
on the measurements and operational experience, a calculation methodology is
established to compare the traditional supply solutions with islanding operations.
Using the comparison of network development costs and islanding solution costs, an
optimal weight factor can be defned, which can be an effective investment decision
support parameter. This chapter is authored by István Vokony, József Kiss, Csaba
Farkas, László Prikler, and Attila Talamon.
Chapter 12 presents a detailed assessment of the use of an energy blockchain as
a solution for developing energy resources. Blockchain offers a system in which a
record of cryptocurrency transactions can be maintained across several computers
that are linked in a peer-to-peer network. This can be applied to the transfer of funds
for the purchase of electricity generated by microgrids. Considering the blockchain
potential in developing countries from the distributed energy perspective, this chap-
ter identifes the challenges and barriers associated with the development of DERs in
developing countries and highlights opportunities associated with the integration of
blockchain-based solutions to overcome these challenges.
In a future in which consumers of energy are encouraged to become producers,
energy blockchains have an important role in the development of microgrids and
smart grid frameworks. Blockchain has the potential to change the way transactions
are processed. By eliminating the roles of third parties in transactions, blockchain
can make our systems more economically effcient by reducing cost and improving
reliability. The ability to conduct smart contracts for microgrid via blockchain plat-
forms is shown to enable and expedite peer-to-peer energy trades which will further
decentralize the energy markets of the future. Microgrid electricity sales and electric
vehicle battery charging offer examples. Alain Aoun is this chapter’s author.
Chapter 13 provides a detailed assessment of smart microgrids. What value is
added by deploying smart technologies? As microgrids begin to morph into smart
microgrids, new concepts have emerged that redefne how to deploy microgrids and
incorporate new technologies. Information about energy production and loads is
xxxii Introduction

collected at a granular scale and algorithms analyze the data to effect effciency
improvements. Smart microgrids create additional benefts and expand opportunities
for services by overlaying information age communication technologies. An objec-
tive of this chapter is to consider how smart systems are integrated into microgrids
and enhance the transfer of electricity to and from the customer.
Smart microgrids use sustainable technologies and can be remotely controlled and
managed. This chapter explains what smart microgrids are, how they work, and the
key differences between traditional and smart microgrids. Smart microgrids often
integrate suitable renewable energy technologies in an effcient manner to provide
clean energy-based, direct, or alternating current microgrids. They are considered
to be a revolutionary power solution. These types of microgrids are variously called
advanced microgrids or advanced remote microgrids. They apply remote sensing,
advanced metering, and digital communications. The chapter also provides real-
world examples of smart microgrid projects under development and those already
deployed. While there are concerns with policies that apply to advanced microgrids,
the market for smart utility systems is expanding.
Chapter 14 provides an introduction into the key considerations that must be
addressed to develop a business case for microgrid development. The interest in
microgrids has been increasing as distributed energy resources have become more
widely understood. The cost for renewables has declined making them more eco-
nomically competitive. There are a number of ways to support the fnancing of
microgrid projects. Traditional approaches include third-party fnancing, public–
private partnerships, and build-transfer agreements. Microgrid development can
be supported by sales of electricity or services, cap-and-trade programs, renew-
able energy certifcates, clean development mechanisms, and peer-to-peer trading
arrangements. Energy savings performance contracts can provide mechanisms for
microgrid development.
Many microgrid developments are custom one-off projects that defy scalability
and require custom engineering expertise. Some include costs for utility intercon-
nections and electrical energy storage. Larger microgrids such as those that connect
multiple centers and cross public rights-of-way face multiple policy barriers. Other
challenges include non-standard controller technologies, variable electricity pricing
schedules, and the costs associated with maintaining multiple generation systems.
Financial risks must be identifed during project development. Making the business
case for microgrids necessitates an assessment of the value proposition, quantif-
cation of lifecycle costs and benefts, and the development of a detailed cash fow
analysis.
Chapter 15 explores the future of microgrids. How are microgrids evolving and
what does the future portend? For microgrids, it is all about electricity and the grow-
ing needs for the services it provides. There is a bright future for microgrids given the
advances in distributed energy resources. Smart grids are emerging. The evolution of
the electrical grid to incorporate monitoring, protect and automatically optimize the
operation of its interconnected elements, and collect digital data instantaneously to
respond automatically to variable conditions is already happening.
This chapter introduces nascent electrical generation technologies that may pave
the way for future microgrid development. Examples include ocean wave and tidal
Introduction xxxiii

energy, Stirling engines combined with solar refectors, small-scale nuclear reac-
tors, hydrogen generation, plasma-arc gasifcation, and others. These technologies
have the potential to transform microgrids by creating a wider range of capabili-
ties for generation technologies. Future microgrids will use artifcial intelligence,
provide control capability at a granular level for consumers, and transfer electricity
wirelessly.
Microgrids provide a back-to-the-future solution for electrical energy systems.
They provide opportunities to develop new networks targeted for the needs of locali-
ties and communities. If thoughtfully designed and carefully deployed, they can pro-
vide more resilient energy supply systems with greater environmental benefts.
 1 Introduction to
Microgrids
Microgrids are an exciting way to provide electricity to serve local needs and solve
supply problems. They offer new ways to provide reliable and resilient electri-
cal power. With the expanding use of decentralized energy resources, the role of
microgrids in power supply systems is increasing as more are being developed.
Microgrids often consist of a number of small power supply systems which makes
them more fexible than a single electrical power source. They can generate electric-
ity from fossil fuels and renewable energy resources. They are categorized by their
size, the types of customers they serve, the types of generation systems they have, and
the regions in which they operate. They can be confgured to produce either direct
current, alternating current, or both. Some are semiautonomous and provide both
heat and power. Their purposes vary from those of conventional electrical plants.
The categories of the energy we use for electrical generation are divided unevenly
into nonrenewable sources; carbon-based energy sources such as coal, oil, and oil
shale; and renewable sources such as wind power, solar, geothermal, and gravita-
tional water sources. A conventional power station, also referred to as a power plant,
powerhouse, generating station, or generating plant, is an industrial facility for the
generation of electric power. Most power stations contain one or more generators,
rotating machines that convert mechanical power into electrical power. Conventional
power stations typically use fossil fuel-fred generators, most notably coal, natural
gas, and nuclear power, using the Rankin cycle. However, there are many others that
use renewable technologies such as hydroelectric dams and large-scale solar power
stations. Such stations are centralized and require electric energy to be transmitted
over long distances [1].
Renewable energy sources can be categorized as sustainable and inexhaustible,
while most nonrenewable energy sources are potentially unsustainable and likely
exhaustible. Microgrids are alternatives to conventional power stations for generat-
ing power. Technologies are converging that enable microgrids to be seen as a new
and viable solution to providing locally generated electrical power. They are the next
step in the evolution of supplying and delivering electricity.

WHAT ARE MICROGRIDS?

Today, large power plants commonly use coal, gas, hydroelectric, and nuclear
energy. They are centralized. Electricity is transmitted over long distances. Like cen-
tral power stations, microgrids generate electricity. Being small-scale versions of the
larger electrical grids, they are sometimes referred to as mini-grids. Microgrids have
become more common with the growth of renewable electrical generation. While
microgrids share common characteristics with utility grids, they are not identical.

1
2 Fundamentals of Microgrids

The electricity generated by microgrids is primarily consumed by local users within

the boundaries of the microgrid. They are often custom confgured to solve local
electrical generation problems and may use combined heat and power systems.
As there does not seem to be a universal defnition as to what a microgrid is, a
number of various defnitions are offered. According the U.S. Department of Energy,
a microgrid is a “group of interconnected loads and distributed energy resources
within clearly defned electrical boundaries that acts as a single controllable entity
with respect to the grid” [2]. A microgrid can connect and disconnect from the
grid to enable it to operate in either grid-connected or island modes. When thus
confgured, seamless transfer of electric power is important for system operation.
The International Council on Large Electric Systems (CIGRR, Fr.) C6.22 Working
Group defnes microgrids as “electricity distribution systems containing loads and
distributed energy resources (such as distributed generators, storage devices, or con-
trollable loads) that can be operated in a controlled, coordinated way either while
connected to the main power network or while islanded” [2]. Its defnition is quali-
fed by the presence and type of electrical generator, storage devices (electrical, pres-
sure, gravitational, fywheel, and heat storage technologies), and controlled loads [2].
Examples of controlled electrical loads include automatically dimmable lighting or
pumping systems. Yet another defnition: “Microgrids are modern, small-scale ver-
sions of the centralized electricity system. They achieve specifc local goals, such
as reliability, carbon emission reduction, diversifcation of energy sources, and cost
reduction, established by the community being served. Like the bulk power grid,
smart microgrids generate, distribute, and regulate the fow of electricity to consum-
ers, but do so locally” [3].
The term microgrid today refers to a collection of multiple smaller energy resources
of different types (including renewables such as solar arrays and wind turbines but
also natural gas generators, combined heat and power systems, and energy storage)
often owned by local prosumers, small businesses or small power operators inter-
connected to supply the locality with self-sustaining power [4]. Microgrids located
in the U.S. and other Organization for Economic Co-operation and Development
(OECD) countries have capacities in the range of hundreds of kilowatts (kW) or
megawatts (MW) [4]. Utility-scale microgrids in the U.S. typically exceed 10 MW.
In many non-OECD countries, microgrids of this scale (sometimes called mini-
grids) are the primary electrical power source for people in rural communities where
access to the central grid is either too costly or unreliable, or is perhaps nonexistent
[4]. The label microgrid in countries such as India is reserved for systems under
10 MW. Though India is striving for universal access to electrical power, other parts
of the world are struggling. With 13% of the world’s population, Africa accounts for
only 4% of the world’s energy demand, leaving roughly 600 million people with no
access to electricity [5].

STANDALONE POWER
Examples of technology options for electrical supply can be roughly viewed as two
scales, the nature of which varies: 1) utility-scale—large, bulk power applications
with better economics but experienced indirectly through purchases of premium
Introduction to Microgrids 3

electricity products with some renewable energy content; 2) distributed-scale—

small, on-site applications experienced directly but somewhat limited due to eco-
nomics and resource availability yet having greater opportunity for renewables [6].
Modern standalone electrical generation systems are usually considered to be dis-
tributed-scale applications.
A standalone power system (SAPS or SPS), also known as a remote area power
supply (RAPS), is an off-the-grid, independent electricity system for locations that
lack an extensive utility-scale electricity distribution system. The main categories
of technological components for a SPS are: 1) components that supply power (gen-
eration equipment); 2) components that store energy for later use (energy storage
equipment); and 3) components that convert one form of power to another (inverters)
and those that control the fow of power in a system (power conditioning and control
equipment) [7]. An SPS is often used to provide electricity for remote buildings, tele-
com sites, villages, or small-scale manufacturing (e.g., mining, resource processing)
sites. In such situations, connecting to the electric grid via rural electrifcation pro-
grams is likely more expensive than installing an SPS. Since power is provided only
to a local geographical area, transmission costs are minimal. Examples of an SPS
include diesel or natural gas generators and solar photovoltaic systems. For owners,
the most common reason to have an SPS is that a grid connection is not available.
Having an SPS might also appeal to their desire for independent power, better align
with their environmental values, or reduce their operation and fuel costs associated
with generating electricity.
Typically, standalone power systems include one or more methods of electricity
generation, energy storage, and regulation. They can be confgured to act or be used
as an uninterruptable power supply. They often take advantage of a combination of
components and technologies to generate reliable power, reduce costs, and mini-
mize inconvenience [8]. On-site generation (OSG), district/decentralized energy, or
distributed generation systems generate or store electricity from a variety of small,
grid-connected devices called a distributed energy resource (DER) or distributed
energy resource systems (DERS) [1]. Some of the strategies for SPS that deploy
distributed energy resources (DERs) include reducing the amount of electricity
required for loads (via energy effciency or load shedding) and using fossil fuel or
renewable hybrid systems [8]. Many remote SPS that previously relied on diesel fuel
are being augmented or replaced with renewable energy systems as prices for diesel
fuel increase or become more volatile.

DISTRIBUTED ENERGY RESOURCES

Microgrids are designed to satisfy the demands of energy consumers within their
limited service areas. Their local low- and medium-voltage electrical distribution
systems contain a set of connected electrical loads and generation from DERS.
Electrical switch gear, either manually or by automatic controls, is used to isolate the
microgrid at the point of common coupling (PCC). For automatic or standby mode,
the system operates as a single-utility service in the event of a power failure [9]. It
can also operate in automatic peak-shaving mode for paralleling with the utility to
reduce consumption of the power it supplies [9]. Manual-mode operation provides
4 Fundamentals of Microgrids

a wide latitude of control when conditions warrant using the system as a supervised
station [9].
DER systems for microgrid applications may use fossil fuel or renewable energy
sources, or combinations of both. Examples include thermoelectric generation, small
hydro, micro combined heat and power (CHP), diesel, biomass, biogas, solar power,
wind power, and geothermal power that connect to existing power distribution sys-
tems. DERs allow for infrastructure development in ways that protect against singu-
lar events and vulnerabilities [10]. Grid-connected devices for electricity storage can
be classifed as DER systems and are often called distributed energy storage systems
(DESS). By means of an interface, DERs can be managed and coordinated within a
smart grid. Distributed generation and storage enable the collection of energy from
many sources while lowering environmental impacts and improving security of
supply [1].
Within defned boundaries, microgrids provide a controllable electrical supply
which maintains equilibrium between supply and loads. Many microgrids can con-
nect and disconnect from the electric grid. This allows them to operate in either
island (standalone, possibly emergency state) or grid-connected (normal state)
modes. They normally have equipment that generates electricity and low-voltage
transmission, plus a power management system. They are linked to energy stor-
age systems and electricity consuming devices. Some are semiautonomous. The
International Renewable Energy Agency (IRENA) says that microgrids (by OECD
standards) are installed “to achieve exceptionally high levels of reliability for indus-
trial applications, such as data farms or industrial processes for which a power out-
age could prove extremely costly” (Figure 1.1) [4].

WHY WOULD YOU NEED A MICROGRID?

It is surprising that despite the growth of the world’s electrical grids, there are over a
billion people on the planet that lack access to electricity, a prime mover of the infor-
mation age. Many have no opportunity to be connected to an electrical grid. Lacking
power for lighting, devices, and electronics, they have little use for the appliances
people in the developed world use on a daily basis. Without grid access, how can
people become more educated, use cell phones, learn to use computers, or access the
internet? Alternative ways to provide electricity must be considered.
The electric grid connects buildings to central power sources, which allow appli-
ances, heating/cooling systems, and electronics to be used [11]. The need for elec-
trical power is the fundamental reason to have grid-connected power which is why
microgrids are required. Those without access to grid-connected electricity might
want to have a source of electrical power, possibly an electric generator. If the gen-
erator failed, a backup source (a different type of generation or storage) of some
kind would be needed. However, a suitable and reliable system could be powered by
microgrids using distributed generators, renewable resources, and energy storage.
The key reason to have a microgrid is to generate electricity reliably and locally.
Unless an adequate value proposition in favor of developing a microgrid is provided,
the arguments for having microgrids are weakened. If a locality has access to grid-
supplied electricity, then electrical power that uses diversifed fuel sources that are
 Introduction to Microgrids

FIGURE 1.1 Microgrid confguration with central monitoring and control.

5
6 Fundamentals of Microgrids

less costly, more dependable, more resilient, more secure, less troublesome, more
environmentally appropriate, and/or have fewer associated externalities is one solu-
tion. If none of this applies to a given situation, there may be no need for a microgrid.
The interconnectedness of the central electric grids means that when part of the
grid needs to be upgraded, everyone on the grid is potentially impacted [11]. This
is especially true when high-voltage distribution and transmission infrastructure
must be repaired or replaced. A primary purpose of a microgrid is to have avail-
able, adequate electricity for non-interruptible and critical loads [12]. Microgrids
connect to the grid at a point of common coupling. A microgrid generally operates
while connected to the grid, but can disconnect and operate on its own using local
energy generation in times of crisis such as major storms or power outages [11]. This
scenario assumes that the microgrid is unaffected by the disturbance that causes grid
power to be interrupted. When not connected to the main grid, a microgrid operates
as an independent entity.
Mitigating grid disturbances and improving grid resilience are often mentioned
as goals for microgrid development. For power systems, resiliency means more than
returning to an original state. It refers to the ability to harden from or recover quickly
from a high-impact, low-frequency event, improving the ability to persist when com-
promised [13]. Ideally, microgrids can operate reliably and continuously when prop-
erly managed using alternative energy generation equipment and storage.

TYPES OF MICROGRIDS
Microgrids usually consist of a number of small power supply systems. Some pro-
duce either direct current (DC) or alternating current (AC). While AC microgrids
are the norm, a DC microgrid may be used to improve reliability and effciencies,
enhance operational performance, or provide advanced capabilities that enable con-
trol of network resources for the ability to operate independently of the primary
AC system [14]. Some microgrid plants are confgured to provide both heat and
power. Microgrids can be confgured to be interconnected with the electric grid (see
Figure 1.2a) or independent of the grid (see Figure 1.2b).
There are two major types of microgrids—true microgrids and milligrids.
Microgrids wholly on a single site, akin to a traditional utility customer, are usu-
ally called customer microgrids or true microgrids (µgrids); those microgrids that
involve a segment of the legacy regulated grid are often called milligrids (mgrids)
[15]. Milligrids allow distributed energy resources to be deployed so they can be
directed to critical infrastructure in the event of emergencies. Another type is remote
power systems (rgrids), which are isolated and unable to operate in a grid-connected
mode [15].
Microgrids are generally categorized by their features and applications. They can
be either off-grid or grid-interconnected. They can be categorized by their use by
utilities, industries, commercial entities, institutions, universities, communities, and
military bases. The microgrid at Fort Bliss in El Paso, Texas, which is grid-con-
nected, would be classifed as a grid-interconnected military microgrid.
Microgrids are a proven way to provide power to remote areas. In the Canary
Islands, a microgrid supplies electricity using wind, solar photovoltaic (PV), and
Introduction to Microgrids 7

FIGURE 1.2 (a) Interconnected microgrid confguration; (b) independent microgrid

confguration.

pumped hydro storage. The Caribbean island of Bonaire has a microgrid. Power is
supplied by wind and biodiesel generation and supplemented with a battery storage
system. Both of these are examples of island microgrids that are off-grid systems.
Cosidine et  al. provide an interesting alternative classifcation for types of
microgrids [16]. They include common categories such as military and industrial
microgrids but further identify others: 1) development microgrids, those for small
commercial operations with existing infrastructure; 2) motivational microgrids,
those that operate in the absence of compelling needs; 3) hidden microgrids, those
with generators on-site that they use to provide emergency power; and 4) isolated
8 Fundamentals of Microgrids

microgrids, those for isolated vacation homes in the mountains or on islands, or

perhaps for yachts [16]. For military and emergency power response in the event of
disasters, mobile microgrids are a solution. These are often used for remote, strate-
gic applications when electricity is immediately required and there is no short-term
potential to connect to grid-supplied power sources. Many of these use diesel genera-
tion or solar power for electrical generation and can be operated remotely if needed.
They may have diffculty matching loads with generation and may require some type
of microgrid control system.
Within the last few years, there have been efforts to distinguish between
microgrids as commonly defned and other categories of microgrids. Similar to
many microgrids, an advanced microgrid is capable of automatically interacting
with, connecting to, and disconnecting from another grid [16]. Advanced microgrids
contain all the essential elements of a large-scale grid, are dynamic, and have the
ability to: 1) balance electrical demand with sources, 2) schedule the dispatch of
resources, and 3) preserve grid reliability (both adequacy and security) [17]. They
grant users the fexibility to securely manage the reliability and resiliency of the
microgrid and connected loads while mitigating the economic impacts associated
with power disruptions [17]. A key feature of advanced microgrids is the ability to
achieve plug-and-play interoperability within the sphere of the technologies used for
electrical generation and compatible communication.
Some microgrids can be classifed as virtual microgrids (vgrids). These include
DERs located at multiple nonadjacent sites that are coordinated so that they can be
presented to the grid as a single entity but operate virtually as a controlled island or
coordinated multiple islands [15]. Virtual microgrids are often loose aggregations of
individual generation sources and loads that can be remotely controlled. In this case
they use the infrastructure of the host grid and while unable to be decoupled physi-
cally, they are operated within the energy market as if independent [18]. They can be
confgured based on software connectivity (cloud-based).

HOW DOES A MICROGRID HELP?

The electric grid connects buildings to central power sources, which allow the
use of appliances, heating/cooling systems, and electronics. This interconnected-
ness means that when part of the grid needs to be repaired, everyone is potentially
affected [19]. This is how a microgrid helps. It connects to the grid at a point of
common coupling which maintains voltage at the same level as the main grid unless
there is a problem on the grid or other reason to disconnect. A microgrid generally
operates while connected to the grid, but can disconnect and operate on its own
using local energy generation when required [19]. Microgrid internal confgura-
tions provide service versatility. They can provide electricity to a single user, serve
a partial or full feeder, or provide service at a full or distribution substation (see
Figure 1.3).
Microgrids can provide power to remote areas that lack the option of connecting
to a grid. In such cases, it operates as a standalone utility system providing electricity
to its connected loads. Controls manage output based on the demand of the customer
services. With multiple generation systems, the least costly and most reliable energy
Introduction to Microgrids 9

FIGURE 1.3 Typical microgrid confgurations. (Source: U.S. Department of Energy [20].)

resources can be utilized. Depending on the types of fuels required and how its load
requirements are managed, a microgrid can be designed to operate indefnitely [19].

ADVANTAGES AND DISADVANTAGES OF MICROGRIDS

Microgrids generate electricity from a diversifed range of electrical generation
sources and can use a variety of technologies. When renewables are used for gen-
eration processes, microgrids emit less pollution and have lower carbon footprints.
There are other advantages and disadvantages associated with the deployment of
microgrids.
Central grids are costly to maintain and subject to disruption. Improving electrical
transmission resiliency in the U.S. is costly and often hindered by state regulations.
The U.S. is experiencing more weather-related electrical outages caused by winds,
fooding, and ice storms. These occur in many states, including California due to
wildfres, the Gulf states due to hurricanes, and the Midwest and Northeast states
due to more intense winter conditions [21]. Recurring fooding has occurred along
the Mississippi River basin and in the Great Lakes. A wildfre in California sparked
by electrical transmission wires killed 85 people in 2018 and caused $16.5 billion in
damages [21]. Ice storms are notorious for taking down electrical power lines, caus-
ing millions of dollars in damages and requiring long periods of time to repair under
stressful conditions. Researchers have estimated that there were 679 widespread
weather-related electrical system outages in the ten-year period ending in 2012 [21].
Excluding major events U.S. electric customers in 2017 experienced an average of
1.4 power interruptions with 7.8 hours of total outage (see Figure 1.4) [22]. The states
with the most total hours of outages were Maine, Florida, New Hampshire, Georgia,
and Vermont with Maine having 42 hours [22].
 10

FIGURE 1.4 U.S. climate disasters in that occurred in 2017. (Source: U.S. National Atmospheric and Oceanic Administration.)
Fundamentals of Microgrids
Introduction to Microgrids 11

Much of the weather-related damage to electricity distribution systems in the U.S.

could be prevented if overhead power lines were not used. While greater transmis-
sion resiliency can be achieved by placing transmission underground, cost is a sub-
stantial burden—a single mile of underground transmission can cost as much as $3
million to install and widespread deployments would substantially increase electri-
cal costs [21]. As a result, less than a quarter of new electrical cable is buried and
the rest consists of overhead transmission lines mounted on utility poles which are
exposed to weather and falling tree limbs.

ADVANTAGES OF MICROGRIDS
An important beneft of microgrids is the potential to improve electrical system reli-
ability. Microgrids often have multiple power generation sources and many deploy
both fossil fuels and renewables in an effort to improve reliability and absorb inter-
mittency. DERs enable electrical power to be generated at or near the loads which
substantially reduces transmission costs and improves resiliency. This makes them
more fexible and resilient than a single electrical power source. Less transmission
infrastructure is needed as energy is generated locally. Since line voltages are much
lower repair costs are less.
Another advantage is that many microgrids provide dispatchable power to critical
loads. This provides electrical power that is available upon demand. Generators can
be turned on or off, or can have their power output adjusted as needed. Hydropower,
biomass, tidal power, and geothermal energy can be designed to be dispatchable
without energy storage. Examples of renewable energy sources normally referred
to as non-dispatchable include solar and wind power. These DERS allow for energy
infrastructure deployment that protects against single vulnerabilities [10]. Power
may be also stored in batteries or reservoirs to provide dispatchable generation of
electricity.
Microgrids provide customers with alternative power generation. A compelling
and fundamental feature of microgrids is their ability to separate and operate in
isolation (known as islanding) from the utility’s distribution system during blackouts
[23]. Islanding occurs when a microgrid or segment of the utility electrical grid with
both loads and distributed generation is isolated from the rest of the grid yet contin-
ues to operate independently from the power grid [24].
Intentional islanding is the act of physically disconnecting a set of electric circuits
from a utility system, and operating those circuits independently [25]. When this
occurs, the island is seen by the utility grid as a single electrical load. These islands
must be supplied from suitable sources and able to guarantee acceptable voltage sup-
port, frequency, controllability, and quality [24]. Non-intentional islanding occurs
after a fault when it is impossible to disconnect the distributed generation system. It
is imperative that non-intentional islanding be detected and quickly eliminated [24].
To comply with grid requirements distributed generation systems must automati-
cally shut down during times of power outages [23]. This makes microgrids appeal-
ing to entities that experience high costs from electrical outages even if they are of
relatively short duration. Continuous industrial processes and emergency lighting
systems are common examples. Microgrids can be intentionally operated as islands
12 Fundamentals of Microgrids

during power outages that occur during extreme weather events. From an electrical
quality perspective, microgrids can offer power-smoothing, shift electrical genera-
tion and loads, and provide seamless power transfer.
Climate scientists believe that severe weather events are becoming more common
due to the impacts of climate change. Since microgrids are smaller distributed gen-
eration systems, they offer redundancy during system failures and provide targeted
power delivery to address a locale’s specifc requirements [10]. Microgrids typically
have black-start capability since multiple generation resources within the microgrid
allow the system to restart on its own [26]. Black start is the process of restoring
power to part of an electric grid without relying on the external electric power trans-
mission networks. Interestingly, some utility companies are installing microgrids for
their central headquarters to enable them to operate as command centers to coordi-
nate response activities during massive area-wide outages [27].
There is economic justifcation for microgrids and they can reduce costs in a
number of ways. In some cases, developing a local microgrid can reduce or avoid the
capital costs needed to expand the macrogrid to accommodate increased load, peak
power requirements, or power quality issues. For example, when a feeder or substa-
tion upgrade is required to address increased loads or power quality, a microgrid
with on-site generation could satisfy the need without a signifcant capital investment
[28]. When multiple generation sources are available, decisions can be made as to
which type of fuel source is the least expensive at a given time. Microgrid manage-
ment systems can be designed with the logistics to reduce costs by incorporating
advanced peak-shaving capabilities and to proftably arbitrage energy pricing differ-
ences. Algorithms can be used to reduce risks and selectively energize loads during
operations and extended outages. Since generation sources are normally in close
proximity to loads, local generation reduces the costs of transmission infrastructure
and the associated losses inherent in transmitting electricity over long distances.
When renewable generation is included in the microgrid, the business risks associ-
ated with variable fossil fuel costs is reduced or eliminated.
Revenue can be generated by selling excess power to the grid if the microgrid
is interconnected. In some cases, it is possible to provide wider services to the grid
and obtain payments supported by feed-in tariffs [29]. In the U.S., microgrid owners
have opportunities to participate in state and federal clean energy programs (e.g.,
renewable portfolio standard initiatives), federal production tax credits, and grant
programs that specifcally target microgrid development [27].

DISADVANTAGES OF MICROGRIDS
There are disadvantages to using microgrids. Development and maintenance costs can
be expensive. This is particularly true when they have multiple electrical generation
systems. A solar plant might be coupled with a wind power site to provide continuous
electricity. If the microgrid relies on grid power, there are added costs for interconnec-
tion equipment. A storage system (e.g., batteries, compressed air, or pumped storage
hydropower) may be required to ensure uninterruptable electrical power.
Economics and customer preferences are causing developers to integrate greater
amounts of non-dispatchable renewables (50% to 100% of capacity) into their
Introduction to Microgrids 13

microgrids [28]. The use of some types of renewable energy (e.g., solar and wind
power) can present intermittency problems and system-balancing challenges which
must be addressed. This is especially true if there is an over-reliance on intermittent
generation. If the microgrid has low capacity, there may be a highly dynamic load
situation to address. While costs for microgrid development are much less than sup-
porting a conventional utility grid, they provide much less power and can cost more
on a per-kW basis. Finally, a fundamental issue is that the engineering expertise
to develop and maintain the microgrid may not be readily available. If the system
is very remote, the costs of maintenance and service at the remote location can be
higher than anticipated.
Another disadvantage that thwarts microgrid development involves imposed
limitations by policymakers. Often, regulations concerning microgrid development
are unclear or nonexistent. The key challenge is that the multi-user microgrid often
requires that the primary utility grant an exception to its established (typically regu-
lated) utility franchise rules [12]. Incumbent electric utility companies often resist
microgrid operations within their established service territories. Some utility execu-
tives are reluctant to embrace local renewable generation due to fears that the exist-
ing power grids are unable to reliably integrate distributed energy generation [30].
Such grid reliability concerns have effectively limited many local renewable projects
to providing no more than 15% of peak power needs [30].

SUMMARY
Microgrids are a back-to-the-future solution. Electricity is a prime mover of the
information age. Those without access to an electrical grid are literally left in the
dark without power for lighting, appliances, and electronics. While countries such
as the U.S., China, and Brazil have grid access rates over 95%, other countries are
not as fortunate. While access to electricity is ubiquitous in most parts of the world,
about 16% of the world’s population (an estimated 1.2 billion people) still lack this
basic necessity [31]. The continent of Africa is particularly in need of access to elec-
trical power (see Figure 1.5). In such areas of the world, microgrids are seen as a
potential low-cost solution to providing electricity. Access to electricity is a notable
driver for microgrid development to support local needs. Others see microgrids as a
solution to meeting environmental goals or obtaining power that is more reliable and
perhaps less costly. Microgrids provide opportunities for access to a local electrical
system.
Microgrids can be confgured to be grid-interconnected or -independent. There
are a number of different types of microgrids including customer microgrids, mini-
grids, virtual microgrids, and remote power systems. They are designed to satisfy
the demands of the energy consumers within their limited service areas. Microgrids
can be powered by distributed generators, batteries, and/or renewable resources.
Examples of distributed energy resources that are used to power microgrids include
thermoelectric generation, small hydro, micro combined heat and power, diesel, bio-
mass, biogas, solar power, wind power, and geothermal power. There is a movement
from diesel-fred generation toward a greater use of renewable energy resources to
generate electricity.
14 Fundamentals of Microgrids

FIGURE 1.5 Global access to electricity. (Source: www.viualcapitalist.com [31].)

Many microgrids can connect or disconnect from the electric grid at will and
offer the potential for distributive-scale, standalone power. They connect to existing
power distribution systems at a point of common coupling. With the advantage of
multiple generation systems, the least costly and most reliable energy resources can
be deployed.
There are advantages and disadvantages associated with the deployment of
microgrids. With access to grid-supplied electricity, a microgrid is desirable if
cleaner electrical power is possible using diversifed fuel sources. Among the advan-
tages is the potential to improve transmission system resiliency with less invest-
ment. Other benefts of microgrids include reducing electricity costs, improved
reliability, security, and reduced transmission infrastructure. Transmission
system effciency and resiliency can be better achieved with less investment
when microgrids are deployed. Another compelling and fundamental feature of
microgrids is their ability to separate and operate in island mode, disconnected
from the host electric grid.
The disadvantages of microgrids include economic, technical, and policy chal-
lenges. Microgrids require engineering design and custom deployment. Economic
issues include fnancing diffculties and the potential of higher costs for development
and maintenance. If microgrids are not connected to a local grid, energy storage may
be required to ensure reliability. The greatest disadvantage that thwarts microgrid
development involves imposed limitations by policymakers and incumbent indus-
tries. Multi-user microgrids often require that the primary utility grant an excep-
tion to its established utility franchise rules. Regardless, there is great potential for
microgrids.
Introduction to Microgrids 15

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 2 Environmental Drivers for
Microgrid Development

INTRODUCTION
Hydrocarbon-based energy consumption is increasing. This is primarily due to
emissions from developing countries. Carbon dioxide (CO2) is released into the
atmosphere by natural sources and the combustion of carbon-containing fuels and
petroleum-based distillates. Atmospheric carbon and greenhouse gas (GHG) con-
centrations that drive global climate change have the potential to negate our boldest
efforts toward mitigation.
How we use energy and the types of energy we use are keys to our mitigation
efforts. Sustainable energy sources are an important component of our solutions.
Renewable energy (RE) resources can be categorized as sustainable, while most
nonrenewable energy sources are potentially unsustainable, and likely exhaustible.
There is hope that we have time to reduce the introduction of GHGs into the atmo-
sphere by implementing climate stabilization remedies. The increased deployment
of RE in microgrid confgurations is among the solutions often cited as being more
sustainable.
The geophysical and biochemical processes that store carbon require hundreds of
millions of years for the renewal process to be effective. Much of the solar energy
captured and stored in the Earth by fossilized hydrocarbon processes that are being
extracted and consumed today date from the Paleozoic period, roughly 600 million
years ago—predating mankind’s existence. At that time natural processes worked
for millions of years to remove high concentrations of CO2 from the atmosphere,
storing them safely away in subsurface geologic formations. Most carbon-based
energy being consumed as primary fuels are actually fossilized biomass and are not
categorized as being renewable. These GHG-containing fuels include peat, lignite,
oil, coal, and natural gas (e.g., methane). Petroleum distillates that generate carbon
include gasoline, kerosene, propane, and diesel fuels. Fuels sources such as those
derived from waste streams (e.g., wood, sawdust, landfll gas, animal wastes) are
more diffcult to classify as they are carbon-based fuels yet are rapidly renewable
if the waste streams are maintained. These are typically classifed as biomass and
considered to be renewable fuel sources.
We understand the serious problems concerning GHG emissions and know
that they are directly related to the combustion of fossil fuels. The emissions of
atmospheric carbon generated by man’s activities are exacerbating environmental
changes on a global scale. The incremental increases in atmospheric carbon emis-
sions have been successfully tracked; the importance of fnding solutions that reduce
CO2 emissions cannot be understated. GHG concentrations in the atmosphere are
increasing, trapping more heat. In the past, we seem to have made conscious choices

17
18 Fundamentals of Microgrids

to ignore the potential consequences. Today, the political and social structures we
have established are developing embryonic policies toward solutions yet are taking
only feeble actions. Our initiatives often seem mismatched, our actions marginal,
and their impacts minimal. We have pushed aside our planet’s stewardship responsi-
bilities and failed to bring our technical and economic resources to bear on the task
of implementing viable solutions.
Hope for solutions can be found in developing and implementing relevant poli-
cies, programs, and technologies. Governments are creating policies, corporations
are reconstructing strategic plans, and institutions are redefning their missions.
Agendas are in fux and new programs are being launched and implemented. There
is an evolving consensus on the horizon, one that will change how we prioritize
our efforts to become more sustainable. Innovative technologies, such as renew-
able energy systems and microgrids, are being proven and developed. They have
the potential to transform energy supply systems to ones that are carbon-neutral.
This is already happening at the local and regional scale in some areas of the world.
RE deployment has a key role and microgrids provide opportunities to expand their
deployment.
While the world is moving toward greater use of renewable energy, hydrocar-
bon-based energy consumption continues to increase. There are many obstacles in
managing environmental problems. One of the most common is that many envi-
ronmental issues are seen as international in scope rather than local. This perspec-
tive diminishes the impetus to attack many problems with local efforts. Successful
response requires international treaties such as the Paris Agreement.
This chapter considers the issue of atmospheric carbon emissions and other
environmental issues that are among the drivers for considering the deployment of
microgrids. It discusses the importance of solutions that focus on renewable energy
technologies as the key to long-term sustainability and the evolution toward a low-
carbon economy.

THE HYDROCARBON AGE HAS ARRIVED

New environmental problems have surfaced that emphasize the ultimate fragility
of our planet’s ecosystems. Due to our unresponsive choices, climate changes are
occurring at a rapidly accelerated pace. Our common future is becoming grim.
Despite actions we might take today, the consequences of increasing carbon levels
will continue to plague the Earth for generations to come. Never before have human-
induced environmental changes had the potential for global impact. These environ-
mental changes have been festering for a long time and local impacts from climate
change can be devastating.
Our patterns of energy use since the early 1900s have contributed to the increas-
ingly dire circumstances we fnd ourselves in today. The results of our past insensi-
tivity to the environment are becoming more and more noticeable, the consequences
less and less dismissible. With the acceptance that an over-abundance of atmospheric
CO2 is impacting Earth’s ecosystems in detrimental ways, a new age is dawning.
The economies of the Hydrocarbon Age are at an impasse. Indeed, the availability
of certain fossil fuels is reaching a tipping point in some regions of the world. We
Environmental Drivers for Microgrid Development 19

are changing our landscapes as a result of economic development and technological

advancements—terraforming them to meet the needs of agriculture, industry, urban
expansion, and regional transportation networks. Many of our cities have evolved to
become post-industrial and are unlike anything that our forbearers might have imag-
ined. Cities in Pakistan, Brazil, Mexico, China, and India are reeling from explosive
population growth, poor development choices, and environmental damage. Air pol-
lution from fossil fuel combustion is making daily life diffcult. Yet access to energy
remains a key to sustainability. It enables mass education, access to domestic water
supplies, the cultivation and distribution of food stocks, and the provision of health
care.
Countries seeking economic and political control over carbon-based energy
resources are at times exerting their military muscle, threatening and waging
regional conficts. For example, Iran attacked several oil tankers in the Persian Gulf
and a Saudi Arabian refnery in 2019 in an effort to disrupt the distribution of crude
oil and refned products. The impacts of each country’s policies and economic sys-
tems are intensifying the problems associated with carbon emissions rather than
resolving them. However, the political dialogue is shifting from outright rejection of
the existence of carbon-induced climate problems to the development of strategies
and legislation to mitigate them.
Sustainability requires foresight. At this point in history—when creative solu-
tions are needed—the backdrop of conficting infuences, political stalemates, and
economic turmoil makes long-term solutions diffcult to implement. Energy is linked
to the world economy and energy-consuming systems account for 95% of man-made
CO2 emissions (see Figure 2.1). Atmospheric carbon concentrations are approaching
410 ppm, the highest levels in the history of mankind. How can we cost-effectively
reduce the energy-related emissions of GHGs to stabilize the climate while meeting
the increasing demand for energy? The seminal inconvenient truth is that a consen-
sus regarding how to proceed remains elusive. The high stakes are evident. All that
is required is an increase in atmospheric temperatures of 2°C to 3°C and the climate
will evolve to being like it was in the Pliocene period, about three million years ago,
when sea levels were estimated to be about 25 meters (80 feet) higher than today.
Already we are seeing ice shelves melt away, warmer seas, increased coastal food-
ing, and stronger storms. In late 2019, the city of Venice, Italy was inundated by the
rising seas of the Adriatic, the worst fooding in over 50 years.
Mankind’s continued misuse of carbon-based fuels has created uncertainty and
increased risks. While there are both natural and man-made sources of atmospheric
carbon, natural endowments that reduce atmospheric carbon levels are under attack
by human activities. Formed over hundreds of millions of years, carbon compounds
were stored by natural processes that worked very slowly. These processes gradually
reduced atmospheric concentrations by storing carbon in natural sinks, such as soils,
vegetation, below the Earth’s surface, and the oceans. Over time, they transformed
the Earth and created conditions to enable human evolution. There are currently no
viable substitutes for these natural processes that have effectively sequestered mas-
sive quantities of carbon for eons.
Many of the adverse environmental consequences we face are caused by
increased atmospheric carbon concentrations and their impact has only recently
20 Fundamentals of Microgrids

FIGURE 2.1 Global carbon dioxide emissions. (Source: IEA, Statista 2018.)

become understood. Why is this? As with serious environmental problems encoun-

tered in the past (e.g., natural resource depletion, species extinctions, or water pollu-
tion), there is a time lag before the environmental impacts of human actions become
noticeable, measurable, and verifable. Environmental changes must be meticulously
observed before the causes and effects are assessed. Theories next evolve as to why
the changes are occurring. Potential impacts must be weighed. To do this, the sci-
entifc community must make comparative measurements of before and after condi-
tions, link the environmental changes to the causes, and consider an assortment of
remedial actions. Prior to suggesting approaches to mitigation, a wide array of inter-
vention methodologies and technologies must be developed, tested, and deployed.
After a period of societal denial and disbelief, a political consensus must emerge
before public resources can be used. This process is time-intensive and laborious.
A scientifc consensus regarding the environmental damage caused by carbon
emissions has only recently become available. Increasingly, the deleterious conse-
quences of carbon-induced climate change have become more apparent. The consen-
sus is that carbon emissions are contributing to possibly irreversible changes in the
world climate. The time of inaction has passed and the time of initiative is upon us.
We must take action now else our common future is in peril.

CARBON DIOXIDE EMISSIONS

Today, the carbon compounds that are being increasingly released into the atmo-
sphere come from many sources, including primary combustion of fuels such as
coal, natural gas, and oil. Atmospheric concentrations of CO2 are increasing. The
consumption of fossil fuels is the primary cause of both CO2 emissions and the
discharge of pollutants such as sulfur dioxide, nitrogen oxides, mercury, and fne
Environmental Drivers for Microgrid Development 21

particulates [1]. Ways must be implemented to reduce carbon emissions and the pol-
lution generated from the use of fossil fuels.
A consensus has evolved that global climate change is a result. We know that car-
bon emissions are directly linked to the use of fossil fuels and they are responsible
for global climate change. Mankind’s activities are exacerbating this problem and
creating climatic disruption, loss of biodiversity, and economic uncertainty. Despite
increased awareness, efforts to address the impacts of climate change remain in
their infancy. They have yielded little impact on global emissions. In fact, carbon
emissions worldwide continue to increase, reaching 37.1 billion metric tons of CO2
in 2018. This is due to the growing quantities of fossil fuels being extracted and how
they are used in combustion processes.
Global carbon dioxide emissions (CO2e) from man-made sources more than tri-
pled from 1950 to 2000 and they continue to increase. From 1990 to 1999, global
emissions increased at a rate of 1.1% annually, jumping to 3% annually despite the
creation of the Kyoto Protocol [2]. Projections indicate that CO2e will increase to
42.9 billion metric tons by 2030 [3]. Increases of such magnitude are unprecedented.
The potential impacts on the Earth’s ecosystems are unknown. It is likely that fur-
ther damage to Earth’s climate will occur. This damage will have unforeseen conse-
quences and impact our economies, our health, our resources, and our settlements.
These changes are likely to occur so quickly that we may be unable to adjust rapidly
enough to avoid global catastrophe.
Another potent GHG, methane (CH4), is at least 25 times more damaging than
CO2 when initially released. Methane gas is used as a combustion fuel for electrical
production and escapes into the atmosphere from fermentation, landflls, coal min-
ing operations, manure, natural gas systems, and other sources. Since methane com-
bustion releases less CO2 per unit of heat generated than other hydrocarbon fuels, it
is seldom the fuel of choice. With a half-life of seven years, atmospheric methane can
oxidize producing CO2 and water [4]. In comparison to CO2, each methane molecule
has a relatively large global warming impact that diminishes in a comparatively
short period of time. Methane tends to concentrate in the stratosphere and in tropical
regions. For these reasons, efforts to mitigate carbon concentrations must include
preventing the release of methane gas into the atmosphere. The amount of methane
present in the atmosphere has increased from 700 parts per billion (ppb) in 1750 to
1,745 ppb in 1998, and stands at 1,866 ppb in 2019 with more than half of the emis-
sions caused by human activity [4].
There is wide variability in national carbon emissions rates and emissions are
unstable and unevenly distributed [5]. Atmospheric carbon emissions would likely
have risen faster were it not for the 7% decline among industrial countries since
2007—a group that includes the United States, Canada, Europe, Russia, Australia,
New Zealand, and Japan [6]. Atmospheric carbon emissions in the U.S. in 2018 were
estimated to be 5.27 gigatons. In 2018, ten countries were responsible for two-thirds
of CO2 equivalent emissions.
In more populous, developing countries, the rates of emissions increase are
becoming unmanageable. In 2004, China and India combined for 22% of world
emissions, yet their share is anticipated to further increase to 31% by 2030 [3]. In
2010 the Chinese government enacted a series of polices requiring methane from
22 Fundamentals of Microgrids

coal mining to be captured, or converted into CO2, yet the new policies failed to curb
total emissions [7]. China surpassed the U.S. in 2016 as the world’s No. 1 carbon
dioxide polluter. The largest portion of China’s anthropogenic GHG emissions are
attributable to coal mining [7]. Despite efforts to reduce GHG emissions in the U.S.,
as of 2018, the U.S. had the dubious distinction of being among those countries with
the highest emissions of GHGs gases on a per capita basis and was responsible for
about 15% of all GHGs emissions. The U.S. emits CO2 at more than twice the per
capita rate of China (see Figure 2.2).
Within countries, carbon dioxide emissions vary widely across economic sec-
tors (see Table 2.1). GHGs from power generation, industrial processes, and trans-
portation account for over 52% of the world’s total greenhouse gas emissions. CO2
emissions are often concentrated in or near urban areas and vary widely. In 2014,
Canadian cities produce roughly 15.2 tons of CO2 per capita per year, while residents
of the Netherlands produce only 9.9 tons annually on a per capita basis [9].

INTERNATIONAL POLICIES—KYOTO AND THE PARIS AGREEMENT

One of the biggest obstacles in creating policies to reduce atmospheric carbon emis-
sions is that many environmental issues are seen as international in scope rather than
local. It is often the sum of local actions which is most effective. Existing institutions
and national bureaucratic structures often cannot handle and were not created to deal
with such problems effectively. Without the institutional capacity in place neces-
sary to handle problems on an international scale, inertia and inaction are often the
result. While local and regional responses can have powerful impacts, supra-national

FIGURE 2.2 Per capita 2016 carbon emissions in top emitting countries. (Source: Statista [5].)
Environmental Drivers for Microgrid Development 23

TABLE 2.1
Total 2018 Carbon Dioxide Emissions (Adapted from [8])
CO2 emissions Share of total ∆ after Kyoto
Country (Billion metric tons) (%) (% change)
China 9.43 27.8 +54.6
U.S. 5.15 15.2 −12.1
India 2.48 7.3 +105.8
Russia 1.55 4.6 +5.7
Japan 1.15 3.4 −0.1
Germany 0.73 2.1 −11.7
South Korea 0.7 2.1 +34.1
Iran 0.66 1.9 +57.7
Saudi Arabia 0.57 1.7 +59.9
Canada 0.55 1.6 +1.6
Total 22.97 67.7

governmental organizations (e.g., the United Nations and the European Union) have
also proved successful. For example, international action to prevent additional dam-
age to the ozone layer required cooperative and concerted efforts and proved to be
effective, evolving into the Montreal Protocol.
Treaties such as the Kyoto Protocol and the Paris Agreement were designed
to reduce greenhouse gasses. The Kyoto Protocol is an international treaty which
became active in February 2005 had a goal of stabilizing GHG concentrations in the
atmosphere at a level that balances anthropogenic (manmade) interference with the
climate system. This 2015 pact committed countries to limiting global warming to
2° above pre-industrial level with 1.5° being the preferred limit [1].
Despite having not approved the Kyoto Treaty, arguing that the required decreases
in emissions were impossible to achieve and efforts to do so would cause economic
ruin, the U.S. has substantially decreased emissions since the Kyoto Protocol was
enacted. Surprisingly, it has also met most of its emissions reduction requirements—
one of the few countries to do so. In fact, U.S. CO2 emissions in 2018 were only 8%
greater than those reported in 1990 though the country’s population grew from 248.9
million in 1990 to 327.9 million in 2018, a 32% increase.
The Paris Agreement, signed by representatives of 193 countries in April 2016,
was a step toward GHG policy at an international scale. Laurent Fabius, France’s
foreign minister, said this agreement is an “ambitious and balanced” approach
and a “historic turning point” in our goal of reducing global warming. Perhaps its
most important goal is to quickly achieve the global peaking of GHG emissions.
Many of the countries participating in this agreement have made substantial GHG
emission reductions which illustrates the success of their progressive measures
(e.g., Armenia, Azerbaijan, Hungary, Romania, Sweden, Switzerland, Kyrgyzstan,
Georgia, Germany, Denmark, and others). Ultimately, we need to create a pathway
for the Earth’s climate resilience. However, for the Paris Agreement to be effective,
24 Fundamentals of Microgrids

all countries must cooperatively participate. As a result of administrative bias, the

U.S. withdrew from the Paris Agreement in 2019 though it remains a party to the
United Nations Framework Convention on Climate Change [1]. While the adminis-
trative branch of the U.S. federal government abstains, many state and local govern-
ments have established GHG reduction programs, upending federal leadership.

CARBON MANAGEMENT—ADAPT OR MITIGATE?

From a technical perspective, there are a number of ways to manage atmospheric lev-
els of carbon. Emissions can be reduced or carbon can be extracted from the atmo-
sphere. Reducing emissions is the least costly and disruptive. Like other atmospheric
pollutants, once emitted into the atmosphere, carbon is diffused and becomes dif-
fcult and expensive to extract. The technologies available to remove carbon from the
atmosphere are commercially unproven, costly, and not scalable. Thus, reducing the
quantities of carbon compounds prior to their release into the atmosphere holds far
greater promise.
An alternative is to adapt to the new and developing circumstances. As the climate
warms and sea levels rise, we can move inland seeking higher ground. Yet this is
costly and requires the abandonment of many low-lying coastal communities and
cities. Infrastructure losses will exceed hundreds of trillions of dollars. The world’s
cities at risk of major fooding and economic damage include Athens, Manila, Dhaka,
Istanbul, Jakarta, Shanghai, and London. Those in the U.S. include New York,
Houston, New Orleans, and Miami. This is already happening locally. A village in
Alaska was the frst in the U.S. to be moved inland by the Army Corps of Engineers,
at a cost exceeding $250 million. The documented justifcation stated the cause at
rising seas due to climate change. Other economic impacts have even greater costs.
When management and adaptation fail, mitigation often proves costly. The state
of Florida has expended over $1.3 billion for beach restoration over the last 70 years
using rising sea levels due to climate change as the justifcation. Another recent
example is the ironic request of oil refning industries in southwest Texas. Their rep-
resentatives have consistently denied the effects of climate change while their prod-
ucts have contributed to atmospheric carbon levels. Yet they have recently requested
the use of state and federal taxpayer funds, several hundreds of millions of dollars,
to build levies to protect them from increasing sea levels which they say are being
caused by rising water levels from the Gulf of Mexico.
To complicate matters, there is no single solution to our carbon management
problems. The smoking gun is often more readily identifed than the elusive sil-
ver bullet—and none may exist. In fact, scientifc investigations often conclude that
a set of concerted mitigation approaches are necessary. Such contextual responses
vary in their identifcation of the source of the problems, local circumstances, eco-
nomic costs, and scope of the solution. In some cases, deploying recommended
technologies has unintended results that are not necessarily favorable. In the case
of microgrids that rely on wind turbines, the disposal of used rotor blades can cre-
ate problems for local landflls. In the face of mounting evidence to the contrary,
some believe that carbon management is unnecessary as the Earth’s environment
is self-correcting. While this is arguable for the long-term (thousands of years), the
Environmental Drivers for Microgrid Development 25

near-term (hundreds of years) impacts to our environment remain unaddressed. The

potential costs of future mitigation increase to the point of being unimaginable.
Our patterns of energy use will dictate the success of our mitigation efforts.
Sustainable energy sources are an important component of our solutions. The keys
to actually reducing carbon emissions include reducing the use of carbon-based fuels
by improving effciencies and fuel substitution. The concentrations of carbon in fos-
sil fuels vary, as do the amounts of carbon released into the atmosphere during com-
bustion processes. New energy sources must produce fewer carbon emissions. One
way to do this is to use renewable forms of energy. These are forms of energy that are
derived from and replaced rapidly by natural processes. They include solar thermal
and photovoltaic, wind power, hydropower, tidal power, biomass, and geothermal
energy.

COSTS OF REDUCING GREENHOUSE GAS EMISSIONS

The cost of reducing U.S. greenhouse gases is diffcult to estimate. The projec-
tions range from almost nothing to hundreds of billions, if not trillions, of dollars.
According to a report entitled Reducing U.S. Greenhouse Emissions: How Much
at What Cost? by McKinsey and Company, annual GHG emissions in the U.S. are
projected to increase to 9.7 gigatons in 2030 if no remedial actions are undertaken
[10]. This report identifes the primary causes for the projected growth of U.S. car-
bon emissions:

• the anticipated long-term expansion of the economy

• growth in the use of energy by buildings, appliances, and transportation due
to a projected population growth increase of 70 million
• the continued reliance on carbon-based electrical power generation from
the construction of new coal-fred power plants that lack carbon capture and
storage (CCS) technology
• a gradual decline in the ability of U.S. forests and agricultural lands to
absorb carbon, forecasted to decrease from 1.1 gigatons in 2005 to 1.0 giga-
tons in 2030 [10]

The McKinsey and Company report provides case projections that consider abate-
ment opportunities such as greater use of coal with CCS and expanded use of nuclear
power, renewable energy, and biofuels, along with vehicle effciency improvements
and energy effciency upgrades for buildings. While the use of coal is declining in
developed countries such as the U.S. and Germany, it is increasing in China and
India [8]. Most carbon abatement projections establish a cost of $50 per ton or less.
While such costs might incentivize projects for fossil fuel-fred thermal plants, motor
vehicle effciency improvements typically require greater levels of investment to
reduce emissions.
In the U.S., policy focus on climate change is widely divergent. GHG mitigation
costs are often cited as the reason for inaction though the costs are not identifed.
While the federal government lacks focus and centers its efforts on partisan fund-
ing for local remediation projects that lack long-term impacts, many states and local
26 Fundamentals of Microgrids

governments are moving forward with more effective mitigation policies. The U.S.
Climate Alliance, representing 17 states and territories, has decided to observe the
country’s responsibilities under the Paris Agreement, supplanting federal leadership
[1]. Many cities and states are committing to being more reliant on renewable energy
rather than fossil fuels, citing renewables as being less costly.

POTENTIAL FOR REDUCING CARBON EMISSIONS

There remain opportunities to further reduce carbon emissions. The potential in the
U.S. can be measured by how policies, programs, and technologies are effectively
synchronized to implement this goal. There must be a focus on managing broadly
based initiatives that successfully reduce carbon emissions. However, the pressures
of population growth and development temper the belief that carbon emissions can
be reduced by only initiating additional energy conservation and effciency improve-
ments. Technological solutions, such as pre- and post-combustion carbon capture
are expensive and untested at large scales. Finding terrestrial carbon sinks can be
diffcult since storage of carbon for long periods of time (hundreds or thousands of
years) is not guaranteed.
The study by McKinsey and Company evaluated fve categories of technolo-
gies that can be employed to reduce carbon emissions and estimates their potential
impacts [10]. They are:

• reducing the carbon intensity from electric power production by using alter-
native energy and CCS technologies (800–1,570 megatons)
• improved energy effciency in buildings and appliances (710–870 megatons)
• implementing carbon reduction opportunities in the industrial sector (620–
770 megatons)
• expanding natural carbon sinks to capture and store more carbon (440–590
megatons)
• increasing vehicular effciency and using less carbon-intensive fuels (340–
660 megatons) [10]

These approaches offer an estimated total reduction in carbon emissions ranging

from 2,910 to 4,460 megatons, or a reduction from the base year (2005) emissions
ranging from 40% to 62%. Substantial energy effciency infrastructure improve-
ments will be necessary to meet such goals. If implemented in concert, these initia-
tives would place the U.S. at a per capita carbon emission level approximating that
of Germany of Japan.
The U.S. is improving the effciency of vehicles and new buildings. Yet it is clear
that the country needs to direct more resources and efforts toward reducing emissions
from electrical energy production and improving the effciency of existing buildings
and appliances—areas where the greatest reductions in carbon emissions are pos-
sible. The need to expand the U.S. economy and support a growing population makes
the implementation of carbon emission mitigation programs challenging. However,
there are ways to reduce the impact of carbon emissions without adversely impact-
ing the economy. Reducing electrical demand (kW) is a prime example. Projections
Environmental Drivers for Microgrid Development 27

indicate that improvements in building and appliance energy effciency combined

with industrial sector initiatives could offset 85% of the incremental demand for
electricity through 2030 [11]. Microgrids designed to boost power to the grid during
peaking conditions offer a potential solution. This scenario is certainly possible, yet
the increased need for electricity through 2030 must be met while decreasing the
number of coal-fred plants.
Renewables provide us with lower, scalable CO2 emissions options for energy
production [12]. Nuclear power generation is a potentially viable option as it does
not generate CO2 emissions. However, the high development costs, long planning
horizons, and nuclear waste disposal issues associated with nuclear power stations
remain largely unresolved. Until these concerns are addressed nuclear energy is not
considered to be a universally viable solution.

THE NEW ECONOMICS OF COAL PLANTS

The use of coal represents a large portion of the CO2 being released into the atmo-
sphere. Coal use is decreasing in the U.S.; in 2018, coal use declined to levels not
seen since 1979. Yet it is increasing in some developing countries. Despite its high
levels of CO2 emissions and its low thermal energy conversion effciency (only about
37%), coal usage has an important role in global energy supply.
The electric utility industry’s plans to decrease coal-fred electrical power genera-
tion is a result of economic realities and U.S. energy and environmental policies. In
2009, the AES Corporation withdrew an application to construct a 650 MW coal-
fred power plant near Shady Point, Oklahoma as part of a strategy to reevaluate their
growth plans [13]. Louisiana Generating was recently sued by the Environmental
Protection Agency (EPA) for failing to install modern pollution control equipment
when its Big Cajun Plant underwent major modifcations [14]. Michigan has placed
several power plants on hold while Governor Jennifer Granholm attempts to shift
her state to power from cleaner, more sustainable energy sources [14]. In Kansas,
a state with a successful wind power development program, former Governor
Kathleen Sebelius vetoed three legislative attempts to approve two large coal plants
at Holcomb with a total generating capacity of 1,400 MW as was initially proposed
by Sunfower Electric Power Corporation [15]. In the U.S. the largest GHG declines
have surprisingly come from lower emissions from coal (primarily used to generate
electricity) as power generation switched to less expensive natural gas and the use of
carbon-free wind energy [6].
Perhaps one of the strongest arguments against the development of coal genera-
tion concerns its long-term economics. The startling fact is that coal-fred power
plants are fast becoming non-competitive. Investors are becoming resistant to
fnancing coal plants and insurers are becoming hesitant to underwrite their poten-
tial liabilities. Most states are using less coal. In Connecticut, New Hampshire, and
Massachusetts, coal consumption has declined by over 75%. In others, coal has
effectively become an intermittent power source. The Energy Information Agency
determined that natural gas-fred power plants are less expensive to construct with
overnight capital costs ranging from $676 to $2,095 per KW, depending on the tech-
nology used [16]. This is the primary reason why natural gas now generates 34%
28 Fundamentals of Microgrids

of the electricity in the U.S. The math shows that for coal to compete with natural
gas, coal would require additional subsidies from $1.2 to $4.5 billion per coal plant
constructed. Natural gas plants can also be started more quickly when needed and
do not have ash disposal problems that require management.
From the microgrid developer’s perspective, it is almost antidotal that substitut-
ing natural gas for coal reduces CO2 emissions. This is due to the lower carbon
content of natural gas and our ability to combust it at higher effciencies than coal.
Capacity additions have favored natural gas and renewable energy while most power
plants being retired used coal [17]. Lower natural gas prices, increased regulation on
air emissions, and more effcient natural gas-fred combined-cycle technology have
made natural gas an attractive choice for baseload demand previously met by coal-
fred generation [17]. Coal-fred generation has decreased because of economics.
What about conventional coal-fred thermal plants built to meet present standards
without carbon capture? These wouldn’t necessarily be called “dirty coal” plants but
they do cause carbon pollution. Interestingly, they are often not price competitive
either. They cost $2.9 to $6.6 million per MW to construct plus the power plant own-
ers need to continue purchasing coal [16]. When compared to greener technologies,
coal plants have permitting issues, are more costly to build, take longer to construct,
and are more expensive to operate. New wind power plants cost about $1.3 to $2.2
million per MW and their costs are declining—plus the utilities don’t need to pur-
chase the fuel source. Concurrently, costs for solar photovoltaic and thermal plants
continue to decline. A solar project in Ohio was recently estimated to cost $1.1 mil-
lion per MW.
Facing such a competitive environment coal companies creatively fnd ways to
maximize the subsidies from the government. To reduce state and federal royalty
payments and maximize subsidies from the U.S. government, coal companies actu-
ally created subsidiaries to sell the coal they mine to themselves [18]. The scheme
involves captive transactions in which companies that mine the coal use other com-
panies they own to sell the resource at a low value. This reduces payments to the
federal government since the frst sale of the coal is at a below-market price to a
subsidiary [18]. In 2017 coal producers asked the federal government to subsidize
the development of coal-fred plants, arguing that they are more resilient than other
forms of generation and are needed for energy security. Governmental subsidies
make the cost of coal-fred generation appear to be economically feasible when
it is not. Regardless, economic realities can be harsh. To reduce its energy costs,
the Kentucky Coal Museum, located in a state that has historically supported the
development of coal plants, installed solar photovoltaic panels on its roof. Coal use
has been declining in the U.S. while natural consumption has been increasing (see
Figure 2.3).

TRANSITIONING TO A LOW-CARBON ECONOMY

Strategies to reduce carbon emissions will impact all sectors of the economy and
costs are likely to be unevenly distributed regardless of the strategies employed.
Therefore, policies that focus on reducing carbon emissions must be broadly based.
A consensus must be reached. Programs must be implemented to achieve the goals
Environmental Drivers for Microgrid Development 29

FIGURE 2.3 U.S. energy impact of reduced coal use. (Source: Energy Information
Administration [17].)

established by the policies that are adopted. While policies and programs are repli-
cable, they must contain overarching principles, have consistent goals, and be locally
adaptable. The technologies employed must be appropriate, deployable, and eco-
nomically viable. There are a number of strategies that would enable a transition to
an economic model based on lower carbon emissions.

GREENHOUSE GAS REDUCTION STRATEGIES

A strategy that is widely used in environmental policy-setting is called stabilization
triangle theory. For greenhouse gasses, the concept involves stabilizing emissions at
a point in time causing them to initially level off and then decline over a period of
years (see Figure 2.4). This is diffcult as GHG emission declines must occur in the
face of population growth and increasing demand for energy, particularly electricity.
Microgrids have an increasing role in meeting the needs for electricity in such scenarios.
Using this model, the future increases in carbon emissions are avoided by base-
lining carbon emissions and implementing policies, strategies, and technologies
that would level greenhouse gas emissions in the short term and reduce them in the
long term. Solutions include switching to fuels that emit less greenhouse gas (e.g.,
coal to natural gas), implementing additional energy effciency measures, improving
energy conservation efforts, and using renewable energy. Improvement alternatives
in the solution toolbox have been referred to as wedges as each implemented solu-
tion has an impact on GHG reduction within the stabilization triangle [19]. When
implemented, these solutions would ultimately reduce the impacts of climate change
(Figure 2.5). Key strategies are summarized below:

Reduce use of targeted high carbon fuels: decrease or stop the use of the tar-
geted fuel; implement energy conservation programs.
Improve effciencies: improve energy management; implement energy eff-
ciency programs and effciency improvement projects; improve the eff-
ciency of vehicles.
30 Fundamentals of Microgrids

FIGURE 2.4 Graphic of stabilization triangle as applied to atmospheric carbon emissions.

(Source: E&E, Princeton University [19].)

Reduce emissions from point sources: such as from power plants, stationary
sources, mobility sources.
Eliminate emissions: fnd ways to eliminate dependence on carbon pollution
generators.
Price in externalities: consider the external costs of fuel selection in project
costs. This necessitates quantifying the cost of the impacts of pollution over
time.
Substitute fossil energy sources: creatively switch from high carbon to lower
carbon fossil fuels (e.g., from coal to natural gas).
Substitute fossil energy sources for renewables: switch to energy sources that
are carbon-neutral (e.g., from coal or natural gas to solar, wind, geothermal).
Capture carbon and apply for process use: use pre-combustion or post-com-
bustion capture to remove, collect, and store CO2 and apply it to economi-
cally benefcial uses (e.g., enhanced oil recovery, beverage manufacturing,
or carbon fber production).
Implement carbon sequestration: provide geologic, pre-combustion, post-
combustion, or biological capture and store the CO2 in a safe location.

OTHER ENVIRONMENTAL CONCERNS

There are additional environmental concerns that are important considerations. The
Clean Air Act, last amended in 1990, requires the EPA to set National Ambient Air
Quality Standards (40 CFR part 50) for pollutants considered harmful to public
health and the environment [21]. The Clean Air Act identifes two types of national
Environmental Drivers for Microgrid Development 31

FIGURE 2.5 Changes in atmospheric temperatures, 1880 to present. (Source: NASA [20].)

ambient air quality standards. Primary standards that provide public health protec-
tion which include protecting the health of sensitive populations such as asthmatics,
children, and the elderly [21]. Secondary standards provide public welfare pro-
tection, including protection against decreased visibility and damage to animals,
crops, vegetation, and buildings [21]. Criteria pollutants include carbon monoxide
(CO), lead (Pb), nitrogen dioxide (NO2), ozone (O2), particulate pollution, and sulfur
dioxide (SO2) [21]. These pollutants can harm the health of individuals, negatively
impact the environment, and cause property damage. Of the six pollutants, particu-
late matter and ground-level ozone are the most widespread health threats. Most of
these criteria pollutants are associated with fossil fuel combustion processes (see
Table 2.2).
Categories of environmental contaminates include the following:

Air pollution: smoke, nitrogen oxides, sulfur oxides, ozone, carbon monoxide,
carbon dioxide, volatile organic compounds, lead, particulates, and acid
rain. This includes non-combusted natural gas emissions and other trace
emissions from combustion processes.
Water pollution: sulfuric acid in lakes and streams, mercury, toxic met-
als including cadmium, arsenic, nickel, chromium, and beryllium. This
includes runoff from agricultural chemicals. Effects include events such as
fsh kills, alga blooms, and environmental damage due to oil spills.
Land laid to waste: strip mines (over one million acres awaiting reclamation),
deforestation, ash storage, lead concentrations in soils, loss of wildlife habi-
tat. Also includes land abandoned due to nuclear accidents and storage of
waste materials.
32 Fundamentals of Microgrids

TABLE 2.2
Air Pollutants, Primary Sources, Health and Environmental Concerns
(Adapted from Air Quality Lab [22])
Human health
Pollutant Primary sources concerns Environmental Concerns
Ozone (03) Motor vehcles, exhausts, Respiratory problems, Disripts photsynthesis,
industrial processes, lung damage and damages plants and
gassoline vapors and respiratory illnesses. reduced crop yields.
chemicals.
Nitogen Motor vehcles, exhausts, Heart attacks, bone Smog, acid rain, global
Oxides (NOx) industrial processes, fossil marrow production, warming, air pollution,
fuel combustion and asthema and nausea. water pollution, toxic
electric utilities. chemical production.
Sulfur Oxides Mining operations, Repiratory problems. Acid rain, water pollution,
(SOx) exhausts, industrial crop damage, damage tree
processes, fossil fuel foilage, growth, and
combustion transportation decreased visibility.
and electric utilities.
Carbon Motor vehcles exhausts, Damage to Low-level smog.
Monoxide industrial processes, cardiovascur system,
(CO) wood combustion, fres, damage to central
and construction nervous system and
death.
Particulate Motor vehicles, factories, Respiratory issues and Visibility, air and water
matter stone crushing, wood death pollution.

MICROGRIDS ARE ONE SOLUTION

What are the solutions? To meet the growing need for energy by reducing the use
of carbon-based fuels (while simultaneously reducing CO2 emissions), the chal-
lenge must be met using the other tools in our engineering toolkit: energy effciency,
energy conservation, fuel substitution, renewable energy. Microgrids can synergize
these tools to aid in the transition to a low-carbon economy.
Microgrids have a key role in helping meet sustainability goals. They can be
confgured to use local energy resources and focus on workable forms of renew-
able generation. With their local focus, they can be successfully deployed to meet
local policy objectives. The technologies used in microgrid confgurations can be
designed based on locally available skills and resources. If fossil fuels are used, new
microgrids are unlikely to use coal to generate electricity. Due to lower costs and
dispatch capabilities, they are more likely to use natural gas to resolve intermittency
problems. They have the ability to reduce greenhouse gases by enhancing our ability
to use renewable energy and energy storage technologies to generate electricity. By
displacing fossil fuels, they can support a GHG stabilization triangle while reducing
air and water pollution.
Environmental Drivers for Microgrid Development 33

CONCLUSIONS
Carbon emissions generated by mankind’s activities are contributing to potentially
irreversible changes in the world’s climate. The scientifc consensus is that global
climate change is one result. The sustainability of life on Earth is at stake. Natural
processes have effectively stored large quantities of carbon for eons and there are
currently no scalable substitutes for these natural processes. The carbon compounds
that are emitted into the atmosphere come from natural and human-made sources.
The primary anthropogenic sources are due to the combustion of fossil fuels. The
Hydrocarbon Age is at an impasse. We must fnd ways to use carbon-based fuels
more effciently and effectively and fnd workable substitutes.
We know that energy, environment, and economy are linked, yet a consensus
regarding how to effectively deal with this relationship remains elusive. There is no
single, quick-fx solution since greenhouse gas emissions vary widely across coun-
tries and economic sectors. Long-term solutions that reduce GHG emissions are
needed, yet they are costly and diffcult to implement. Policies that focus on reducing
carbon emissions must be broadly based. The Kyoto Treaty and the Paris Agreement
provide examples but have yielded mixed results. Programs must be implemented to
achieve the goals established by those policies that we choose to adopt. Technologies
that are directed toward the reduction of carbon emissions must be adaptable and
economically viable. Microgrids provide a potentially viable solution as they can
readily incorporate renewable energy and energy storage systems.
In the future, CO2 is likely to become a regulated pollutant in the U.S. There are
ways to improve our buildings and transportation systems that can lead to reduced
GHG emissions. The initiatives in the U.S. are having a positive impact. After three
years of declines, U.S. carbon emissions from energy consumption in 2017 were
the lowest since 1992, the year that the United Nations Framework Convention on
Climate Change came into existence [23].
There are a number of greenhouse gases more potent than CO2 that offer emission
reduction opportunities. Among the most proftable approaches is the destruction of
nitrous oxide, which has 310 times the global warming potential of CO2 and which
stems from fertilizer and nylon production. Next is avoiding the release of methane
gas, at least 21 times as potent as CO2, from landflls, coal mines, and gas-faring
projects.
Ultimately, the greatest weapon in the battle against human-induced global
warming will be technologies to cut CO2 emissions from energy generation. The
sooner clean energy approaches, such as renewables and near-zero fossil fuel tech-
nologies, can be refned and replicated, the more likely we can meet the challenge
of reducing GHG emissions by 80% by 2050. The U.S. is making improvements
toward such a goal. Due to increases in wind and solar capacities, renewable energy
resources are gaining an increasing share of generation [17]. While nuclear genera-
tion was relatively fat over the past decade, it remains one of the largest sources of
electrical generation without CO2 emissions [17]. Renewable energy sources com-
bined with nuclear energy provided about 33% of total U.S. electricity production
in 2015 [17].
34 Fundamentals of Microgrids

Renewable energy resources can be used to provide distributed generation and

be widely deployed by developing microgrids. Microgrids provide the potential to
resolve the principle problem of delivering energy to remote areas. They provide
opportunities to decentralize and democratize the process of supplying electric-
ity. Millions of people who lack access to electricity for basic services can develop
microgrids for local use at costs that are often much less than providing grid access.
The opportunity to develop microgrids provides more expedient delivery of electri-
cal services, often at a lower cost than developing central utility systems.
We fnd ourselves at an impasse and solutions will be both technologically chal-
lenging and costly to implement. Solutions include fuel substitution, improving
energy effciency of vehicles, upgrading buildings and facilities, reducing emissions
caused by electrical energy production, using more effcient appliances, and expand-
ing the use of alternative energy. The potential can be measured in how policies,
programs, and technologies are effectively synchronized and implemented to reduce
fossil fuel consumption and carbon emissions. Microgrids, by improving effcien-
cies, relying more on renewables, and reducing transmission costs are seen as part of
the solution to the emissions problems caused by fossil fuels.

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2H2O. http://en.wikipedia.org/wiki/Methane, accessed 8 March 2018.
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r-in-co2-reduction, accessed 24 January 2020.
 3 The Roots of Microgrids

THE EARLY HISTORY OF MICROGRIDS

Small electrical grids were the norm when electricity was frst harnessed. The frst
local electric grid was the Manhattan Pearl Street Station in New York City, located
at 255–257 Pearl Street in Manhattan [1]. Built by Thomas Edison in 1882, it began
with 85 customers and powered 400 electric lamps [1]. It also pioneered two other
solutions that are linked to contemporary microgrid development. It was the world’s
frst combined heat and power (CHP) plant [2]. The steam used to power the genera-
tors was used by local manufacturers to heat nearby buildings and it also had batter-
ies to store electricity [2]. Edison’s system provided the frst model of incremental
microgrid growth. By 1884, the Pearl Street Station had added three more generators
and expanded to serve over 500 customers with 10,164 lamps [1]. Its small but cen-
tralized generation system defned a model that eventually grew into what we know
as a traditional electric grid.
The Edison Illuminating Company developed similar direct current (DC)
grids in Shamokin, Pennsylvania (1882), Sunbury, Pennsylvania (1883), Brockton,
Massachusetts (1883), Mount Carmel, Pennsylvania (1883), and Tamaqua,
Pennsylvania (1885) [1]. As demand for electricity grew, the primary problem from
the consumer perspective was obtaining access. If a facility was not in close proxim-
ity to the source of generation, it was diffcult to get electricity due to the costs of
transmission. By 1886, Edison’s company had successfully installed 58 independent
electric generating systems that we would today call microgrids. The technologies
we use today for electric grid interconnections were unimportant at the time as there
were no electric grids to connect to.

HYDROPOWER MICROGRIDS
The world’s frst hydroelectric power plant began operation in September 1882 on the
Fox River in Appleton, Wisconsin [3]. The plant, later named the Appleton Edison
Light Company, was initiated by Appleton paper manufacturer H. J. Rogers, who
had been inspired by Thomas Edison’s plans for an electricity-producing station in
New York [2]. Unlike Edison’s New York plant, which used steam power to drive its
generators, the Appleton plant used the natural energy of the Fox River to produce
about 12.5 KW. The operation’s water wheel, generators, and copper wiring took
only a few months to install and test [3]. When the plant opened, it produced enough
electricity to light Rogers’s home, the plant itself, and a nearby building. Such con-
fgurations were similar to what we now call microgrids.
The growing demand for electricity and the relative ease of generating hydroelec-
tricity caused the process to be rapidly cloned. By 1886, there were 45 hydroelectric
power plants in the U.S. and Canada; by 1889, there were 200 in the U.S. alone [4].
By 1920, about 40% of the electricity in the U.S. was produced by hydropower plants.

37
38 Fundamentals of Microgrids

THE WORLD’S LARGEST MICROGRID IN 1883

There was a series of fairs held in Louisville, Kentucky from 1883 to 1887. Called
the Southern Exposition, it was a large development held in what is today called
the Old Louisville neighborhood and south of today’s central business district (see
Figure 3.1). The exposition, held for 100 days each year on 45 acres (180,000 m2)
immediately south of Central Park (now the St. James-Belgravia Historic District),
was essentially an industrial and mercantile show [5]. Though Louisville had a popu-
lation of just 156,000, in the frst 88 days, nearly a million people attended the expo-
sition [6]. The exposition was larger than any previous American exhibition with the
exception of the Centennial Exposition held in Philadelphia in 1876 [5]. The exhibi-
tion building was so large that it contained a half-scale Mayan temple [6].
The Southern Exhibition’s electrical system included all of the features that we
would fnd in a contemporary microgrid confguration operating as a standalone dis-
tributed generation system. It contained a generation source (see Figure 3.2), loads,
transmission, etc. A highlight of the exhibition was the world’s largest installation
of incandescent lamps that were used to illuminate the exposition at night [5]. The
lamps were invented by Thomas Edison, a previous Louisville resident. Edison’s
electrical system, which he personally supervised, initially included 4,600 incandes-
cent lamps (16 candlepower each) for the exhibition hall and 400 for an art gallery;
the total was more than all the electric lamps installed in New York City at that
time [5]. The exterior was illuminated using Jenny arc lights. An electric trolley sys-
tem (nicknamed “the electric railroad”) encircled the structure. Within a few years,
Louisville had one of the best electric trolley systems in the country. George H.

FIGURE 3.1 Rendering of the Southern Exposition showing electric rail line [6].
The Roots of Microgrids 39

Yater writes in his book 200 Years at the Fall of the Ohio: “The Exposition was the
frst large space lighted by incandescence and many electrical pioneers felt that the
Louisville success did more to stimulate the growth of interior electric lighting than
any other Edison plant” [5].

ALTERNATING CURRENT
It soon became apparent that a large centralized power plant was more effcient at
providing electricity over a wide area (and less expensive to construct) than small
power plants were at providing electricity over a regional area [1]. Higher system
effciencies could be achieved using hydropower rather than fossil fuels. By the turn
of the century, Westinghouse built a hydroelectric power plant on Niagara Falls, and
using alternating current (AC) technology sent the electricity 20 miles to Buffalo,
New York [1].
Alternating current had a distinct advantage over direct current when transporta-
tion of electricity over long distances was needed. It was much easier and cheaper
to step up and step down voltage [1]. This is due to Ohm’s law: current = voltage ÷
resistance, or I = V/R. When voltage increases, the resistance in the transmission line
is reduced. As resistance increases, more electricity is lost as heat. The higher the
voltage, the smaller the wire that can be used. As a result, DC electric generators had
to be located within a mile of the load, while AC generators could be constructed
much further away [1]. Most of today’s modern microgrids are AC systems.

COMBINED HEAT AND POWER

A co-generation facility produces electric energy and forms of thermal energy (such
as heat or steam) that are used for industrial, commercial, heating, or cooling pur-
poses, through the sequential use of energy [8]. Co-generation is broadly defned as

FIGURE 3.2 Southern Exposition electric generator [7].

40 Fundamentals of Microgrids

the coincident or simultaneous generation of usable heat and power in a single pro-
cess [8]. The co-generated power is typically in the form of mechanical or electrical
energy [8]. The power may be totally used in the industrial plant that serves as the
host of the co-generation system, or it may be partially or totally exported to a utility
grid [8]. Most CHP systems use steam turbines, internal combustion engines, and
packaged co-generation systems as prime movers. Natural gas turbines are widely
used in industrial plants.

MILL TOWNS AS A MODEL FOR TODAY’S MICROGRIDS

Co-generation was a model for the factory towns or mill villages of the U.S. and
England in the early 1900s. These settlements clustered near mills or factories,
such as cotton mills, steel works, or textile factories. The ability to offer heat for
machinery enabled production. The advent of electrical lighting systems extended
working hours, especially during the shorter winter days. Since water was needed in
large quantities to produce steam, mill towns such as those in New England huddled
near waterways (e.g., the Housatonic, Merrimack, Nashua, and Saco rivers). Many
were called mill towns or company towns. An example is Pullman, Illinois, which
was conceived as a place where workers could both live and work. This town was
designed on the premise of being a model industrial town, complete with parks and a
library [9]. All power sources were co-located in places where the factory’s electrical
loads could match the ability of the co-generation systems to produce power. These
were models for today’s microgrids.
Modeled on company towns, distributed generation (DG) has emerged as the next
generation of CHP through relatively small distributed units (from a few kilowatts to
25 MW) [8]. DG plants may be interconnected to a utility grid or operate as stand-
alone systems (see Figure 3.3). Typically, they are smaller, self-contained, power
generation systems located near or within the boundaries of a CHP user or con-
sumer facility and use natural gas, liquefed petroleum gas (LPG), kerosene, or diesel

FIGURE 3.3 Combined heat and power generation schematic [11].

The Roots of Microgrids 41

fuel [8]. Small-scale or micro CHP systems are available with units that provide heat
to power engines which in turn drives an electric generator [10]. The recovered heat
can also be used to generate additional electricity in a different process. These are
called co-generation combined cycle plants.
CHP generates electricity and captures the heat that would otherwise be wasted
to provide useful thermal energy, such as steam or hot water, that can be used
for space heating, cooling, domestic hot water, and industrial processes [11]. This
improves overall system effciency. CHP co-generation systems have operated suc-
cessfully in times of crisis, enabling facilities to operate independently. Modern
systems can be combined with renewable generation, improving capacity. During
the power outages that resulted from Hurricane Sandy, Princeton University’s CHP
(15 MW) and solar (5.3 MW) microgrid maintained power on campus for three
days in October 2012 [12].

SHIPS ARE MICROGRIDS

Nearly all modern cruise ships and ocean liners are powered by electricity. Marine
vessels are excellent models for microgrids due to their extensive use of power and
electronically interfaced loads and sources [13]. Marine microgrids are central elec-
trical networks that include generation, storage, and critical loads, and are able to
operate connected to a grid (when in port) or operate in islanding mode (when out
to sea) [14]. Characteristics of marine microgrids are similar to islanded land-based
microgrids, except they have large highly dynamic loads, such as propulsion loads
[13]. The presence of such loads and sources with power–electronic converter inter-
faces creates the need to manage power quality [13]. Electricity powers the motors
that turns the propellers. It also powers the heating and air conditioning systems,
lights, and appliances used aboard the ship. Most ships produce their electricity with
turbines using diesel, natural gas, a combination of diesel and gas, or electric engines
(see Figure 3.4).
Multiple microgrid technologies are being used for maritime microgrids. An
example is droop control to properly share and balance the power injected by the gen-
erators [14]. The state of the art is to employ large AC/DC hybrid maritime microgrid
systems, which allow integrating AC generators, AC and DC energy storage sys-
tems, and AC and DC critical and noncritical loads [14]. However, some maritime
microgrids are trending more toward DC distribution systems (a DC microgrid),
especially when incorporating energy storage systems [14]. Typical confgurations
for ships include diesel generation, an energy storage system, electric propulsion,
thrusters, an internal transmission system, a power electric substation, converters,
electric loads, a central control station, and a communication network. Some have
small solar PV arrays to provide supplemental DC power. Excluding the propul-
sion system and thrusters, these are similar conceptually to the primary components
found in most land-based microgrids.
Nuclear submarines are powered by nuclear reactors. Inside these reactors, a neu-
tron is deployed to split uranium atoms. The atomic structure of uranium, once split,
forms a huge amount of heat and gamma radiation. This heat emitted is used to
heat water, generate steam, and drive the turbines. The turbine directly drives the
42 Fundamentals of Microgrids

FIGURE 3.4 Cruise ship microgrid system using an on-board energy storage system [15].
(Source: https://www.et.aau.dk /digitalAssets/141/141055_cruise_vessel.bmp.)

propulsion system and electric generators; this is why they are often called “elec-
tric boats.” The process is similar to the reactor systems used in commercial power
plants but at a smaller scale. It is theoretically possible that the reactor from an Ohio
class nuclear submarine (which has two turbines rated at 45MW each) could provide
enough electricity for a village or small town.

BUILDING-SCALE NANOGRIDS
Buildings that generate their own electricity serve as small-scale models for
microgrids. Initially designed to satisfy the need for reliable sources of power in the
event of grid failures, hospitals and civil emergency support centers were provided
with secondary power sources, often in the form of diesel generators. Many used
legacy switch technologies for grid-connection to enable generators to connect and
disconnect from the grid [16].
Today, many residences have backup power supply systems that might use gen-
erators or battery storage systems. Green buildings today have renewable elec-
trical generation systems, especially solar PV, that provide electricity generated
on-site.

SUSTAINABLE BUILDINGS
Buildings have an important role in reducing carbon emissions since they account
for large amounts of energy use. They require interrelated systems that are energy
intensive in their construction and operation. Buildings use energy for lighting, heat-
ing spaces and water, mechanical uses, appliances, and other purposes.
The Roots of Microgrids 43

Buildings today are being constructed with features that consume fewer resources
and enable operation with less energy use. Sustainable buildings (often called green
buildings) are notable due to their higher performance and enhanced capabilities as
compared to standard construction practice. They are a response to past resource-
intensive construction practices used in building designs with comparatively greater
energy and water consumption, adverse environmental impacts, and higher costs
of ownership. Sustainable buildings address issues such as site development, recy-
cling, energy use, water consumption, renewable energy, and indoor air quality.
Their primary goals include providing higher quality construction with healthy and
comfortable indoor environments. They are designed to have lower operating and
maintenance costs. The use of energy is a key design consideration for the con-
struction and development of green buildings. Recently, sustainable buildings have
focused on carbon emission reductions.
There are many opportunities in architectural practice to include green design
features and components in buildings that address their sustainability. Developing a
green building project is a balancing process that often requires tradeoffs. It involves
considering how buildings are designed and constructed at each stage of the project
development and delivery process. The designs typically augment the use of insula-
tion, carefully detail fenestration, and control air and moisture infltration. Green
buildings tend to make greater use of renewable energy (see Figure 3.5).
The standards for green construction are constantly evolving. The International
Energy Conservation Code (IECC) requires that certain energy effcient design
methodologies be used in construction practices. It addresses the design of energy-
effcient building envelopes and installation of energy-effcient systems while empha-
sizing system performance. It is comprehensive and provides regional guidelines
with specifc requirements based on climate zones. New construction materials and
products are available that offer improved design solutions. Many local governments
have developed their own codes that incorporate sustainable design requirements.

FIGURE 3.5 Rooftop solar collectors for residences in Amersfoort, Holland.

44 Fundamentals of Microgrids

GREEN BUILDING ASSESSMENT METHODS

Numerous assessment systems for sustainable buildings are in use throughout
the world though BREEAM and LEED set the dominate standards. The Building
Research Establishment Environmental Assessment Method (BREEAM), one of the
world’s longest established methods of assessing, rating, and certifying the sustain-
ability of buildings, has been used in over 70 countries. The Leadership in Energy
and Environmental Design (LEED) program, originated in the U.S., considers a
wide range of sustainable construction features, components, and project types. As
of the end of 2019, there were approximately 70,000 LEED projects registered in the
U.S. They have been completed in over 150 countries. LEED projects credit design
attributes including energy and water consumption, environmental criteria, and use
of renewables and green building standards.
When required by regulation, IECC requirements are included in BREEM
or LEED projects. This holds the building designers using these certifcation
programs to higher energy-effciency standards. Many green building technolo-
gies such as high-effciency windows, solar arrays, and day-lighting applications
are readily observable. Regardless, it is sometimes discouraging to owners that
many important engineered features of green buildings are hidden from view
in mechanical rooms and inaccessible spaces. Examples of these technologies
include enhanced insulation, lighting control systems, computer control systems
to manage energy and water use, rainwater collection systems, under-foor airfow
systems, and geothermal heating and air conditioning systems, among others.
LEED certifcation programs encourage the use of such generation technologies
by providing credits for identifed percentages of renewable generation and pur-
chased renewable power.
Energy managers and engineers recognize the importance of sustainable build-
ings, their primary components, and the importance of resource and energy use in
green construction practice. They are often the leaders in promoting green design
features in the lighting, control, electrical, and mechanical systems that are found
in a growing number of buildings. Green buildings advance the use of renewable
energy for on-site electricity generation, as many have solar PV arrays and small-
scale wind power systems.
Validating green building performance is challenging due to the subjective con-
cepts involved, the evolving nature of standards, and the local variability of construc-
tion practices and regulations. Measurement and verifcation of building performance
and resource consumption has an important role in this process. It provides proce-
dures that verify the energy use, water consumption, and emissions reductions green
buildings offer. As improved performance is verifed, the use of green construction
techniques and technologies will further expand as more examples of successful
green buildings become available.

ZERO NET ENERGY BUILDINGS

Many building owners recognize the importance of sustainable buildings and of
resource and energy use in green construction. They are among the leaders in
The Roots of Microgrids 45

promoting green design features in the lighting, electrical, and mechanical systems
that are found in a growing number of buildings.
Many green building designers attack the problem of energy usage in two ways.
First, the buildings are designed to be more energy effcient as compared to build-
ings designed to local standards. Second, they design the buildings to take advantage
of renewable energy either by on-site generation or through purchase of green power.
On-site generation typically includes use of renewables, such as solar energy or geo-
exchange systems, that further reduce the need to purchase energy from local utili-
ties. Buildings that power themselves have revolutionized how buildings function yet
may disrupt the electric utility industry in the future as the practice becomes more
widespread. Building owners that utilize green power purchase programs essentially
partner with the utility that provides renewable electricity.
Some newer structures are designed to be zero net energy (ZNE), net positive
energy (NPE), or carbon-neutral buildings. ZNE buildings represent a new category
of green buildings and a departure from the perspective that a building can be con-
sidered green without generating on-site power. ZNE buildings have been completed
in Japan, Malaysia, the U.S. and elsewhere. U.S. examples of ZNE buildings include
the NREL Research and Support Facility in Golden, Colorado, and the North Shore
Community College Health and Services building in Danvers, Massachusetts.
It would be better if buildings could generate more power than they require and
routinely sell excess power back to the grid. Perhaps some can. Such buildings are
called net positive energy buildings. In the UK, a model energy-positive project,
called The Active Offce, produced more than 150% of the energy it consumed [17].
This project was funded by Innovate UK, with support from Swansea University
and the European Regional Development Fund. By combining a range of innovative
technologies, it generates, stores, and releases solar energy in one integrated system
[17]. Technologies include a roofng system with integrated solar cells, a solar pho-
tovoltaic thermal system capable of generating both heat and electricity, lithium ion
batteries for electricity storage, plus a 2,000-liter (528-gallon) water tank to contain
solar heat [17]. Energy-positive buildings lower energy costs for the consumer and
eliminate the need for peak central power generating capacity [17].

NANOGRIDS
Building-scale ZNE and NPE microgrids are often called nanogrids. They are indif-
ferent to whether or not electricity from the host utility is available and functioning
(see Figure 3.6). Typically serving a single building or a single load, nanogrids are
very small microgrids [18]. Navigant Research defnes a nanogrid as being 100 kW
for grid-tied systems and 5 kW for remote systems not interconnected with a utility
grid [18]. Since nanogrids are restricted to a small and limited service area, they are
not constrained by regulations prohibiting the transfer or sharing of power across a
public right-of-way [18]. They have a greater propensity to use direct current systems.
The components of a residential nanogrid might include renewable energy sys-
tems, energy storage, a building energy management system (BEMS), and a smart
electric meter. The BEMS monitors, automates, and controls building systems
such as heating, ventilation, air conditioning, thermostats, and lighting to increase
46 Fundamentals of Microgrids

FIGURE 3.6 Energy-effcient residence designed as a nanogrid. (Concept adapted from [20].)

building energy effciency [19]. They can monitor electrical energy generated by the
renewable energy systems (e.g., solar PV and wind power) and in conjunction with
smart metering systems make decisions as to how to manage energy use in the resi-
dence. The primary benefts are reduced energy costs, on-site electricity generation,
improved comfort and interior environmental conditions, and the ability to remotely
program and monitor conditions. Residential nanogrids may also incorporate charg-
ing stations for automobiles or other vehicles.
Many residences—almost 26 million households or an estimated 100 million
people—are served by off-grid renewable energy systems: some 20 million house-
holds through solar home systems, 5 million households by renewables-based mini-
grids, and 800,000 households by small wind turbines [21].
The U.S. Virgin Islands and Puerto Rico were hit by hurricanes Irma and Maria
during 2017. These were severe storms which disrupted power for months. Some
residents decided to rebuild their homes and incorporate new solar PV systems in an
effort to improve reliability (see Figure 3.7). Those with larger systems have essen-
tially constructed nanogrids. The question is whether or not these systems will sur-
vive the high wind conditions associated with hurricanes and continue to generate
electricity afterward.

REGIONAL GRIDS
There is another category of electric grids for those too large to be considered
microgrids yet not large enough to be considered to be similar to central grids. These
systems are characterized by multiple load centers, and low or medium voltages for
transmission, yet are not connected to a central national grid. Holdmann and Asmus
have proposed the defnition for regional microgrid as “a high voltage transmission
network connecting multiple distribution nodes/load centers and power stations, but
that is entirely isolated from a larger national or continental central grid or is only
weakly connected” [22]. An attribute of regional microgrids is that they align with
The Roots of Microgrids 47

FIGURE 3.7 Residence using solar PV on St. Thomas Island, U.S. Virgin Islands.

distributed energy resources management systems (DERMS) [22]. These types of

control systems manage the centers of electrical energy production to match the
loads of the regional systems.
The majority of the people living in Alaska, Canada, and the Russian far east have
electric power supplied by regional grids that connect generation sources and load
centers via a transmission network [22]. Most Arctic regional grids are anchored
by renewable generation systems, such as geothermal and hydropower, along with
a base load primary energy source such as diesel or natural gas generation [22].
Examples of regional grids that rely heavily on hydropower include the Railbelt and
Southeast Alaska Power Agency grids in Alaska, and the Yukon, Taltson, and Snare
Grids in Canada [22].
The Nordic country of Iceland offers an example of a regional microgrid. Being
a remote island disconnected from the Nordic Grid, it is often considered to be too
large of a system to be considered a microgrid. The Landsnet Transmission Grid in
2017 was powered by 14,059 GWh (73.3%) of hydropower, 5,170 GWh (26.6%) of
geothermal energy, and only 2 GWh (.01%) of fossil fuel-fred generation [22].
Norway’s electricity grid is confgured with three levels: the nationwide transmis-
sion grid (operated by Statnett), the regional grid, and the distribution grid [23]. The
transmission grid makes it possible to transmit electricity from the hydropower plants
in the southwest and north to consumers in other parts of Norway and to nearby
countries. Regional grid companies, engaged in production and electricity trading,
own about 6% of Norway’s transmission grid. They are owned by private companies,
municipalities, and county governments. Both the distribution and regional grids are
considered distribution systems, as defned by EU legislation [23]. Its regional grids
typically link the transmission grid to the distribution grid, and may also include
48 Fundamentals of Microgrids

production and consumption radials that carry higher voltages [23]. The regional
grid carries voltages from 33 kV to 132 kV, and has a total transmission length of
about 19,000 km [23]. The distribution grid consists of the local electricity grids that
normally supply power to smaller end-users [23]. It carries a voltage of up to 22 kV,
divided into high-voltage and low-voltage segments with the low-voltage distribution
to ordinary customers normally carrying 230V or 400V [23].

THE ROLE OF TRANSPORTATION SYSTEMS

In 2018, the U.S. transportation industry consumed the equivalent of 28.3 quadril-
lion Btus or 27.9% of its total of 101.3 quadrillion Btus of primary energy [24]. Plans
to reduce greenhouse gases (GHGs) must include ways to reduce impacts from the
combustion of transportation fuels. Most of our mobility fuels are derived from fossil
fuels, primarily petroleum (92%), and to a lesser extent natural gas (3%) and renew-
ables (5%) [24]. Products include diesel fuels, gasoline, and ethanol. Combustion of
petroleum fuels creates environmental problems by adding GHGs, pollutants, ozone,
and soot to the atmosphere. While mobility fuel use continues to increase, we have
other options. Solutions that decrease these pollutants include reducing the use of
vehicles by planning solutions, manufacturing vehicles that are more effcient, using
alternative means of transportation, and using fuels that are less polluting. Fuel sub-
stitution is another. These can lead us to a more sustainable energy future when
petroleum fuels are replaced with renewables.
Planning solutions include infrastructure improvements and densifcation. Cities
can be designed to minimize the impact of automobiles, discourage vehicle use, pro-
vide green wedges from the city center to its outskirts, and by encouraging brown-
feld redevelopment. Well-designed urban planning approaches encourages people to
walk, bicycle, and skateboard, by locating people in close proximity to urban ameni-
ties and creating transit centers. Infrastructure improvements such as bikeways, bus
rapid transit, light rail, and waterways have a place in sustainable planning.
We can provide more effcient vehicles. This has been a focus of successful leg-
islative efforts to improve feet vehicle mileage requirements. It has been accom-
plished by improving the effciency of the combustion engines used in automobiles
and trucks and by reducing vehicle weights and sizes. Vehicular electrifcation tech-
nologies provide opportunities for microgrids to be developed to support personal
transportation systems.
Alternative means of transportation enable consumer choice by providing mul-
tiple transportation options. Arriving at the central train station in Amsterdam by
bicycle, canal boat, bus, tram, or taxi, you can connect to rail service that will get
you anywhere in Europe. While vehicles are not allowed to park at the station, there
is a spacious three-story garage for bicycles.
The railways in The Netherlands operate on electricity generated primarily by
wind power. Yet renewable fuels in the U.S. comprise only a small portion of its
transportation fuels. Examples include biogas-derived compressed natural gas,
ethanol, hydrogen vehicles using fuel cells, electric vehicles that are charged using
renewable energy, and many others. In Atlanta, one of the largest landflls produces
methane gas which is used as a fuel for garbage trucks. The main commercially
The Roots of Microgrids 49

produced biofuel in the U.S. is ethanol, created using corn. In most processes, the
corn kernels are extracted for this purpose as their sugar content is higher than in
the other bulky materials, such as the husks and stalks. Producing cellulosic ethanol
from these waste materials is more costly but provides a higher energy production
ratio than from the kernels and is similar to that of using sugar cane. A biopower
plant that generates 2.5 MW for a locality of 4,000 households has been proposed
using sorghum to ferment ethanol for combined heat and power [25]. This novel
combined ethanol and power microgrid model has more robust and stable character-
istics when compared to conventional microgrids [25].
Providing alternatives to fossil fuels for transportation systems is challenging.
Planning solutions include infrastructure improvements and densifcation but appli-
cations are limited once infrastructure is in place. Alternative fuels must complete
with gasoline and diesel fuels which have remarkably high energy production ratios.
However, GHG emissions from the combustion of petroleum fuels are substantial.
Not so with biofuels which recycle the carbon dioxide they extract from the atmo-
sphere. Many researchers believe algae many be a future solution. When grown
under specifc conditions, they produce oils plus byproducts that can be used to make
ethanol. Compared to cultivating corn, growing algae requires less land area and
uses less water, pesticides, and energy. Carbon emissions from the process are actu-
ally negative.
Solar PV-powered vehicle charging stations are becoming more common in the
U.S. Some are designed for feet mobility uses. A solar array was constructed over
an existing parking lot at the Cincinnati Zoo and Botanical Gardens primarily to
produce electricity for the facilities. It is confgured as a microgrid and also provides
electricity for electric vehicle charging stations (see Figure 3.8). Another example is
the City of Asheville, North Carolina, which has electric-powered police cars and

FIGURE 3.8 Solar array at the Cincinnati Zoo and Botanical Gardens.
50 Fundamentals of Microgrids

its own vehicle charging stations. Today, there are many other examples of solar PV
being used to supply electricity to the batteries found in electric vehicles. Using fuel
cell vehicles is another alternative. Las Vegas, Nevada has its own hydrogen fueling
station for hydrogen-powered vehicles.
We need synergistic, multi-faceted approaches to resolving our energy-related
transportation emissions. It begins with rethinking the design of our transportation
infrastructure, offering more effcient vehicles, more options, and greater use of
renewable energy systems.

SUMMARY
The generation of electrical power began with hydropower and diesel generation sys-
tems. It is reasonable to claim that Thomas Edison was one of the early developers of
local microgrids. Microgrids have been called a back-to-the-future solution and are
considered to be smaller versions of the electric grid [25]. Microgrids are a proven
way to provide power to remote areas and locations that lack access to established
electrical supply networks [26]. These frst microgrids were developed in the U.S. in
the early 1880s. The world’s largest microgrid in 1883 provided power for lighting
and electric trollies for an exposition center in Louisville, Kentucky. It was the frst
example of a microgrid serving both building and transportation systems. Early in
the history of electrical generation, both AC and DC electrical generation systems
were available. If a DC electric load was not close to the source of generation, it was
diffcult to supply electricity due to the costs of transmission. Ultimately, AC systems
became the preferred alternative since they could more effciently transmit electric-
ity over larger geographic areas. It is interesting that this problem persists to modern
times, and remains a driver for microgrid development.
Models for microgrids include ships and building-scale nanogrids. Both have
internal energy provision systems that provide all or a portion of their electricity
requirements. Marine examples include combined heat and power systems for on-
board systems using diesel generation when out to sea. Green building programs
are used to certify a building’s sustainable features including the use of renewable
energy systems. Some buildings are designed to harness on-site sources of energy,
such as solar energy, for electrical or thermal generation and can operate in stand-
alone mode. Zero net energy buildings generate power on-site for building use. Many
are interconnected with the electric grid, providing excess electricity when available.
Transportation systems have a role in supporting the development of microgrids.
Electrifcation of transportation systems provides opportunities to support microgrid
development since vehicular batteries can be charged using renewables and serve as
storage devices.
Regional electric grids are usually too large to be considered microgrids yet not
large enough to be considered similar to central grids. These systems are character-
ized by multiple load centers and low or medium voltages for transmission, yet are
not connected to a central national grid.
Microgrids have a varied and notable history which provides many successful
real-world examples of successful applications. It is apparent that what we today
call a traditional electric grid grew from the notion of microgrids that were designed
The Roots of Microgrids 51

to provide electricity at a local scale. Yet microgrids present a different set of chal-
lenges than traditional grids. Microgrids are smaller and highly customized, and
require specialized designs. For microgrid solutions to be successful, engineering
expertise is required to design, develop, and maintain microgrids.

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al-grid, accessed 1 November 2018.
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rgy-industry-needs-microgrids-work-now-work-future, accessed 24 January.
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begins-operation, accessed 1 November 2018.
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y-water, accessed 1 November 2018.
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Strategic Energy and Environmental Planning, 1(4), page 5.
 4 Traditional Electrical
Supply Systems

SUPPLYING THE ELECTRIC GRID

A conventional power station, also referred to as a power plant, powerhouse, generat-
ing station, or generating plant, is an industrial facility for the generation of electric
power. Most power stations contain one or more generators, a rotating machine that
essentially converts mechanical energy into electrical power. Conventional power
stations, such as coal-fred, gas, and nuclear-powered plants, hydroelectric dams, and
large-scale solar power stations, are centralized and often require electricity to be
transmitted over long distances [1]. Central plants typically rely on one type of fuel
for generation. Distribution systems provide power from the plant to the customer
using a one-way model for power transmission and fow. These plants, owned by
large utility companies, are used to supply power to the electric grid. Their chief
objective is to supply uninterruptable power to their customers in the exact quanti-
ties instantaneously required.

WHAT IS THE ELECTRIC GRID?

An electrical grid is an interconnected network for delivering electricity from sup-
pliers (typically a utility) to consumers. The existing electrical system we call the
grid began as a set of connections among various standalone systems. Today we
might call these standalone distributed systems microgrids. The grid consists of gen-
erating stations that produce electrical power, high-voltage transmission lines that
carry power from distant sources to demand centers, and distribution lines that con-
nect to the individual customers [2]. Generation sources for traditional grids produce
electricity which is instantaneously supplied and instantaneously consumed.
To enable use of the electricity, it needs to travel from the source of generation to
the point of consumption. This process is called transmission. Transmission equip-
ment and power lines supported on transmission towers transfer the bulk electricity
using high voltages. These voltages are used to electrically transfer larger amounts
of energy with lower transmission line losses, since resistance in the transmission
wires is often the greatest cause of system loses. The primary transmission (high
voltage) lines continue to receiving stations that step down the voltage to secondary
transmission (low voltage) networks. Distribution equipment components include
relays, interrupters, distributors, and service mains which provide electricity directly
to consumers. Users consuming the electricity are typically categorized as residen-
tial, commercial, and industrial loads. These loads might include power for lighting,
motors, machinery, thermal applications, buildings, or transportation systems.

53
54 Fundamentals of Microgrids

National grids supply power to entire countries and transnational or interna-

tional grids are interconnected with other countries, typically geographically adja-
cent to one another [2]. These grids are vast. The U.S. electrical grid is comprised
of 7,300 generating stations, 55,000 substations, plus 160,000 miles (257,000 km) of
power lines which are owned and operated by over 500 companies [3,4]. This sys-
tem provides power to 145 million discreet consumers. Due to its massive scale and
millions of components, it has been called the world’s largest and most complicated
machine (see Figure 4.1). Much of the electrical generation relies on fossil fuels. For
example, the U.S. has about 400 coal-fred power plants (down from 589 coal plants
in 2011) that generate 30% of the nation’s electricity [5]. In 2017, there were 27 U.S.
states that relied on coal to produce at least 25% of their electricity [5].
For North America, the grid is actually two major and three minor alternating
current (AC) power grids that are called interconnections [6]. The U.S. segments
of these grids that serve the lower 48 states are the Eastern Interconnect (east of the
Rocky Mountains to the Atlantic and part of northern Texas), the Texas Interconnect
(Electric Reliability Council of Texas, ERCOT), and the Western Interconnect (area
from the Rocky Mountains to the Pacifc). These three interconnections operate
independently and have only limited power exchanges among them [4]. The network
structure of the interconnections improves system reliability by providing multiple
routes for power to fow and allowing generators to supply electricity to multiple
load centers [4]. Both the Eastern Interconnect and Western Interconnect actually
operate as transnational grids since they accept and supply electrical power to nearby
provinces in Canada.
Renewable energy is energy derived from natural, non-depletable, or rapidly
replenished resources—sun, wind, water, tidal, biological processes, and geother-
mal heat [7]. With the exceptions of tidal (due to gravitational forces) and geothermal
(from the Earth’s internal heat) energy, all energy traces its origins back to the sun.
Solar energy from the sun’s radiation may be converted into heat or electrical power
[7]. Wind energy technologies harness the kinetic energy of air movement caused
by solar radiation. Biomass processes store energy from solar radiation as chemi-
cal bonds in organic matter through the process of photosynthesis, and may then
be passed through the food chain or converted into thermal, kinetic, and electrical
energy through a variety of conversion processes [7].

CATEGORIES OF ENERGY RESOURCES

Fossil fuels are forms of energy formed from deposits of compressed and heated
organic matter that consist primarily of carbon and hydrogen bonds. Common types
include peat, coal, lignite, petroleum, natural gas, and other bitumen-based fuels.
Uranium is also a fossil fuel. A key feature of fossil fuels is that they are considered
to be depletable energy resources. Once they are used in a combustion process they
typically cannot be reused. The exception is uranium as there are ways to recondition
spent fuel rods, enabling them to be recycled and reused. However, such processes
are not used in North America.
Today’s alternative energy resources are often distinguished by low environ-
mental impact in contrast to fossil fuels. Sometimes considered synonymous with
 Traditional Electrical Supply Systems

FIGURE 4.1 Basic structure of the electrical power system. (Source: adapted from [8].)
55
56 Fundamentals of Microgrids

renewables, alternative energy is, in fact, a broader class of resources and energy
conversion technologies that include energy effciency, combined heat and power,
and zero-emissions conversion technologies such as fuel cells [7]. Fundamentally,
alternative energy is simply the substituting of one form of energy for another to
achieve a purpose such as lowering costs or environmental emissions. Examples
include switching from coal to natural gas-fred systems or using solar generated
electricity rather than nuclear power.
The defnition of clean energy is more ambiguous and variable. Generally, clean
energy is considered to be any type of energy, such as renewables or nuclear power,
that does not cause atmospheric pollution; this is opposed to fossil fuels, such as coal
or oil, that exhaust pollution when combusted [9]. Some experts believe that nuclear
power should be categorized as a clean energy source since harnessing nuclear energy
does not directly emit greenhouse gas (GHG) emissions; others believe that nuclear
power should not be included as a clean energy source because of the radioactive
nuclear wastes that are generated when producing electricity [10]. If clean energy
refers only to energy sources that do not produce GHG emissions then nuclear power
should be considered a clean energy option; otherwise, if clean refers to energy
sources that are not hazardous for the environment then nuclear power cannot be
categorized as a clean energy source [10]. Others defne clean energy as energy that
is derived from inexhaustible, zero-emissions sources including renewables and
energy saved through energy effciency measures, yet excluding nuclear power [11].
To further confound the defnition, a broad interpretation sometimes includes natural
gas in the mix of clean energy resources, despite it being a fossil fuel, since it can be
combusted more effciently, and releases less nitrogen and CO2 into the atmosphere,
than coal and oil.

TRADITIONAL SOURCES OF GRID-SUPPLIED ELECRICAL POWER

The traditional ways of generating grid-supplied electricity are discussed in this sec-
tion. Excluding hydropower, most of these approaches use thermal plants whose pro-
cesses involve combustion of fossil fuels to generate electricity. Traditional electrical
grids are characterized by a one-way fow of electricity from the center of production
to the consumers. They also tend to be dependent on traditional resources to generate
power, specifcally fossil fuels. Along with initiatives toward energy effciency and
associated conventional technologies, renewable energy resources must be deployed
to effectively reduce GHGs in a sustainable manner.

LARGE HYDROPOWER
Hydropower provides an important way to generate electricity with a renewable
resource. It was the primary means of generating electricity using renewables in the
U.S. until the late 20th century. However, these projects are hydrology-dependent and
a set of natural and geophysical conditions must be available at a selected site for it
to be economically feasible. Of the 80,000 existing dams in the U.S., only 2,400 cur-
rently generate hydroelectricity [3]. These generate power when the pressure of fall-
ing water spins turbines, rotating a shaft that causes generators to produce electricity.
Traditional Electrical Supply Systems 57

In the U.S., utilities have proposed 70 new projects to upgrade existing generating
facilities or to build new capacity. These projects when completed are anticipated to
increase hydropower electrical production by 11,000 MW over the next decade [3].
Large hydropower systems are developed as major public works projects. The
methodology for generating electricity is dependable, scalable, and highly effcient.
Most plants use a dam to hold back water and create a reservoir. The intake gates
on the dam are opened allowing gravity to cause water to fow though the penstocks
(pipelines leading to a turbine). The penstock might be tapered over its length, wider
at the intake and narrower at the exit point near to where the fowing water strikes
the blades of the turbine. Gravity increases the water pressure as it fows though the
penstock. The water strikes the blades of the turbine, which rotates and is attached
by a turbine generator shaft to the generator located above it. The most common
turbine used in hydropower generation is the Francis Turbine which is a large disc-
shaped component with curved blades. The water pressure is so great that the turbine
might weigh hundreds of tons yet rotate at a rate of 90 revolutions per minute. As
the turbine generator shaft rotates, so does a series of magnets inside the generator
(rotor), which rotate past copper coils (stator) and cause alternating current (AC)
to be produced. The transformer inside the powerhouse increases the power’s volt-
age, creating higher-voltage current. Exiting the power plant are four primary wires,
three supplying three phases of power simultaneously and the fourth being a neutral
or ground which is common to the other three. The water then fows away from the
turbine through pipelines called tailraces which allow the water to reenter the water-
way downstream.
The world’s largest power station of any type is the Three Gorges Dam, located
on the Yangtze River in China, which became fully operational in 2012. The project
produces hydroelectricity, increases the river’s navigation capacity, and reduces the
potential for foods downstream by providing food storage space. The dam’s annual
electric generating capacity is roughly 22,500 MW. Its construction submerged 244
square miles (632 km2) of land and displaced over 1.5 million people. Other large
hydroelectric plants include the Itaipu owned by Brazil and Paraguay (14,000 MW),
and the Guri power plant on the Caroni River in Venezuela (10,300 MW).
The U.S. has 1,444 hydroelectric dams that generate 7% of the nation’s grid-
supplied electricity [5]. The Grand Coulee plant on the Columbia River in the U.S.
state of Washington, rated at 10,080 MW, was originally constructed to generate
7,600 MW and is an example of how older plants can be upgraded to increase output.
Another uprating project from 1986 to 1993 for the Hoover Dam (see Figure 4.2) in
Arizona increased its capacity from 1,345 MW to 2,080 MW [12]. In 2015, the site
generated 3.6 TWh [12].

COAL-FIRED ELECTRICAL POWER

Second only to natural gas, coal-fred electrical generating plants are one of the
primary ways power is produced in the U.S. In 2017, the U.S. had roughly 285 GW
of thermal coal-fred generation, down from 357 GW in 2008. The share of electric-
ity generated from coal dropped from 51% in 2008, to 33% in 2015, then to 31% in
2016, due primarily to market forces and low-cost natural gas [13]. The U.S. has
58 Fundamentals of Microgrids

FIGURE 4.2 Low water levels of the reservoir at the Hoover Dam in 2010 reduced plant
electrical output.

400 coal-fred power plants, with coal producing the majority of the electrical power
in 13 states [5]. The impact of the Clean Power Plan and market forces have shut-
tered 111 plants since 2015 [5]. Of the remaining coal plants, roughly a quarter will
be retired or converted to natural gas and another 17% are considered to be uneco-
nomical to operate [13]. This shift away from the use of coal in the U.S. has resulted
in reduced greenhouse, sulfur oxide, and nitrogen oxide emissions plus substantial
benefts in the form of improved health [13].
Like most fossil fuel generation, coal plants often use a conventional Rankin Cycle
process in which the fuel is combusted, water is heated in a boiler where it changes
into steam, and the steam pressure is used to drive a turbine generation system. The
steam is then condensed and changes again into a liquid state and the water is reused.
A reliable water source is required and due to the large amounts of water needed,
these plants are typically located near a river or large lake. There are two types of
plants: 1) once-through plants pump the water directly from the water source, heat it,
and then discharge it back to the original source; and 2) wet-recirculating plants that
avoid discharging the heated water by cooling and reusing the water.

NATURAL GAS-FIRED ELECTRICAL POWER

The U.S. has 1,793 natural gas power plants that generate 34% of the nation’s elec-
tricity [5]. Natural gas is the primary power source in 19 U.S. states and its use in
electrical generation is increasing [5]. Compared to other fossil fuel-fred electrical
plants, NG plants are relatively inexpensive to construct and more easily permitted,
and have higher thermodynamic effciencies and lower associated GHG emissions.
Some are designed to reuse waste heat. However, the inability to store large amounts
Traditional Electrical Supply Systems 59

of natural gas on-site is a limitation of natural gas generation. Some U.S. utilities
purchase natural gas in the summer when demand and costs are lower, transfer it to
storage facilities, and draw from storage in the winter when demand is greater and
costs are higher.
There are two primary types of natural gas-fred power plants. Simple cycle plants
consist of a natural gas-fred turbine connected to a generator. The simple cycle plants
are less complex but less effcient than combined cycle plants. However, simple cycle
plants are able to dispatch faster than coal or nuclear plants [14]. Combined cycle
plants include the components of a simple cycle plant plus have an external combus-
tion engine enabling plant effciencies up to 60% [14]. Their combined cycle extends
beyond this, using more of the energy created during combustion. The exhaust gases
can be directed to fow toward the heat recovery steam generator, in which the hot
gases boil pre-heated water into steam that next expand through a turbine, generating
additional electricity [14]. Some plants are capable of using both oil and natural gas
to generate electricity (Figure 4.3).

DIESEL GENERATION
Reciprocating engine generators deliver reliable energy and are fully dispatchable
while renewable sources are offine or producing at less than their rated capacities
[16]. Modular units rated from 350 kW to 15 MW and larger can be added incremen-
tally to create microgrids with greater capacities. The modularity of multiple units
adds fexibility for variable load conditions [16]. Generator sets offer high power
densities, simple-cycle electrical effciencies from 40% to 48%, high part-load eff-
ciency, and excellent capability to follow loads. They tolerate a broad range of ambi-
ent temperatures and operate at higher altitudes without derating. Diesel units accept
loads rapidly, with start times to full load as fast as ten seconds and ramp-up times
from 25% to 100% load in as quickly as fve seconds [16]. They are capable of unlim-
ited starts and stops with limited impact on service life or maintenance requirements
[16]. The technology is thoroughly proven and reliable, with hundreds of gigawatts
of capacity installed worldwide [16]. For these reasons, diesel generation has been a
preferred technology for island and remote microgrids when storage is available and
fuel transportation costs are low.

FIGURE 4.3 Design of an electrical generation system using oil and natural gas [15].
60 Fundamentals of Microgrids

Gensets using diesel also offer the potential for combined heat and power (CHP).
Indeed, applications that make microgrids economically attractive—communities,
resorts, industrial facilities—tend to have signifcant thermal requirements [16].
Heat captured from engine exhaust or cooling circuits can be converted to steam, hot
water, or chilled water (by way of absorption chillers), or used in water desalination
plants. In each case, the project economics can be greatly enhanced [16]. In temper-
ate climate zones, it is very attractive to use both CHP and solar energy because of
their complementary nature [16]. CHP capabilities are typically used during cooler
times of the year when the solar contribution lessens [16].
Diesel generation presents a set of infrastructure and supply-chain requirements
to generate electricity, especially for remote locations. Oil production and refneries
may not be locally available or nearby. In most cases, diesel fuel must be transported
to the site and stored in close proximity to be immediately available for the combus-
tion equipment. If diesel fuel is imported, tank storage is needed near port facilities
in locations where land costs are likely at a premium (see Figure 4.4). For the gen-
eration process, fresh water must be available in ample quantities for steam conver-
sion. Maintenance support for the generation site must be readily available. These
logistics and support concerns raise the fuel costs, increase safety and fnancial risks,
and must be addressed.

NUCLEAR POWER
Nuclear power is often classifed as a clean energy source as its greenhouse gas emis-
sions are negligible. The fuel is widely available but impacted by the economics of
production. Support for nuclear power is mixed. While countries such as Finland,

FIGURE 4.4 Typical island liquid fuel storage facilities.

Traditional Electrical Supply Systems 61

Canada, China, and Russia are planning to increase the use of nuclear power, oth-
ers including Spain, Germany, Switzerland, Belgium, and France are phasing out or
reducing their shares of nuclear power production. Nuclear fuels are mined using
underground mining, open pits, in-situ solution mining, or heap leaching [17].
Preparing the fuel for use involves several complicated front-end processes, includ-
ing milling, conversion, enrichment, reconversion, and nuclear fuel fabrication [17].
For many countries, it is less expensive to import fuel rods than to manufacture them
domestically.
The U.S. has more nuclear power plants than any other country in the world, fol-
lowed by France. As of 2018, there were 61 nuclear power plants (36 having two or
more reactors) with a total of 99 operating nuclear reactors in 30 U.S. states [18]. Of
the 31 countries in the world with commercial nuclear power plants, the U.S. has the
most nuclear electricity generation capacity and has generated more electricity from
nuclear energy than any other country [18]. France has the second highest nuclear
electricity generation capacity and obtains 78% of its total electricity generation
from nuclear energy, the largest share of any country (see Table 4.1) [18]. There are
14 other countries that generate at least 20% of their electricity from nuclear power
[18]. Almost all nuclear-generated electricity is used to supply central grids.
Nuclear power plants create thermal energy by nuclear fssion, boiling water to
produce steam. The fssion reaction takes place inside the nuclear power plant’s reac-
tor core which contains uranium fuel formed into energy-rich ceramic pellets [18].
These pellets are stacked to form metal fuel rods 12 feet (3.7 m) long [18]. A bundle
of the fuel rods, some with hundreds of rods, is called a fuel assembly [18]. Using a
Rankin Cycle process the heated water is converted to high-pressure steam which
expands and is used to rotate large turbine generators to generate electricity. Nuclear
plants cool the steam back into water in a cooling tower located at the power plant or
use cooler water pumped from nearby ponds, rivers, or the ocean. Baseload nuclear
plants typically have capacity factors that exceed 80% [19].
In the U.S., after the spent fuel rods are used they must be stored on-site as the
U.S. has no permanent storage location to handle high-level nuclear wastes. Some
states have specifc regulations which prohibit the transfer of nuclear wastes through

TABLE 4.1
Capacity of Nuclear Power Stations
Nuclear electricity Nuclear electricity Share of country’s
generation capacity generation total electricity
Country (million kW) (billion kWh) generation
U.S. 99 797 19.5%
France 63 419 77.6%
Russia 25 183 18.1%
China 27 161 2.9%
South Korea 22 157 30.4%

Source: USEIA, International Energy Statistics, August 8, 2018.

62 Fundamentals of Microgrids

their jurisdictions. Billions of dollars of federal funds have been expended to prepare
a site for underground storage of nuclear waste at Yucca Mountain in Nye County,
Nevada. However, after years of development the site has not yet been licensed to
store nuclear wastes. Transportation of spent fuel rods across jurisdictions is not per-
mitted in most U.S. states. Currently, power stations in the U.S. must store nuclear
wastes in dry steel and concrete casks on-site and may be required to do so for thou-
sands of years. As an alternative, the European Union has a facility to recondition
spent fuel rods for reuse. However, the number of times that the fuel rods can be
recycled are limited.

PROBLEMS WITH THE ELECTRIC GRID

Electric grids throughout the world are aging. The oldest systems are ineffcient and
utility and transmission companies face high costs in their efforts to maintain them.
Electric grid reliability varies widely throughout the world (see Figure 4.5). Though
it has served the country well, the U.S. electric grid includes segments of the system
that are over 100 years old. Roughly 70% of the U.S. grid’s transmission lines and
power transformers are over 25 years old, and the average age of its power plants is
over 30 years old [6]. Large electric grids are diffcult to secure, expensive to oper-
ate, and arduous to maintain [20]. In some cases, replacing segments with more
modern modular technologies is less expensive from a lifecycle cost perspective
than attempting to maintain the existing equipment and infrastructure [21]. Electric
demands on the grid have increased along with rising domestic consumption.
The strategy used to prevent and manage service interruptions has been to design
the systems to include redundant infrastructure if possible. When outages occur in
segments of transmission lines, they are bypassed until they can be repaired. Yet this
strategy has proved costly. To prevent future power outages much of the transmission
system and its supporting equipment need to be substantially upgraded.

SECURITY ISSUES
In the past, electric utility companies have focused on the physical security of
their management centers, generation equipment, substations, and transmission
infrastructure. This focus is no longer adequate. Security threats to the utility grid
include actors such as nation-states, politically motivated hackers, disgruntled util-
ity employees, and many others [21]. Successful attacks on segments of the grid can
cause fnancial losses plus impact the safety of company employees and the public.
Power outages caused by cyberattacks have local and national security implications.
Deliberate power outages, such as those in California in 2019 that were intended to
prevent fres due to dry conditions and high winds, can unintentionally ignite wild-
fres when transmission lines are reenergized causing billions of dollars in damage.
As electrical generation systems become increasingly managed by internet-con-
nected direct digital control systems, vulnerabilities tend to intensify [21]. The poten-
tial for cyberattacks is increasing and the ones that occur are becoming increasingly
sophisticated. “Since at least March 2016,” reads an alert from the United States
Traditional Electrical Supply Systems 63

FIGURE 4.5 Electrical grid reliability in developing countries [28].

Computer Emergency Readiness Team (US-CERT), “Russian government cyber

actors […] targeted government entities and multiple U.S. critical infrastructure sec-
tors, including the energy, nuclear, commercial facilities, water, aviation and critical
manufacturing sectors” [22]. It further stated:

This campaign comprises two distinct categories of victims: staging and intended tar-
gets. The initial victims are peripheral organizations such as trusted third-party suppli-
ers with less secure networks, referred to as staging targets throughout this alert. The
threat actors used the staging targets’ networks as pivot points and malware reposito-
ries when targeting their fnal intended victims.”

These initial intrusion efforts involved a scouting mission after gaining access and
did not result in loss of control or outages. However, in December 2015, a Russian
group used similar tactics to shut down 30 electrical substations in western Ukraine,
cutting power to 230,000 citizens in the frst known successful cyberattack on a
central power grid [23].
64 Fundamentals of Microgrids

Securing the electric grid involves restricting physical access to plants, safeguard-
ing networks with frewalls and data encryption, and maintaining system integrity by
keeping unauthorized actors from making changes to the system [23]. Establishing
and maintaining cybersecurity safeguards is not easily accomplished since much of
the utility system equipment is not state-of-the-art and each power station is unique.
Each utility substation is also a potential point of attack. The objective of the safe-
guards is to create a situation that requires potential attackers to overcome multiple
time-consuming and diffcult obstacles in order to access utility company computer
systems [23].

SYSTEM INEFFICIENCIES AND POWER OUTAGES

The existing electric distribution system is ineffcient. This is due to aging equip-
ment, obsolete system layout, outdated engineering, and management obstacles that
include the diffculties of operating a vertically integrated industry in a deregulated
environment [2]. The system creates high rates of outages along with the potential
for cascading failures. Many electrical power plants exhaust two-thirds of the energy
in the source fuel as unusable heat. Distribution systems in the U.S. waste another
2% to 13% of the energy, as losses are magnifed by power transmission [24]. Losses
ranging from 8% to 10% are typical.
Ineffciencies include power interruptions, some only for seconds, with extended
outages lasting for weeks or months after severe weather events. In the U.S., climate
change is increasing the risk of damage to petroleum, natural gas, and electrical
infrastructure along the east and Gulf coasts from rising sea levels and hurricanes
of greater intensities [25]. More frequent and intense precipitation events are antici-
pated that increase the risk of foods for coastal and inland energy infrastructure
[25]. Higher ambient temperatures lower the operating thermal effciencies and
generating capacities of thermoelectric power plants, reducing their effciencies and
the current-carrying capabilities of transmission and distribution lines [25]. Due to
climate change, the U.S. energy supply system is projected to be increasingly threat-
ened with infrastructure damage, fuel availability, and supply imbalances that will
cause more frequent and longer-lasting power outages [25].
Extreme weather can impact all components of electricity generation systems.
Examples include foods, wind damage, ice, lack of rain, mudslides, etc., especially
those caused by clusters of tornados and hurricanes which usually cause widespread
damage to infrastructure. Electrical outages create substantial economic losses in
communities impacted by extreme weather conditions. After severe weather events
occur, utility companies often spend large amounts of money upgrading their
infrastructure. These costs are eventually reimbursed by the ratepayers. The U.S.
Department of Energy estimates that power outages cost U.S. businesses roughly
$150 billion per year [26]. Power outages create unreliable electric grid connections,
which are a concern in North America but more so in Africa and parts of Asia where
it is diffcult to mobilize response efforts.
Other drawbacks include costs to install and maintain step-up and step-down trans-
formers, obtaining rights-of-way, legal expenses, and the cost of settlements due to
outages [26]. Generating capacities require that large amounts of excess capacity be
Traditional Electrical Supply Systems 65

built into the electrical grid, increasing system investment and maintenance costs [27].
Grid management needs constant monitoring and management, requiring balanced
electrical generation with electrical demand satisfed over large geographic areas [27].
Despite such problems grid reliability tends to be taken for granted in the developed
world. Reliability is much less ensured in developing countries.

ENVIRONMENTAL ISSUES
A fundamental feature of the electric grid is that it is comprised mostly of large
power plants that use fossil fuels for generation (hydropower plants are the excep-
tion). Utility companies with fossil fuel-fred generation expend large sums of money,
supported by taxpayers and ratepayers, to mitigate the environmental consequences
of the air and water pollution they create. Much of these expenditures, often to con-
trol sulfur and nitrogen oxides and perhaps mercury, have not been amortized. Some
have problems with ash storage ponds and concerns about long-term containment.
The Kingston Fossil Plant in Tennessee experienced a failure of an ash pond dam
in 2008 that released over a billion gallons of slurry, fooding surrounding land and
causing hundreds of millions of dollars in damage. The cleanup costs paid by the
Tennessee Valley Authority (TVA) ultimately totaled more than a billion dollars and
the project required eight years to complete.
Utility companies fnd themselves in a quandary as to how to increase electri-
cal production without increasing carbon emissions [29]. As the use of funds from
public utilities becomes increasingly transparent, consumers observe utility expen-
ditures, funded by rate payers, being used to impede the institution of the environ-
mental regulations they are advocating. The widely advertised mantra of clean coal
as a solution has proved too costly to implement, is not scalable, and yet is widely
advocated by utility companies using ratepayer funds [29]. Costs for such plants are
so prohibitive and undefnable that in some parts of the U.S. even utility support is
waning. Yet the fundamental environmental issues with fossil fuel-fred electricity
generation remain mostly unchecked, and continue to cause human health problems
in populations living near fossil fuel plants.
To add to the conundrum, the fossil fuel plants use large quantities of fresh water,
which is becoming increasingly costly. To extract fresh water at low cost, the plants
are typically located near lakes and rivers where the resource is considered to be
free. Often the actual value of extracting and pumping water are hidden costs not
found on the expense sheets of many utilities. Valuing water to improve sustainabil-
ity is a robust and detailed process that requires measurement, valuation, decision-
making, and governance [30]. If this or a similar process is not followed, the value of
water is externalized. Watersheds throughout the world are experiencing unsustain-
able amounts of water extraction that degrade water quality and fossil fuel plants are
part of the problem [30].

REGULATION OF THE ELECTRIC GRID

Electric distribution systems have required regulation since the 1930s. Due to peri-
odic regulatory changes, electric utilities have a history of focusing on compliance.
66 Fundamentals of Microgrids

Regulation happens at the generation, transmission, and distribution levels of the

system (see Figure 4.6). Utility companies routinely attempt to infuence political
processes that enable them to maintain a monopoly in their regulated territories of
operation. Using a purely socialist business model with oversight by public service
commissions, most are able to recover all their costs and are guaranteed a proft.
They are protected from default even when gross mismanagement occurs and laws
are violated. When fnes are paid due to regulatory control, rate structures are often
adjusted to cover the increased costs.
The electrical power system in the continental U.S. consists of three mostly distinct
large interconnections: the Eastern Interconnection, the Western Interconnection,
and the ERCOT. Each operates as an integrated machine that directs the fow of
power and instantaneously matches generation with loads. Regulation of the national
grids is balkanized and complicated [31]. Each state can regulate many aspects of
the electric power system within their jurisdictional boundaries [31]. Typically, the
regulations are codifed by the state legislature and carried out by a public utility
commission which oversees retail rates, distribution reliability, and the services of
investor-owned electric utilities [31]. The Federal Energy Regulatory Commission
(FERC) regulates the transmission and sale of electricity in interstate commerce.

CONNECTING MICROGRIDS WITH THE GRID

Connecting a microgrid to an existing electric power system (EPS) requires a legal
contract between the microgrid owners and the EPS owners [33]. The technical
design must ensure the safe, reliable, and economic operation of both the microgrid
and the macrogrid [33]. Among other requirements, the point of interconnection
(POI) between the microgrid and the EPS may require automatic islanding, syn-
chronization, and dispatch controls [33]. Both active and reactive power dispatch is

FIGURE 4.6 Electric grid distribution and regulation model. (Source: adapted from [32].)
Traditional Electrical Supply Systems 67

typically performed by the relay logic of the POI, which may simultaneously dis-
patch multiple DERs [33]. This makes a microgrid that is confgured with multiple
DERs appear to be a single dispatchable generator to a utility [33]. A series of feld
tests of the interconnection and its control technologies is often needed to insure safe
and reliable operation.
Advanced microgrid controllers facilitate microgrid connections to the main grid.
The improved capabilities of the controllers have led to greater interest in the pos-
sible applications of grid-tied microgrids [34]. When a microgrid is grid-connected,
its distributed generators and electrical storage system (if any) will synchronize
to the frequency and magnitude of the grid voltage, optimizing the energy sup-
ply as determined by the energy management unit [34]. In island mode, intelligent
microgrid controllers manage and maintain the steady state and dynamic power bal-
ance between load, generation, and energy storage without dependence on the grid
or communications infrastructure [34]. Utilities have struggled to create business
models that enable microgrid deployment at larger scales [35]. Recent studies are
targeting how microgrids can be standardized for wider adoption and provide more
benefts to the larger utility grid [35].

SUMMARY
The strategy of traditional electrical supply systems has been to provide power to
consumers by linking centralized power plants to the grid with high-voltage trans-
mission combined with low-voltage distribution systems [36]. The often-used anal-
ogy is that the power stations provide electricity to fll the lake and consumers are
the straws that pull electricity from the lake. Traditional power generation sources
include hydropower, coal-fred generation, diesel generation, natural gas-fred gen-
eration, and nuclear power, mostly dependent on fossil fuels. The number of coal-
fred power plants is declining in developed countries such as the U.S. and Germany
but increasing in many developing countries such as China and India. In the U.S., a
key driver in reducing coal consumption has been greater shale gas extraction from
fracking which has created large supplies of comparatively inexpensive natural gas
[37]. Over the past decade, consumption of renewable electricity in the U.S. rose by
349 terawatt hours (TWh), yet power from natural gas increased by 696 TWh—
almost twice the renewable energy contribution [37]. Supplies are so large that the
U.S. no longer requires substantive imports of natural gas from Canada. The avail-
ability of low-cost natural gas in the U.S. has been a boon for microgrids that depend
on the fuel to smooth generation from intermittent renewable energy sources.
Service interruptions that create large-scale power outages are becoming more
frequent and larger in scope. A power outage on Manhattan Island in New York
City that occurred in June 2019, putting 73,000 residents in the dark, was caused by
a single transformer fre [38]. In August 2019, a National Grid failure impacted the
southeastern United Kingdom and much of London. Trains, vehicular traffc, and
residences were impacted by the outage. Securing the electric grid involves restrict-
ing physical access to plants and safeguarding networks with cybersecurity capa-
bilities. The costs required to maintain central grids increases their costs, creating
markets for microgrid development.
68 Fundamentals of Microgrids

For certain consumers and businesses, regardless of where they are located, a
reliable electric supply is critically important [39]. Some businesses have equipment
that must operate continuously or risk substantial losses and restart costs. Microgrids
are seen as a potential solution, preventing unscheduled shutdowns. Many traditional
sources of electrical generation provide models for microgrids yet the scale of elec-
trical production for microgrid is typically much smaller. As utilities incremen-
tally update their transmission and distribution systems, regulators implement new
approaches to unlock innovative microgrid business models, and large customers
(e.g., municipalities and industrial facilities) become more economically and logisti-
cally driven to ensure their energy security, microgrids will become increasingly
attractive [38].
Microgrids are a solution as they are capable of being connected to their host grids
and providing more resilient electrical power. Microgrids that are grid-connected
synchronize their distributed generators and storage to the frequency and magni-
tude of the grid voltage to optimize the energy supply. Microgrids, when properly
designed, can ensure high electrical system reliability while also reducing fuel costs
and emissions [39]. They can provide viable local alternatives to grid power if needed.

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 5 Microgrid Architecture
and Regulation

FEATURES OF MICROGRID ARCHITECTURE

The critical infrastructures of today’s modern world rely on having dependable elec-
tricity supplied continuously. Microgrid designers develop system architecture that
attempts to achieve improved scalability, fexibility, and security. The basic archi-
tecture of a microgrid includes generation, critical and noncritical electrical loads, a
central controller, power interfaces, a point of common coupling, and storage tech-
nologies. Digital systems manage interoperable distributive control functions and
capabilities. The supportive architecture for microgrids has the elusive goals of ulti-
mately providing component plug-and-play functionality, two-way electrical power
transfer, and seamless connectivity with the utility grid. This chapter considers the
features of microgrid architecture, their primary components, advanced microgrids,
and reviews microgrid regulations and standards.

MICROGRID OPERATIONAL CONFIGURATIONS

Microgrids are confgured as substructures of the macrogrid that are comprised of
local low-voltage and medium-voltage distribution systems with distributed energy
resources (DER) and storage devices that satisfy the demands of energy consum-
ers [1]. These systems can be operated in a semiautonomous way, if interconnected
to the grid, or in an autonomous way (islanding mode) if disconnected from the
main grid [1]. Islanding capabilities are a fundamental feature of many microgrids.
Intentional islanding is the act of physically disconnecting a set of electric circuits
from a utility system, and operating those circuits independently [2]. Anti-islanding
refers to safety protocols to prevent DERs from feeding power onto utility distribu-
tion networks during system outages [2]. These are designed to prevent harm to
workers and damage to the grid during outages and power restoration efforts.
There are several basic components of the architecture of a microgrid that are
fundamental. Most importantly, microgrids must contain the equipment necessary
to generate electricity to satisfy loads. Microgrids usually have a form of energy
storage system which does not necessarily need to be an internal system. It may
satisfy this need by purchasing external storage services or allowing the host electric
grid, if interconnected, to serve as the primary electricity storage system. Within
the microgrid there must be a set of electricity-consuming devices that dictate the
loads placed on the microgrid. Examples include lighting systems, electric motors
and fans, heating and air conditioning equipment, refrigeration systems, water heat-
ing, etc.—all typically associated with facilities and buildings. Automatic control
systems may be used that enable selected loads to be cycled or shed during periods

71
72 Fundamentals of Microgrids

of peak electrical demand to optimize load management. Finally, grid-connected

microgrids require a utility interconnection to enable the microgrid to exchange
power with the larger utility network. If a microgrid is designed to operate only
independently in island mode, then the utility interconnection with the macrogrid is
not required.
The various generation components and auxiliary equipment of microgrids can
present design problems when planning microgrid architecture. Often, the multi-
ple types of electrical generation systems are not initially designed or confgured
to operate in concert with other systems. Regardless of microgrid confguration, to
achieve the goal of providing resilient electrical power when needed, microgrids
must be designed and constructed to ensure safe and seamless interoperability
among the various electrical generation sources and any connected electrical storage
equipment.
There are three primary conceptual confgurations for electrical utility dis-
tribution systems: centralized, decentralized, and distributed (see Figure 5.1).
Centralized systems are a direct connection of nodes to a central point of electrical
production. This is common in a utility confguration in which there is only one
central power plant and transmission links and connections carry electricity from
the plant directly to individual users (loads). The central plant provides continuous
power by having multiple generators. However, a breakdown of the confguration at
its central station may cause the entire system to fail. Decentralized confgurations
have multiple points of electrical generation which connect to their direct loads but
also connect to either a central station or a number of remote stations. Decentralized
confgurations tend to have greater resiliency than centralized systems since they

FIGURE 5.1 Centralized, decentralized, and distributed network confgurations. (Source:

concept adapted from Baran, P., RAND Institute [1964].)
Microgrid Architecture and Regulation 73

lack a central point of failure. Distributed confgurations provide both generation

and loads at each node and are linked to all other generation and load points in a
web-like confguration. Distributed networks are the most resilient since a break-
down that occurs at any station or link can be resolved by rerouting transmission to
ensure reliability.
Microgrids typically use either decentralized or distributed network confgu-
rations within their boundaries. By using a multi-resource model as a solution
to the problem of electrictrifcation, a diverse portfolio of production options
improves system redundancy to reinforce the power grid if a single electrical
generating asset or resource is compromised [3]. Distributed confgurations are
most resilient for situations when single transmission pathways or specifc nodes
are compromised.

PLANNING FOR ELECTRICAL DISTRIBUTION SYSTEMS

There is an evolution in the development of electrical supply systems from central
grid systems to smaller more resilient decentralized systems. From the utility’s
planning perspective, the aging of grid infrastructure increases the need for future
upgrades and spawns rate increases. Electric utility companies, especially those with
regulated service areas, may proft from the development of the improvements plus
fnance the costs by increasing the tariffs paid by their customers. Some electric
customers, dissatisfed with the increasing costs and declining services of their util-
ity supplier, are generating their own power and using the grid-supplied power for
backup purposes [4]. From the host utility’s perspective, this arrangement may not be
proftable since additional capacity must be available on short notice if the customer
requires large amounts of additional power. Some respond with increases in fees or
fxed rates for access.
Implementing grid-related improvements is not only expensive but also creates
service interruptions and major inconvenience. Often these events transfer costs
to non-stakeholders who are not parties to the electrical supply transaction. In
November 2018, a transmission line replacement by the electric utility LGE over a
major interstate highway in Kentucky was scheduled as a two-hour event but instead
required an entire day. The construction created a traffc jam over 15 miles (24.1 km)
long leaving commuters stranded on remote sections of the highway for hours with-
out access to services. Those impacted by the utility’s decision were not forewarned
and received no compensation for their lost time, cost of delay, or increased travel
expenses.
Planning at the building scale usually focuses on the building itself without con-
sideration of capacity optimization. When a new skyscraper is constructed in an
urban area, it is often assumed that the utility will simply have additional power on
hand to meet the added loads. During the design process, architects often have no
idea of the building’s estimated electrical usage nor have they attempted to calculate
the building’s electrical demand. This process often negates opportunities for load
optimization and results in higher operating costs that are transferred to the owners.
The building is plugged into the electric network and the hope is that the utility will
have excess capacity for the long term.
74 Fundamentals of Microgrids

Long-range electrical generation planning is capacity- and transmission capabil-

ity-focused and often based on extension of regional demand projections. Building
and system loads are considered to be beyond utility control. Planning at this scale
often fails to account for the evolution away from central coal and nuclear plants
which are being replaced by systems that generate electricity by renewable energy
and natural gas sources [4]. Adjusting to intermittent resources and mixed fuel gen-
eration means that energy supply strategies must also adjust to be successful [4].
From the utility company perspective, meeting the requirements of dispersed electri-
cal generation can be challenging.
Traditional electrical distribution systems provide a one-way transfer of electric-
ity from the producer to its consumers. Some regional electric utility companies
with regulated service territories behave as if they own the customers they serve
and have sole rights to supplying power. When a microgrid is developed the ques-
tion of who owns the customer becomes less clear. When customers are linked to
the transmission system of the distributed energy resource (DER) developer, there
can be two-way power fows between the DER and the local utility or power fow
among and through DER developers. When effectively designed, system resiliency
and reliability can be improved. For example, DER developers can supply power by
orchestrating delivery from multiple developers through system interconnections to
large numbers of consumers. Figure 5.2 shows local microgrid supply options for
consumers linked to DERs.
A proposed improvement to standard grid architecture is the smart grid model.
The smart grid provides a set of functional categories that supports a conceptual
understanding of the grid frameworks. According to Eger et  al., “From an archi-
tectural point of view the microgrid can be represented by selected viewpoints.
Microgrid use cases can be decomposed into four interoperability layers modelling

FIGURE 5.2 Local microgrid supply capability diagram for consumers using DERs as the
primary electrical energy source.
Microgrid Architecture and Regulation 75

use case functions, information model and data requirements, communication and
connectivity requirements and the components” [5]. The architecture of microgrids
consists of the following interoperability layers:

Function layer: the function layer represents use cases, functions, and ser-
vices independent from their physical implementation in systems and
components.
Information layer: the information layer describes the information-related
requirements, objects, or data models which are required by the use cases,
functions, or services.
Communication layer: the communication layer describes all the communica-
tion and connectivity requirements.
Component layer: the component layer is the physical distribution of all par-
ticipating components in the microgrid context. This includes power system
equipment (typically located at process and feld level), protection and con-
trol devices, network infrastructure, and computer system [5].

Smart grids are structured to optimize the use of technologies that provide auto-
mated, digital, and intelligent decision-making algorithms, and use data collected
from sensors monitoring these components.

ALTERNATIVE ARCHITECTURES FOR AC AND DC MICROGRIDS

For microgrids, there are several types of basic architecture, divided into either alternat-
ing current (AC) or direct current (DC) networks. Operating effciencies of microgrid
confgurations will vary. Microgrid networks might include frm generation; electrical
generation that is controllable and dispatchable, such as a diesel generator; combined
heat and power (CHP) generation; or possibly battery storage [6]. Energy storage sys-
tems and frm generation types are dissimilar within microgrid confgurations. For
example, the basic architecture of AC network confgurations with solar photovoltaic
(PV) used as the sample generation source include the following options [6]:

AC network: the AC grid acts like a 100% efficient storage system; the timing
of the generation relative to the load is not critical.
AC microgrid + PV + battery storage: when generation and load are matched
and there is no charging or discharging to and from the storage system,
the energy flows and efficiencies are the same as in the AC network. In the
disjoint case, the storage system absorbs all energy from the PV system and
then delivers that energy to the aggregate internal loads at a later time. The
use of storage to manage the net flow of power leads to losses as the batter-
ies are charged and discharged.
AC microgrid with frm generation: frm generation complicates the analysis
of architecture efficiency since generator efficiency can depend strongly on
loading and speed. With AC architecture, the electrical losses are from the
conversion of power from the AC bus to the DC internal loads assuming the
generator is operated to handle microgrid loads [6].
76 Fundamentals of Microgrids

The basic architecture of DC network confgurations with solar PV used as the sam-
ple generation source includes the following options [6]:

DC network: the bidirectional inverter/converter imposes a round trip

efficiency for exchanges with the AC grid.
DC microgrid + PV + battery storage: with storage system operation schemes
similar to AC microgrids, similar logic can be applied to determine the
efficiencies of a DC microgrid. In the matched case, the storage system is
not charged or discharged, and the operation and efficiencies are the same
as the DC network during matched loads. In the disjoint case, the stor-
age system absorbs all energy from the PV system and then delivers that
energy to the aggregate DC internal loads when needed. Effciency losses
will result.
DC microgrid with frm generation: similar logic applies to the DC architec-
ture, but the power from the generator passes frst through an AC–DC con-
version step to get to the DC bus, but can then be used directly by 50% of
the native DC loads at high voltage [6].

COMPONENTS OF MICROGRIDS
There are primary components of microgrids which are keys to the design of their
architecture. Microgrids are designed based on the need to link and manage power
generation sources with connected loads to meet selected goals. Enabled by intelli-
gent control technology, microgrids manage the operation of all linked DERs while
connected to the utility grid or utilized as an independent power system [7].

POWER SOURCES
Microgrids use distributed energy resources to generate electrical power. DERs are
comprised of electrical generation and storage systems and can be deployed in a
large number of units [8]. They have a number of common features: 1) they are not
centrally planned; 2) they are often owned and operated by an independent power
producer; 3) their power is not centrally dispatched; 4) they are interconnected to the
central electric power system at any convenient point in the grid; 5) when operating
connected to the grid, they may modify grid operation; and 6) the power supplied
can be either dispatchable or non-dispatchable depending on confguration [8].
Microgrids can be powered by distributed fossil fuel generators, batteries, or
renewable resources such as solar panels and wind turbine generators [9]. Note that
batteries when discharging are seen by the system as a source of power generation.
Microgeneration is the electricity generated by homes and small business that is
distributed locally [10]. Despite the granular nature of the generation, the contribu-
tion from microgeneration sources in total makes a substantial impact. In the UK,
renewable energy resources account for one-third of all electricity and microgenera-
tion accounts for 17% of the total [10]. At times renewable distributed resources are
the primary source of electricity in the UK. For example, on 8 December 2019, the
UK generated 16.2 GW of electricity from wind which accounted for 43.7% of its
Microgrid Architecture and Regulation 77

electricity requirement and biomass provided an additional 7.9%. While renewables

accounted for 51.6% of the total electricity needed, coal supplied only 3.1%.
An advantage of microgrid design is the fexibility to select from a number of
generation sources, often in complementary combinations. The goal is to maximize
electrical generation based on the resources available while considering their eff-
ciencies and costs. As effciencies improve, cost savings often result. An electric
power plant’s effciency (η) is the ratio between the useful electricity output from
the generating unit during a specifc time period and the energy value of the energy
source supplied to the unit [11]. The theoretical effciency of converting various
energy sources into useful electrical energy using a sampling of generation tech-
nologies is shown in Table 5.1 [11]. A secondary goal may be to reduce greenhouse
gas emissions which is also accomplished by effciency improvements but may be
accomplished by energy conservation, fuel substitution, or using renewables. For
example, system electrical generation effciencies can be improved, and greenhouse
gas emissions reduced, by substituting hydropower generation or tidal power for coal
or natural gas.

POINT OF COMMON COUPLING

A microgrid connects to the electric grid at a point of common coupling (PCC),
the interconnection that maintains microgrid voltage at the same level as the grid
unless there is a problem on the grid or other reason to disconnect [9]. The PCC is
the location in the electrical system where multiple customers or multiple electrical
loads may be connected [12]. It is the point of a power supply network electrically
nearest to a particular load at which other loads are connected [13]. These loads can
be electrical devices, equipment, or systems, or distinct customer installations [13].
The PCC enables the transfer and exchange of electricity from the microgrid to
the larger utility grid. When it is the point of coupling between the microgrid and
the host electrical utility, IEEE-519 (a set of guidelines to measure power harmon-
ics on power system connections between a utility line and a building) suggests that
this be a point which is accessible to both the utility and the customer for direct
measurement [12]. The PCC’s primary job is to ensure that voltage regulation from
the generation system is synchronized with the voltage from the main power grid. If
the grid goes down, it must activate a circuit breaker that isolates the grid. To recon-
nect, the microgrid requires information about the grid power conditions, such as the
frequency and voltage of the grid power. Usually, reconnection is possible within ten
seconds or less.

MICROGRID POWER MANAGEMENT SYSTEMS

The power management system handles the transfer of electrical power from the
power source to the electricity-consuming devices [14]. These types of electric load
management usually require converting the electricity generated from the power
source with an inverter that transforms the electricity to the form required for most
loads and interfaces with the microgrid’s storage components to balance the electrical
supply and demand loads [14]. The reliability and maintainability of digital control
 78

TABLE 5.1
Approximate Electrical Generation Effciencies of Selected Technologies [11]
Effciencv Fossil fuel Effciency Other generation Effciency
Renewable generation systems (%) generation systems (%) systems (%)
Hydro electric Nuclear Fission 35 Municiple waste 23
Large hydropower 85–98 Natural Gas Turbine 38–42 Sterling engine 38
Small hydropower 25–90 Coal 32–42 Microturbines 20–30
Tidal power 90 Oil 42
Ocean thermal energy conversion 4 Internal combustion
engines
Wind turbine generators 30–45 Petrol 25
Solar Diesel 35–42
Thermal 25
Photvoltaic 15–23
Biomass 25–35
Geothermal 10–12
Fuelcells
Solid oxide 48
Phosphoric acid 40–45
Melted carbonate 50
Proton exchange 40
Fundamentals of Microgrids
Microgrid Architecture and Regulation 79

system components must be considered as the power management system provides

critical services for the operation of the microgrid. The ultimate goal is to create
a central microgrid control system that provides active balancing (see Figure 5.3),
energy services, and control for energy-consuming devices that are deployed in
smart buildings, residential areas, transportation systems, and communities.
The control of the power fow in a microgrid is performed by operation algo-
rithms implemented in the central controller which may utilize weather forecasts and
other data [15]. Central controller reference values are distributed to the local power
electronic converters whose control loops and topologies are adapted to microgrid
requirements [15]. Custom tasks for distributed control systems include stability
assurance within the grid and active fltering [15]. Modern microgrid systems often
integrate software and control systems, such as smart electric meters, that can man-
age the grid operation in an effcient and reliable manner [14].

CATEGORIES OF LOADS
Important microgrid components are the electricity loads (consuming devices) whose
energy is supplied by the microgrid system [14]. Loads can be divided into groups
based on the degree of need for electricity. They are commonly categorized as sensi-
tive, adjustable, or sheddable (see Figure 5.4). Tier 1 loads (sensitive) are those that
must operate continuously without fail. These might include elevators, refrigeration
equipment, and emergency lighting. When electricity outages occur and impact Tier
1 loads, signifcant costs, safety issues, or equipment damage are experienced. Tier
2 loads are discretionary (adjustable) and may be shifted or shed for short periods to
balance generation availability. Examples include domestic water heating systems,
certain fans, and air conditioning loads. Tier 3 loads are those that can be shed for
emergency operations due to unplanned and partial loss of generation. Depending
on the actual loads, examples might include kitchen equipment, interior lighting, and
emergency generation equipment. Some loads may fall into different tier classifca-
tions based on the season or time of day.

ENERGY STORAGE SYSTEMS

For many microgrids, batteries are a common type of energy storage technology.
They can be designed to convert, store, manage, and recycle energy for extended
periods of time.
There are microgrid applications for energy storage technologies which provide
brief bursts of power. Ultracapacitor energy storage delivers power services with
short response time (cycles ranging from milliseconds to minutes in duration) [7].
When combined with other storage technology, storage times can be extended to
several hours. Ultracapacitors are high peak current devices with 100% depth of
discharge capability, which provides a reduction in the charge–discharge rate on the
battery and lead to longer battery life [7]. Flywheels can provide bursts of electricity
for periods of fve to 30 minutes.
To ensure the lifecycle and safe operation of the batteries, more complex energy
storage systems are equipped with a battery management system (BMS) to monitor
 80

FIGURE 5.3 Microgrid control system to provide active balancing.

Fundamentals of Microgrids
Microgrid Architecture and Regulation 81

FIGURE 5.4 Graphic showing point of common coupling and types of loads. (Source:
Berkeley Lab [16].)

and control the charge and discharge processes of the battery’s cells or modules [17].
The confguration for the internal control architecture of a basic BMS would include
direct connections from the BMS to the storage controller and the batteries with both
also connected directly to a converter. To be fully functional, this confguration fur-
ther requires an electrical connection and communication to external generation and
systems. The control scheme should in turn be determined by the application, which
establishes the algorithmic and input/output requirements for the electrical energy
storage system [17]. The battery storage architecture for hybrid generation systems
can be confgured to have an individual BMS for each generation type or share a
central BMS and storage system (see Figure 5.5).

ADVANCED MICROGRIDS
Advanced microgrids are a subcategory of microgrids with defned characteristics,
some similar to conventional defnitions of microgrids with enhanced capabilities
that enable the microgrid to offer improved services. According to researchers at
Sandia National Laboratories [18], the defning characteristics and features of an
advanced microgrid include:

1) being geographically delimited or enclosed

2) having a connection to the main utility grid at one PCC
 82

FIGURE 5.5 Microgrid architecture for small to medium size enterprise systems. (Source: concept adapted from Paderborn University [15].)
Fundamentals of Microgrids
Microgrid Architecture and Regulation 83

3) being fed from a single substation

4) capability to automatically transit to and from the grid and to be operated in
island mode
• operates in a synchronized and/or current-sourced mode when utility-
interconnected
• is compatible with system protection devices and coordination
5) inclusion of DER while remaining generator-agnostic and in accord with
customer needs regarding renewables (inverter-interfaced), as well as hav-
ing fossil fuel-based (rotating equipment generators) and/or integrated
energy storage
6) inclusion of an energy management system (EMS) with controls for power
exchanges, generation, load, storage, and demand response, and load-man-
agement controls to quickly balance supply and demand
7) inclusion of real-time and instantaneous power and information exchanges
across the PCC [18]

Meeting these requirements directly impacts microgrid system architecture by

integrating new controls, energy storage, and renewable energy systems to enable
greater cost savings and environmental benefts. They achieve plug-and-play
interoperability with the use of sophisticated technologies and digital controls
that enable peer-to-peer, autonomous coordination among micro-sources [19].
Advanced microgrids typically use inverters and controllers to interface with
the EMS or other coupled microgrids [18]. Inverters can provide multiple func-
tions to enable smart-grid interoperability. A challenge for microgrid applica-
tions is that the technologies used need to address the optimal mix of power fow
[18]. Networked hybrid designs for microgrids may prove to be the optimal con-
fguration to maximize effciency and performance [18]. With such capabilities,
microgrid owners have the capability with advanced microgrids to optimally man-
age system resources to address threats and potential consequences, and respond
quickly to changes in priorities [18].
There are other possibilities for advanced microgrid confgurations. Microgrids
vary in type, scale, kind of assets, generation capacities, internal connections,
and services. The beneft of a grid interconnection includes having supplemental
power if the microgrid assets are unable to perform as intended or are offine for
routine maintenance. What if there is no opportunity for a grid interconnection
at a PCC as there is no central grid available? Rather than being confgured for
a grid interconnection, multiple microgrids in local proximity could intercon-
nect to support each other at a lower-voltage distribution level essentially creating
an interconnected mini-grid (see Figure 5.6). When excess capacity is available
that might be useful for other nearby or virtual microgrids, the electricity could
be redistributed. Asset and resource coordination would be accomplished from
a central control center using wireless remote monitoring and control systems.
Communications options might include a local area network with a confguration
similar to a token ring.
84 Fundamentals of Microgrids

FIGURE 5.6 Architecture for multiple interconnected microgrids coordinating assets.

MICROGRID REGULATIONS AND STANDARDS

Microgrid architecture is strongly infuenced by regulations and standards that may
vary based on application. Much of the regulation that applies to U.S. microgrid
interconnections is created by state governments that are often infuenced by estab-
lished local utility companies rather than the federal government [20]. There is a
long history in the electrical utility business of maintaining monopoly status, infu-
encing both regulations and their enforcement procedures. Electric utilities often
view non-regulated power generation as a threat which increases their business risks.
The paradox is that rather than increasing risks, microgrids when properly designed
can actually reduce risks and grid instabilities. Regardless, once regulations are
established, maintaining compliance is a chief concern for both public utilities and
microgrid operators.
There are understandable concerns about microgrid regulation regardless of the
type or confguration of electrical generation systems—especially those that are
independent of utility grids. Regulatory policies simply have not been adopted that
are congruent with the vision of the utility system provided by the introduction of
microgrids. Microgrids, regardless of the architecture employed, encroach on many
areas of existing regulation not conceived prior to their recent popularity (i.e., gen-
erator interconnection rules, air quality permitting, building codes, tariffs, etc.) [20].
A fundamental example: traditional interconnection rules often require microgrid
generators to disconnect when disturbances in the grid occur, though one of the
objectives of microgrid development is to achieve systems that can island and fully
or partially ride through grid-induced problems [20]. However, the regulatory envi-
ronment concerning microgrids is in fux and there are a number of legacy recently
adopted or updated regulations and standards.
Microgrid Architecture and Regulation 85

U.S. CLEAN AIR ACT

The Clean Air Act is the law that defnes U.S. Environmental Protection Agency
(EPA) responsibilities for protecting and improving the nation’s air quality and
the stratospheric ozone layer [21]. The EPA establishes requirements on the use of
fossil fuel generation systems which are enforced by state and local governments.
Microgrids using fossil fuels must comply with its provisions (see https://www.epa.
gov/clean-air-act-overview). Of greatest concern for microgrids is Title I of the Act
which covers air pollution and control. Its parts identify requirements for air quality
and emission limitations, ozone protection, preventing signifcant deterioration of
air quality, and requirements for nonattainment zones. Title III covers general pro-
visions including administration, licensing, economic impact analysis, and exemp-
tions. Title V identifes permitting requirements.
U.S. greenhouse gas regulations and policies are limited. In April 2009, the EPA
released a proposed fnding on CO2 and fve additional greenhouse gases (methane,
nitrous oxide, hydrofuorocarbons, perfuorocarbons, and sulfur hexafuoride). The
agency stated that “in both magnitude and probability, climate change is an enormous
problem” and that greenhouse gases “endanger public health and welfare within the
meaning of the Clean Air Act” [22]. It cited human-made pollution as a “compel-
ling and overwhelming” cause of global warming. According to EPA administrator
Lisa Jackson, the fnding “confrms that greenhouse gas (GHG) pollution is a serious
problem now and for future generations.” On April 2, 2007, the U.S. Supreme Court
ruled in Massachusetts v. EPA that carbon dioxide could be regulated as a pollut-
ant under the Clean Air Act and that the government had a responsibility to issue a
determination based on science. The Bush administration failed to act on this rul-
ing. This fnding was prompted by a Supreme Court decision in April 2007 ruling
that GHGs are indeed pollutants as classifed by the Clean Air Act and regulation
is required if human health is threatened [23]. Most federal government programs
regarding GHGs are languishing or are being unenforced or dismantled as a result
of administrative policy changes beginning in 2016 under the Trump administration.
Regardless of the failure of recent federal governmental leadership, individual U.S.
states are making impressive policy gains in efforts to reduce GHG emissions (e.g.,
New York, Connecticut, and California).

U.S. PUBLIC UTILITY REGULATORY POLICIES ACT (PURPA)

The PURPA was enacted in 1978 as part of the National Energy Act and amended
as part of the Energy Policy Act of 2005. It is the only federal legislation requiring
competition in the utility industry. It effected the development of alternative energy
and co-generation production by requiring public utilities to purchase power pro-
duced by co-generators at reasonable buy-back rates, typically based on the utility
company’s cost [24]. This effectively created a market for non-utility power produc-
ers. PURPA guaranteed that the co-generator or small power producer would be able
to interconnect with the electric grid and access backup services from the utility
[24]. It also exempted co-generators and small power producers from federal and
state utility regulations and the associated reporting requirements of these bodies
[24]. The portion of the act dealing with co-generation and small power production
86 Fundamentals of Microgrids

appears in U.S. code in Title 16 (Conservation), chapter 12 (Federal Regulation and

Development of Power), subchapter II (Regulation of Electric Utility Companies
Engaged in Interstate Commerce), section 824a-3: Cogeneration and Small Power
Production [25].
To assure the benefts of PURPA, a co-generation facility had to be classifed as
a qualifying facility, generating electricity and useful thermal energy from a single
fuel source [24]. In addition, a qualifed co-generation facility had to be less than
50% owned by an electric utility or an electric utility holding company [24]. Finally,
the plant had to meet the minimum annual operating effciency standards established
by the Federal Energy Regulatory Commission (FERC) when using oil or natural
gas as the principal fuel source [24]. The minimum effciency standard established
was that the useful electric power output, plus one half of the useful thermal output
of the facility, must be either: 1) no less than 42.5% of the total oil or natural gas
energy input; or 2) 45% if the useful thermal energy is less than 15% of the total
energy output of the plant [24].
PURPA is becoming less important as many older supply contracts expire and
electric deregulation and open access to electricity transportation by utilities has
created a vast market for the purchase of energy [25]. Though PURPA was amended
under the Energy Policy Act of 2005 to allow the Federal Energy Regulatory
Commission (FERC) to exempt utilities from its requirements if qualifying facili-
ties are provided access to wholesale markets, it has not been updated to refect the
advent of microgrids and need for more competitive markets [26]. In fact, many state
regulatory agencies have stopped requiring utilities to offer contracts to develop-
ers of non-utility power projects [25]. Regardless, PURPA remains important as it
promotes renewable energy (especially hydropower) by exempting the developers of
such projects from onerous state and federal regulatory regimes [25].
In 2018, the National Association of Regulatory Utility Commissioners (NARUC)
promoted the updating of PURPA for the energy sector [25]. NARUC is proposing that
the FERC “exempt from PURPA’s mandatory purchase obligation those utilities which
are subject to state competitive solicitation requirements and other best practices that
ensure all technologies access to the market” [26]. Citing examples that qualifying
facilities have invoked PURPA in an anti-competitive manner, NARUC suggested that
reforms would better enable competitive solicitation and procurement [26].

IEEE STANDARD 1547-2018 FOR INTERCONNECTION AND

INTEROPERABILITY OF DISTRIBUTED ENERGY RESOURCES WITH
ASSOCIATED ELECTRIC POWER SYSTEMS INTERFACES
Institute of Electrical and Electronics Engineers (IEEE) Standard 1547-2018 out-
lines the requirements and technical specifcations for interconnecting distributed
resources safely with the grid. This includes design, safety, response to abnormal
conditions, power quality, equipment, production, installation, commissioning, and
periodic testing [27]. This standard was frst published in 2003, after fve years of
development, with the goal of creating a set of technical requirements that could be
used by all parties on a national basis [28]. It also addresses unintentional islanding
by requiring detection of the island condition and the ability to cease energizing
Microgrid Architecture and Regulation 87

the area electric power system (EPS) within two seconds of the microgrid’s island
formation [28]. It emphasizes installation of DER on radial primary and secondary
distribution systems using 60 Hz sources. IEEE 1547 also provides anti-islanding
standards to protect the safety of utility line workers [2].

IEEE P1547.4-2011 GUIDE FOR DESIGN, OPERATION, AND INTEGRATION OF

DISTRIBUTED RESOURCE ISLAND SYSTEMS WITH ELECTRIC POWER SYSTEMS
Intended for use by designers, operators, system integrators, and equipment manu-
facturers, IEEE P1547.4 covers microgrids and intentional islands that contain dis-
tributed resources connected at a facility and with the local utility [28]. The guide
covers the distributed resource, interconnection systems, and participating electric
power systems [28]. It provides alternative approaches and good practices for the
design, operation, and integration of microgrids and covers the ability to separate
from and reconnect to the utility grid while providing power to the islanded local
power systems [28]. It is relevant to the design, operation, and integration of dis-
tributed resource island systems [29]. Implementation expands the benefts of using
distributed resources by targeting improved reliability and builds upon the intercon-
nection requirements of IEEE Standard 1547(TM)-2008 [29].

IEEE P2030.7-2007 IEEE STANDARD FOR THE

SPECIFICATION OF MICROGRID CONTROLLERS
Microgrid controllers are direct digital control (DDC) systems that are responsible for
managing the operating equipment within the microgrid. A key element of microgrid
operation is the microgrid energy management system (MEMS). IEEE P2030.7-2007
is an international standard that defnes how microgrid control functions operate as
self-managing, autonomously, or grid-connected, and seamlessly connect to and dis-
connect from the main distribution grid for the exchange of power and the supply of
ancillary services [30]. The standard categorizes microgrid functional control assign-
ments into four blocks: grid-interactive control functions, supervisory control func-
tions, local area control functions, and device level control functions [31].
The scope of this standard is to address the functions above the component con-
trol level associated with the proper operation of the MEMS that are common to
all microgrids, regardless of topology, confguration, or jurisdiction [30]. It also
describes control approaches required from the distribution system operator and the
microgrid operator [31]. IEEE Standard P2030.7-20078 addresses testing procedures
and attempts to ensure interoperability of the microgrid by defning which parts of
the microgrid controller must be standardized and which can remain proprietary [27].

IEC 61727 INTERNATIONAL ELECTROTECHNICAL

COMMISSION’S PV SYSTEM REQUIREMENTS
This international standard applies to utility-interconnected photovoltaic (PV)
power systems operating in parallel with the utility and utilizing static (solid-state)
88 Fundamentals of Microgrids

non-islanding inverters for the conversion of DC to AC power. It describes the inter-

national requirements for photovoltaic systems interconnecting with existing or pro-
posed low-voltage utility distribution systems. Recent updates provide clarifcation
regarding for non-islanding inverters, point of common coupling, and power factor.

MICROGRID STANDARDS BEING DEVELOPED [25]

IEC TS 62898-1: Guidelines for Microgrid Projects Planning and Specifcation;
published
IEC TS 62898-2: Microgrids Guidelines for Operation; working document
IEC TS 62898-3-1 Microgrids: Technical/Protection Requirements; working
document
IEEE P1547 REV: Microgrid Connection to Distribution Utilities; Microgrid/
Distribution Utility, ISO/RTO
IEEE P157.8/D5.0: Draft Recommended Practice for Establishing Methods
and Procedures that Provide Supplemental Support for Implementation
Strategies for Expanded Use of IEEE 1547 (Clause 8, Recommended
Practice for DR Islanded Systems)
IEEE P2030.10: Standard for DC Microgrids for Rural and Remote Electricity
Access Applications
IEEE P2030.9: Recommended Practice for the Planning and Design of the
Microgrid
IEEE P2030.7: Standard for the Specifcation of Microgrid Controllers
IEEE P2030.8: Standard for the Testing of Microgrid Controllers

SUMMARY
Microgrids are normally confgured as either decentralized or distributed networks.
While there are basic components fundamental to the architecture of a microgrid,
the microgrid must contain the equipment necessary to generate electricity. They
may also have a management system, loads, and possibly storage capabilities.
Microgrids can be designed to be completely grid-independent or connected and
capable of operating in island mode. Unlike traditional electrical distribution sys-
tems, microgrids are capable of providing bidirectional transfer of electricity, either
from the host grid to the microgrid or from the microgrid to the grid. They can be
designed to use AC or DC power or both.
A feature of those capable of islanding is the point of common interconnection
between the microgrid and its host grid. Advanced microgrids are a subcategory
of microgrids with defned characteristics, some similar to conventional microgrids
but having supplemental capabilities that enable them to provide improved services
for their customers. Toward the goals of maximizing electrical generation based
on resource availability, production effciencies, and costs, microgrid operators
can select from a number of complementary combinations of generation sources.
Microgrid control systems strive to achieve active balancing and may categorize
connected loads as sensitive, adjustable, or sheddable. They can also be intercon-
nected and rely on other microgrids for power rather than a central grid.
Microgrid Architecture and Regulation 89

Microgrid architecture is infuenced by the regulations that apply to their devel-

opment. Those using fossil fuels must comply with the provisions of the U.S.
Clean Air Act, primarily Title I of the Act which sets standards for air pollu-
tion. The IEEE has established standards for microgrid interconnection require-
ments and provides microgrid design, operation, and interconnection guidelines.
Other microgrid standards are evolving. Microgrids create a special regulatory
issue as many U.S. states and local governments have not yet adopted regulations
for their design and implementation. However, many have regulations concerning
the development of distributed energy resources and guidelines concerning utility
interconnections.

ACKNOWLEDGMENTS
This chapter is a revised version of a reviewed article entitled “Microgrid Architecture”
that was originally published in the International Journal of Strategic Energy and
Environment Planning, Volume 2, Issue 5, Stephen A. Roosa, Ph.D. (author/edi-
tor) in September 2020. The editor extends thanks and credit to the Association of
Energy Engineers, Atlanta, Georgia for use of previously published material and for
approving that the article be republished.

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 6 Linking Microgrids with
Renewable Generation

THE IMPACT OF RENEWABLE ENERGY

Alternative and renewable energy refer to electricity or heat generated from renew-
able sources (including wind, solar, geothermal, biomass, landfll gas, and low-impact
hydro) as well as energy substitutes and various conservation methods. Renewable
energy is considered to be more environment-friendly than traditional electricity
generation. Unlike fossil fuels, alternative and renewable energy emit little or no air
pollution. They also do not generate radioactive wastes. Most importantly, they are
replenished by naturally occurring processes. Investments in renewable energy have
been increasing and the economic impact is considerable. Worldwide, annual renew-
able power generation investments increased to $148 billion by 2007 and to $242
billion by 2014, greater than that year’s $132 billion invested in fossil fuel systems
[1]. Clean energy investments (renewables plus nuclear energy) exceeded $288 bil-
lion in 2018.
In contrast to green power or electricity generated from renewable sources, brown
power is electricity generated using environmentally hostile technologies. The vast
majority of electricity in the United States comes from the combustion of coal and
natural gas. The remaining amounts of electrical energy are produced mostly from
nuclear power, hydropower, wind, solar, and other portable fossil fuel sources. The
brown power generators are sources of air pollution in the U.S. and elsewhere and
contribute to smog and acid rain. They are also the greatest contributors of green-
house gasses (GHGs), including CO2 and nitrous oxide. Innovative alternate energy
technologies can decrease the reliance on imported oil and fossil fuels. The combus-
tion of oil and its byproducts contribute to GHG emissions but are used primarily in
vehicular transportation.
The use of alternative forms of energy, including wind and solar power, began
increasing in the U.S. with wind and solar energy output jumping roughly 45%
from 2006 to 2007. The U.S. share of renewables to total domestic electrical use
doubled between 2010 to 2017 (see Figure 6.1). This was driven by steady reduc-
tions in the costs of the technologies, tax credits, and other incentives and policies
that focused on sustainable energy development. U.S. renewable energy sources—
including biomass, geothermal, hydropower, solar, and wind—accounted for 17.8%
of the country’s net domestic electrical generation through the frst nine months
of 2018 [2]. Through the same period, Energy Information Administration (EIA)
data shows that solar and wind both saw strong growth, with utility-scale solar
growing by 30.3% (which includes distributed small-scale solar) and wind energy
growing by 14.5% compared to the same period a year earlier [2]. Together, wind
and solar accounted for 9% of the country’s electrical generation and almost 50% of

91
92 Fundamentals of Microgrids

FIGURE 6.1 U.S. Primary energy consumption by resource (EIA).

the total from all renewable energy sources [3]. For renewable energy technologies,
hydropower accounted for 7.05% of the nation’s total electricity generation, fol-
lowed by wind with 6.41%, solar with 2.42%, biomass with 1.48%, and geothermal
with 0.39% [3].
There are changes in the mix of energy being used in the U.S. There is an obvious
trend away from coal as a primary combustion fuel to natural gas and renewables.
Capacities for renewable generation exceed that of coal in the U.S. as does pro-
duction. According to the EIA, in April of 2019 renewables provided 68.5 million
MWh of electricity compared to just 60 million MWh from coal. It is likely that
100–150 natural gas-fred plants will be constructed in the U.S. within the next ten
years. However, the greater use of natural gas is not compatible with the ultimate
goals being set by U.S. cities and localities to substantially reduce greenhouse gas
emissions that target reductions approaching 100%. While these goals are in some
cases idealistic, they are nevertheless notable. With a view of sustainably developing
future electrical power generation and transmission, more effcient technologies are
needed [4]. Many municipal planning agencies intend to rely on renewables, particu-
larly solar and wind power, to meet their GHG reduction goals. While hydropower
production has been stable, much of the growth in renewable energy sources can be
Linking Microgrids with Renewable Generation 93

attributed to increased use of wind power and to a lesser extent biomass and solar.
These trends are creating new markets for the development of microgrids that use
renewable energy.
Worldwide, a 20% to 25% increase in renewable energy production should cause
a considerable reduction in CO2 emissions, if the use of fossil fuels is stabilized or
reduced. China ranks frst internationally in installed renewable generation includ-
ing hydropower, wind power, and solar energy. It plans for 50% of its power genera-
tion by 2030 to be from renewable energy sources which will require an investment
of more than 10 trillion yuan ($1.4 trillion U.S.) [5]. To meet this target, installed
non-fossil fuel power generation capacity will need to increase by one billion kW, an
amount equaling the current total installed generation capacity of the U.S. [5].

RENEWABLE GENERATION FOR MICROGRIDS

A guiding design principle for buildings and energy-consuming systems has been
to initially focus on energy effciency and conservation; then, after these options
are exhausted and optimized, focus on renewable energy to supply the needed
power [6]. In conjunction with efforts toward energy effciency and associated
conventional technologies, renewable generation can be developed to effectively
reduce GHG and CO2 emissions in a sustainable manner, sometimes with sub-
stantial cost savings. The inherent ineffciencies in the conventional electric grid
present a remarkable opportunity for microgrids: reductions in on-site electricity
consumption can result in a three-fold reduction in non-renewable energy use, thus
providing opportunities for smaller amounts of renewable generation to locally
supply the remaining power required [6]. This leveraging impact on system energy
consumption when renewable microgrids are deployed is often not cited in the
literature.
Certain types of renewable energy, such as hydropower, geothermal energy, and
in some cases biomass, can provide microgrids with baseload electrical generation.

FIGURE 6.2 Microgrid confguration with renewable generation, energy storage, and dis-
trict heating. (Source: adapted from reference [4].)
94 Fundamentals of Microgrids

Others, such as solar and wind power, provide microgrids with variable renewable
energy (VRE) and require batteries or some other form of energy storage to increase
capacities (see Figure 6.2). For electrical generation systems, capacity refers to the
percentage of time over a given period (typically a year) that the system is capable of
producing electricity.

SMALL HYDROPOWER SYSTEMS

Hydropower is a key means of generating electricity and offers a set of highly scal-
able applications for the generation of electricity. In 2017 hydropower accounted for
43% of the renewable electricity generated and 25% of the total renewable energy
consumed in the U.S. [7]. However, most of this generation is provided by large-scale,
high-head hydropower projects. Very little is provided by small-scale hydropower
systems that support microgrids. This is changing somewhat as improvements in
small-scale technologies that can support microgrid development are being adopted
and deployed.
Of the total solar energy incident on Earth, approximately 21% is used for main-
taining the global water cycle of evaporation and precipitation. But only 0.02% of
this amount of energy is available as kinetic and potential energy stored in the riv-
ers and lakes of the Earth [8]. The water reserves are available in solid (ice), liquid
(water), and gaseous (water vapor) conditions and are continuously cycled by inci-
dent solar energy. This global water cycle is mainly fed by evaporation of water
from oceans, plants, and continental waters. The resulting precipitation which feeds
snow felds, glaciers, streams, rivers, lakes, and groundwater is a source for small
hydropower. Using low-head hydropower systems or fowing water (run of the river)
to power electric turbines creates opportunities to generate power in close proxim-
ity to loads as many villages and towns are found near rivers and streams. Small
hydropower plants are less than 30 MW in size. There are thousands of such sites in
the U.S. with existing dams that are available for mini-hydropower applications. A
small hydropower installation at the Kentucky River Lock and Dam No. 2 in Mercer
County, Kentucky (the Mother Ann Lee hydroelectric plant) began operation in 2007
and provides power for the equivalent of 2,000 residences [9]. There are numerous
recent international examples including the new 15 MW hydropower plant in the
Soloman Islands.
Non-traditional forms of hydropower include technologies and structures that
harness the power of water in tides, waves, and temperature differences. Tidal power
systems include tidal fences and barrages that enable the extraction of tidal energy
by constructing a barrage across an estuary or bay to produce static head. Wave
systems that generate electricity include permanent magnet linear generator buoys
that are anchored to the seafoor, devices that ride on the waves, and capture cham-
bers that use waves to pressurize air. Ocean thermal energy conversion (OTEC)
systems take advantage of thermoclines in tropical regions and use a condenser/
compressor cycle to drive a turbine. The closed cycle OTEC system is similar to a
conventional Rankine cycle steam engine. It is essentially the same as commercial
refrigeration, except it runs in the opposite direction such that a heat source and a
cold sink are used to produce electric power rather than the reverse. OTEC uses a
Linking Microgrids with Renewable Generation 95

different working fuid (typically ammonia) and operates at low temperatures and
pressures. Due to the large amounts of water that must be pumped, OTEC systems
operate at very low effciencies.

BIOMASS ENERGY
Biomass resources release solar energy stored in plants and organic matter by burn-
ing agricultural waste and other organic matter to generate electricity including land-
fll methane-gas-to-energy conversion. Biomass can be divided into primary and
secondary products. The former is produced by directly using solar energy through
photosynthesis. In terms of energy supply, these are farm and forestry products
from energy crop cultivation (e.g., fast-growing trees such as poplars or grasses such
as switchgrass), plant byproducts, residues, and waste from farming and forestry
operations including the downstream industries and households (e.g., straw, residual
and demolition wood, or organic components in household and industrial waste).
Secondary products are generated by the decomposition or conversion of organic
substances in higher organisms (e.g., the digestion system of animals); examples
include liquid manure and sewage sludge.
Biofuels are used for electrical generation in microgrids. The traditional way to
generate electricity using primary biomass materials is by direct combustion. The
City of Burlington, Vermont uses wood from managed forestry operations to gen-
erate baseload electricity for its microgrid. Biomass can also be processed using
gasifcation technologies to create suitable fuels to generate electricity. Ethanol is
normally used as a transportation fuel but is corrosive and is diffcult to transport
long distances in pipelines. An alternative is to use it to generate electricity. Brazil
is the world’s second largest ethanol producer after the U.S. The city of Juiz de Fora
(population 150,000) in Minas Geris generates electricity with ethanol made from
sugar cane [10]. The plant, a simple-cycle, natural gas system, uses a converted 43.5
MW combustor and has an operating capacity of 87 MW [10].

LANDFILL GAS EXTRACTION

A landfll is a waste disposal site. Does this represent a form of renewable energy?
The answer is yes to the extent that landfll gas is produced by organic decompo-
sition. At municipal sanitary landflls, wastes are generally spread in thin layers,
compacted, and covered and compacted further with fresh layers of soil, clay, or
plastic foam each day [11]. The decomposing wastes generate methane (CH4) gas,
a hydrocarbon molecule that is the principal component of natural gas. CH4 is pro-
duced through anaerobic (without oxygen) decomposition of waste in landflls, ani-
mal digestion, decomposition of wastes, production and distribution of natural gas
and petroleum, coal production, and incomplete fossil fuel combustion. It is also
formed and released into the atmosphere by biological processes occurring in anaer-
obic environments.
Once in the atmosphere, CH4 absorbs terrestrial infrared radiation that would
otherwise escape to space. This property contributes to the warming of the atmo-
sphere, which is why CH4 is classifed as a greenhouse gas. CH4 has global warming
96 Fundamentals of Microgrids

potential estimated to be a minimum of 23 times higher than CO2. CH4’s chemi-

cal lifetime in the atmosphere is approximately ten years but it absorbs much more
energy and has indirect effects such as being a precursor to ozone [12]. Methane’s
relatively short atmospheric life, coupled with its potency as a GHG, makes it a
candidate for mitigating global warming over the near term (e.g., the next 25 years
or less).
Projects that transform landfll gas (LFG) to energy signifcantly reduce biometh-
ane emissions from municipal solid waste (MSW) landflls—and simultaneously
create green energy [13]. These projects offset the use of fossil fuels such as coal
and natural gas. MSW landflls are one of the largest human-generated sources of
methane emissions in the U.S., accounting for 14.1% of methane emissions 2017. In
general, LFG projects could capture roughly 60% to 90% of the biomethane emit-
ted from the landfll, depending on system design and effectiveness. The captured
methane is converted to water and less potent CO2 as the gas is burned to produce
electricity. LFG can be upgraded to renewable natural gas (RNG), a high-Btu gas,
through treatment processes by increasing its methane content while reducing its
CO2, nitrogen, and oxygen contents [14]. Producing energy from renewable RNG
avoids the need to use non-renewable sources such as coal, oil, or natural gas from
traditional sources (Figure 6.3).
Over 70% of the operational LFG projects in the U.S. are used to generate elec-
tricity. About 10% of currently operating LFG energy projects use RNG [14]. The
technologies used include internal combustion engines, turbines, microturbines,
and fuel cells [14]. Reciprocating engines are the most commonly used conversion
technology for LFG electricity applications due to their relatively low cost, high
effciency, and sizes that complement the gas output of landflls [14]. Landfll gas

FIGURE 6.3 Genset using landfll gas in Johnson City, Tennessee.

Linking Microgrids with Renewable Generation 97

projects operate about 95% of the time, providing the potential to reduce baseload
electrical power and greenhouse gases that would normally be fared.
Many companies have developed successful operations across jurisdictions that
help achieve the goals of sustainability. Waste Management, a company that operates
281 landflls across the U.S., is turning the production of electricity from renewable
landfll gases into a major business opportunity. Landfll gases are typically com-
posed of 40% to 50% CO2 and 50% to 60% CH4 [15]. Waste Management currently
operates 103 landfll gas-to-energy (LFGTE) plants. The company intends to create
new revenue streams by developing additional sites, with another 60 planned adding
230 megawatts to its total generating capacity [15]. These projects will be located
in Texas, Virginia, New York, Colorado, Massachusetts, Illinois, and Wisconsin.
When completed, the company will become a mini-utility. Paul Pabor, the com-
pany’s vice-president of renewable energy, sees these initiatives as “a major step in
Waste Management’s ongoing efforts to implement sustainable business practices”
[15]. Combined with their existing LFG generation facilities, the total electrical
energy produced when all projects are completed will be 700 megawatts—roughly
the equivalent of a fossil fuel power plant [15].

SOLAR ENERGY (THERMAL)

Solar energy initially arrives at the outer edge of the Earth’s atmosphere. Including all
types of solar radiation, it is measured by satellites as being equivalent to an average
of 1.3615 kW/m2. This value is referred to as the solar constant as it has varied only
0.2% in the last 400 years. Part of this radiation is refected back to outer space, part is
absorbed by the atmosphere and re-emitted, part is scattered by atmospheric particles,
and part is absorbed by the Earth’s surface and radiates into the atmosphere [6]. Only
about two-thirds of the sun’s energy reaches the surface of the Earth. Peak solar radia-
tion on the surface of the Earth is approximately 1 kW/m2. Solar radiation (insolation
or irradiance) data are often given in kWh/m2/day, sometimes referred to as peak sun
hours, a term for the solar insolation that a particular location would receive if the sun
were shining at its maximum value for a certain number of hours [6]. The types of
applications used to generate electricity include solar thermal and solar photovoltaic
(PV) technologies.
Solar thermal (also called thermosolar) applications use solar energy for water
heating, space heating, or electrical generation applications. They typically employ
mechanical systems to collect, distribute, and/or store solar-heated fuid or air [6]. In
industrial systems, energy demand will rarely correlate with solar energy availabil-
ity. In some cases, the energy can be stored until needed, but in most systems, there
will be some available solar energy that will not be collected. Successful solar-ther-
mal applications are a function of design, site conditions, climate, and project costs.
These systems are usually sized in terms of collector panel area. Pumps, piping, heat
exchangers, and storage tanks are then selected to match [6].
A wide variety of devices may be used to collect solar energy. High-temperature
collectors (>50°C above ambient temperature), such as evacuated tubes, are used
mainly for industrial process heat, solar air conditioning, and (rarely) water heat-
ing in buildings [6]. Flat-plate collectors are most common in building applications
98 Fundamentals of Microgrids

while concentrating collectors are more likely to be used for electrical generation.
Technologies that use concentrating solar power (CSP) technologies to harness
solar thermal energy for electrical generation include parabolic troughs, central
receivers, dish-Stirling engines, linear Fresnel refectors, and power towers. To
increase the capacity of solar thermal generation, they are often coupled with
energy storage systems.

SOLAR ENERGY (PHOTOVOLTAIC)

Solar photovoltaic is today a very common way to generate distributed electricity.
Manufactured using mass production technologies, solar panels can be installed
almost anywhere and will generate power as long as the sun is shining. Due to their
fexibility, ease of transport, installation alternatives, and modularity solar arrays are
a preferred means of providing distributed generation, especially in remote locations
where electrical costs are higher (see example shown in Figure 6.4). The primary
types of commercially available solar PV technologies are thin flm, polycrystalline
silicon, and monocrystalline silicon. In most applications, the largest expenses are
the solar collector panels (modules), support structures (mounting and racking sys-
tems), electrical connections, and labor [6].
As of mid-2018, there were more than 2,450 utility-scale solar photovoltaic
sites in the U.S. representing about 27.5 gigawatts (GW) of installed capacity [16].
Although more than half of installed PV capacity comes from sites 50 MW or larger,
most of the total capacity and utility-scale PV facilities are 5 MW or less [16]. Small
utility-scale facilities (ranging from 1 MW through 5 MW) account for 18% of the
total installed solar capacity and 72% of utility-scale solar facilities located in all 50
states [16].

FIGURE 6.4 Solar PV installations on the island of Antiqua (2018).

Linking Microgrids with Renewable Generation 99

Community-developed solar facilities, averaging 3 MW, offer a share of their

solar capacity for sale to off-site customers who may not necessarily have access to
solar generation [16]. In these programs, customers subscribe to a designated com-
munity solar facility and receive monthly credits on their electric bills for the energy
generated based on the share of solar capacity purchased [16]. An example of the role
of community solar has in the growth of small utility-scale solar facilities is in the
U.S. state of Minnesota where community solar facilities account for more than 36%
of the total operational PV capacity [16].
Solar PV systems use combinations of panels mounted in arrays. Racking systems
use either fxed-tilt systems that are rigidly set at an angle, or tracking systems that
follow the movement of the sun’s path in the sky. Fixed tilt systems are the least
costly.
The maximum energy collected by the solar PV modules occurs when the sun’s
rays are perpendicular to the panel. The amount of electricity generated by a fxed-
tilt solar PV system depends on the orientation of the PV panels relative to the sun
[17]. Almost 40%, or 10.4 GW, of utility-scale solar PV systems installed in the U.S.
at the end of 2017 were fxed-tilt arrays [17]. Of the utility-scale fxed-tilt solar PV
systems, 76% of the capacity was installed at a fxed angle between 20° and 30° from
the horizon [17]. For U.S. installations the angle of the tilt is related to the latitude of
the site. Systems installed with tilt angles less than the latitude angle of the plant’s
location typically have greater output during summer months when the mid-day sun
is higher in the sky and reduced output during winter when the sun tracks lower in
the sky [17]. In the U.S., most of the output from solar PV installations is from sites
located between 30° to 40° north latitude (see Figure 6.5).
Solar PV is a preferred solution for microgrids. The Moapa Southern Paiute Solar
Project is a 250 MW microgrid that uses solar PV to generate enough electricity
(AC) to power an estimated 111,000 homes [18]. Located on the Moapa River Indian
reservation approximately 30 miles (48 km) from Las Vegas, this facility is the frst

FIGURE 6.5 U.S. utility-scale fxed-tile solar PV capacities and tilt angle. (Source: U.S.
Energy Information Administration, Annual Electric Generator report.)
100 Fundamentals of Microgrids

utility-scale solar power plant to be built on tribal lands. It has a 25-year power
purchase agreement (PPA) with the Los Angeles Department of Water and Power to
supply renewable electricity [18]. Power is generated using 3.2 million (25 million ft2,
2.32 million m2) advanced First Solar thin flm photovoltaic solar panels [18].

WIND POWER
Wind power can be harnessed to provide mechanical power or to generate electricity.
Windmills are used for applications such as water pumping. Wind turbine genera-
tors (WTGs) convert the kinetic energy contained in the wind frst into mechanical
energy and next into electricity by turning a generator [7]. WTGs can be used to
support microgrid applications. The size of the turbine and the speed of the wind
are key determinates in how much electricity can be produced [19]. A small wind
energy system will produce a power output of 100 KW or less [19]. Small commer-
cial and community wind projects typically use turbines with ratings from 100 KW
to 1.5 MW. Utility-scale WTGs typically range from 1.5 MW to 8 MW. A 12 MW
offshore WTG prototype, the world’s largest, is planned for installation and test-
ing in The Netherlands in 2019 [20]. The Haliade-X turbine is designed to generate
67 GWh annually with a 63% capacity factor [20]. Specifcations include a 220 m
rotor, 107 m blades, and features which make the model less sensitive to wind speed
variations [20].
There are two primary types of WTGs, vertical axis and horizontal axis. Modern
horizontal axis WTGs with three blades that face into the wind are the most common
confguration [7]. Wind speeds are a determining factor in assessing a WTG’s per-
formance since faster wind speeds contain more kinetic energy. Generally, annual
average wind speeds of greater than 9 miles/hour (4 m/s), are required for small
electric wind turbines not connected to the grid; utility-scale wind plants require a
minimum wind speed of 10 miles/hour (4.5 m/s) [7]. The power available to drive
wind turbines is proportional to the cube of the speed of the wind; therefore, dou-
bling the wind speed leads to an eight-fold increase in power output [7].
The wind farm at Tehachapi Pass near Mojave, California (see Figure 6.6) is one
of the world’s largest. The site has over 5,600 WTGs with a total annual produc-
tion over 800 million kWh annually. Initially established in the early 1980s without
a utility grid-connection, the Tehachapi wind resource area now exports electrical
energy to other parts of California. This was accomplished by the completion of the
Tehachapi Renewable Transmission Project in 2012 that connects transmission to the
grid serving Los Angeles.

GEOTHERMAL ENERGY
The more ubiquitous uses of geothermal (Earth heat) energy resources are grouped
into the categories of direct use and geothermal heat pump applications. Less com-
mon is the use of the Earth’s subsurface heat to generate electricity. Basically, the
process involves extracting the heat from the Earth’s molten core and using it to
drive a turbine and generator to generate electricity. This core consists primarily
of extremely high temperature liquid rock known as magma. The heat circulating
Linking Microgrids with Renewable Generation 101

FIGURE 6.6 Wind turbine generators at Tehachapi Pass, California.

within the rock is transferred to underground reservoirs of water which circulate

under the Earth’s crust. The geothermal resources tapped to generate electricity are
intense and can reside as deep as 10,000 feet (about 3,050 m) below the Earth’s sur-
face [21]. The closer the resource to the Earth’s surface, the less the costs of drilling.
The basic process of extracting geothermal energy to generate electricity starts
with drilling a hole in the ground to release the naturally heated water. The high-
temperature water remains in a liquid state as it is under pressure. It changes state,
becoming steam when it reaches the Earth’s surface and is exposed to atmospheric
pressure. This steam is used to drive a turbine. After its heat is neutralized by expo-
sure to lower temperatures, the steam changes back into water. This water is then
reinjected to replenish the sub-surface reservoir which is again reheated in a continu-
ous cycle. The key variables when estimating the size of the resource include feld
size, depth below ground level, and water pressure. Testing helps to evaluate poten-
tials and how quickly and in what volumes a feld can heat and release water. It also
provides information that helps manage feld resources and prevents rapid resource
depletion. While this is rare, several wells in California have been retired that were
developed as early as the 1970s due to resource depletion.
The goal of the process is to generate electricity by creating a continuous heat
transfer system. There are several technologies that enable geothermal energy to be
used for electrical generation. Geothermal electricity generation technologies consist
of either fash technology or binary technology or a combination of the two. With
fash technology, water from 300°F to 700°F, still in a liquid form, is piped from
its highly pressurized underground reservoir into a geothermal facility [21]. Once
this super-heated water is released, it fashes into steam that then drives a conven-
tional turbine generator [21]. Using binary technology, underground reservoirs of
lower temperature water are used for fashing [21]. Binary technologies use such
water to transfer the heat via a heat exchanger to a secondary liquid (isobutane or
102 Fundamentals of Microgrids

pentafuoropropane) that changes into a steam-like, gaseous vapor to drive turbines

to generate electricity [21]. Dry steam, a rarer resource, is used for larger geothermal
plants such as those in northern California which hosts the world’s largest number of
geothermal plants. When available, highly pressurized geothermal dry steam can be
used to directly drive a turbine.
Advances in generation technologies have enabled engineers to use water at lower
temperatures. New drilling technologies borrowed from the oil and gas industry,
such as directional and horizontal drilling, have enabled the use of well felds that
were previously diffcult to access. Geothermal resources can be accessed by using
more expensive technologies such as enhanced geothermal. Using this process,
hydraulic stimulation or shearing creates fractures in crystalline bedrock for appli-
cations such as small-scale generation of district heating.
Geothermal energy is a match for microgrids. The U.S. maintains world leader-
ship in generating electricity with about 3,600 MW of capacity. Geothermal electrical
generation technologies have been tested and proven reliable. They eliminate most
of the combustion cycle problems associated with fossil fuels. There are also over a
thousand geothermal sites in the U.S. that have not yet been developed, but many are
remote from population centers and potential grid connections. Geothermally pro-
duced electricity can be designed provide continuous, baseload power though this is
usually not the case. A study by the Massachusetts Institute of Technology suggested
that roughly 10% of U.S. electrical energy could be supplied by harnessing acces-
sible geothermal resources at costs that are competitive with fossil fuel generation.

WASTE-TO-ENERGY
There has been an ongoing debate among energy management professionals as
to whether or not waste-to-energy (WTE) systems can be generally classifed as
renewable energy systems. If the source of the waste for the WTE system is woody
biomass from a tree-harvesting process, then the consistency of the waste and its
source qualify it as a waste from biomass, a renewable energy source. If the energy
is sourced from municipal mixed wastes, then it can be considered to be partially
renewable. According to the UK’s Department for Environment Food and Rural
Affairs, “energy from residual waste is only partially renewable due to the presence
of fossil-based carbon in the waste, and only the energy contribution from the bio-
genic portion is counted towards renewable energy targets” [22].
Energy derived from wastes is considered to be a more sustainable alternative
than placing it in landflls, providing the residual waste being used has the right
renewable content and is matched with a process that is effcient at turning the waste
into energy [22]. It also produces a lower cost, domestic source of heat which can
be used to produce electricity for microgrids. For municipal mixed wastes, these
partially renewable energy sources can provide heat, electricity, and transportation
fuels.
WTE plants are used for combined heat and power or electrical generation appli-
cations. A WTE plant owned by Pinellas County, Florida operates as an enterprise
fund by charging capacity payments, electricity sales, material sales, and tipping
fees [23]. The plant generates electricity and reduces the amount of waste that must
Linking Microgrids with Renewable Generation 103

be place in a sanitary landfll. It provides a heuristic example of how these plants

are confgured and how the business model supporting them can be successful.
Approximately 80% to 90% of all municipal solid waste from the county is directed
through the Pinellas County Solid Waste Integrated Solid Waste Management
Facility [23]. This solid waste stream provides a constant fow of fuel for the plant
and allows it to operate without using taxpayer funds [23]. The plant processes gar-
bage for the combustion process and uses the heat to boil water to make steam,
which then turns a turbine to make electricity (see Figure 6.7) [23]. The key beneft
to burning trash is that its volume is reduced by nearly 90% and its weight by 70%
[23]. The plant is designed with three boilers that operate 24 hours per day producing
high-pressure steam (610 psig and 750°F) to rotate two turbines that are connected
to two generators with rated capacities of 25 MW and 50 MW [23]. Combined, the
two generators can produce steam at the rate of 700,000 lb./hour. The plant burns
roughly 3,000 tons of garbage every day, or almost one million tons annually [24].
Natural gas burners (two per boiler) supplement the combustion process to reduce
carbon monoxide emissions from the waste fuel source [23]. Emissions from the
incinerator are treated and fltered before they reach the stack and are emitted into
the atmosphere [23]. About 60 MW of electricity is sold to Duke Energy, enough to
power about 40,000 homes and businesses [24].

COMPARITIVE COST OF GENERATION SYSTEMS

Renewable generation for microgrids provides opportunities to lower the cost for
electricity when compared to fossil fuels. However, they can operate more effciently
and reduce costs to a greater extent when the microgrid smooths the variation in gen-
eration [26]. For example, the initial capital costs for the construction of geothermal
power plants are higher than for new coal-fred or natural gas turbine plants [21].

FIGURE 6.7 Schematic diagram of the Pinellas County Solid Waste Treatment Facility [25].
104 Fundamentals of Microgrids

However, geothermal plants have reasonable operation and maintenance costs and
no fuel costs, substantially lowering their lifecycle costs [21]. Geothermal plants can
be used to supplement other renewable resources, such as solar or wind power that
provide intermittent generation, by supplementing their operations with baseload
capacity.
When comparing plant costs, overnight capital cost is often used as a basis for
comparisons in the power industry. This refers to the cost of building a power plant
as if it were to somehow happen overnight. The term is useful when comparing the
economic feasibility of building various types of generating plants and is expressed
in $/KW per unit of capacity. As Figure 6.8 indicates, distributed generation tech-
nologies are competitive both for base and peak loading generation. Renewable tech-
nologies including solar, wind, hydropower, and geothermal compare favorably to
coal with sequestration and nuclear power.

FIGURE 6.8 Estimated capital cost of generating technologies. (Source: Energy Information
Administration [27].)
Linking Microgrids with Renewable Generation 105

SUMMARY
Providers of renewable energy sources such as solar PV and wind power have
scaled their technologies, improved their capacities for generation, and driven down
installation costs [14]. Meanwhile, prices for electricity from renewable energy sys-
tems have fallen rapidly, making them more affordable and realistic as options for
distributed generation [14]. This broadens their commercial appeal especially for
microgrids. The use of renewable energy is both a solution for microgrid generation
applications and a driver for microgrid development. Microgrids can be powered
using hydropower, solar thermal or PV, landfll gas, biomass, wind power, and waste-
to-energy systems.
There is enormous potential when microgrids are designed to incorporate renew-
able energy generation. As added generation capacities have leveled off in developed
countries, they are increasing in the world’s developing countries where renewables
have become the primary source of new electrical generation. In 2017, the majority
of all power generation capacity (totaling 186 GW) was from renewables (totaling 94
GW) [28]. According to the International Energy Agency’s market forecast report,
the world’s total renewable energy capacity is expected to increase by 50% between
2019 and 2024 adding 1,200 GW—equivalent to the current total power capacity
of the U.S.—with solar PV accounting for 60% of the increase [29]. The share of
renewables in global power generation is predicted to rise from 26% today to 30% in
2024 [29]. Increased investments in developing countries is making renewables more
competitive with fossil generation by lowering the costs of renewables, especially
wind power and solar generation [28].
Due to technological improvements and falling costs, wind and solar generation
are becoming comparable in cost with conventional generation sources in a number
of markets [30]. They are seen as the primary solution in parts of the world that lack
transmission infrastructure. As a result, renewable generation is becoming preferred
for microgrid applications in previously underserved off-grid locations. However,
despite the growth of market-driven capacity additions, some of the recent renewable
electricity growth has been due to the availability of fnancial incentives such as tax
credits and feed-in tariffs [30].
The IEA estimates that 33 million people have electricity access with off-grid
renewables and mini-grid solutions [30]. The pace of solar electrifcation has been
accelerating with an estimated fve million people having gained access each year
since 2012, compared with about one million on average between 2000 and 2012
[30]. Regardless, North America remains the leader in microgrid development. The
future potential for technology transfer and new markets for renewable energy-based
microgrids is increasing.
The U.S. has a diverse, abundant, and geographically distributed set of renew-
able energy resources. The electrical power sector is being transformed with the
incremental additions of generation from renewables, especially geothermal
energy, wind power, and solar energy. As renewable generation technologies are
more widely understood and obtain regional cost-parity with fossil fuel generation,
this transformation to clean energy will accelerate the opening of new markets for
microgrids.
106 Fundamentals of Microgrids

Renewable energy microgrids are versatile and are being encouraged by some
regional electric utilities as they can be deployed rapidly for special situations.
Southern California Edison constructed a solar microgrid in 27 days in cold and
windy weather to solve an urgent need to avert and inspect wildfres near a remote
dam in California’s Sierra Nevada mountains [31]. The microgrid, completed in
2019, powered valves, emergency backup, cameras, and other equipment needed
to ensure that the Gen Dam (part of the Rush Creek Hydroelectric Facility near
Yosemite National Park) was operating properly; it included two 3.3 kW solar arrays,
a 600-amp, 48-volt storage system, and a propane backup generator [31].
The Renewable Electricity Futures Study, by the National Renewable Energy
Laboratory (NREL), indicated that if renewable generation were combined with
a more flexible electrical grid, they could provide 80% of the needed U.S. elec-
tricity supply by 2050 [32]. The study further noted that “greater flexibility will
enable operators to more readily maintain the required balance between elec-
tricity supply and demand, even at high levels of variable renewable generation
on the grid” [32]. For microgrids, flexibility can be provided by an energy gen-
eration portfolio that includes hybrid renewable energy systems and improved
microgrid controls. As the costs for the renewable energy systems used to gen-
erate electricity decline, the costs of coal-fired and nuclear plants continue to
increase giving developers more reason to consider microgrids. Simulations and
analysis of an integrated network of generation, transmission, and storage have
shown that they are capable of reliably meeting the need for electricity across
the entire U.S. [32]. Renewables when ideally configured have the surprising
potential capability to meet electricity demand for every region of the U.S.
every hour of every day [32].

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January 2019.
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 7 Energy Storage
Technologies for
Microgrids

ENERGY STORAGE SOLVES PROBLEMS

Energy storage systems enhance the capacities of microgrid systems. They are fast
becoming an integral component of renewable generation systems to resolve issues
with intermittency. Some defnitions of microgrid specifcally note electrical storage
as an integral component of microgrids. For example, the CIGRE C6.22 working
group defnes microgrids as “electricity distribution systems containing loads and
distributed energy resources (such as distributed generators, storage devices, or con-
trollable loads) that can be operated in a controlled, coordinated way either while
connected to the main power network or while islanded” [1].
The often-cited problem with the generation of electricity is that it must be used
the instant it is generated. If the energy cannot be used at the instant of production, it
cannot perform work and has no economic value. Another problem is that electricity
cannot be directly stored. When not consumed instantaneously, to be useful it must
be converted to another form of energy which can be stored for later use. Energy
losses and ineffciencies result from the processes that convert the electricity into
energy that is storable and reconvert the energy back into useful electricity. The per-
centage of energy that is useful at the end of the process is sometimes referred to as
the storage system’s turn-around effciency or round-trip effciency.
When generation systems lack energy storage and supply excess electricity
directly to the grid, these losses are avoided but distribution system losses may be
increased. Electrical energy storage systems (ESS) can serve either on-site, behind-
the-meter, or utility grid applications. Most non-utility microgrid storage solutions
are behind-the-meter applications. Energy storage to support microgrid functions
may be required for both short-term and long-term requirements.
Electricity storage can be deployed at or near any of the major subsystems in an
electric power system: generation, transmission, substations, distribution, and at con-
sumer sites [2]. Systems that store electrical energy serve both as storage (during the
charging process) and generation (when stored energy is regenerated and released in
the form of electricity). For this reason, electrical energy storage systems are often
functionally classifed as being electrical generation systems. Traditional uses for
electrical energy storage include: 1) improving the reliability of the power supply
since storage systems support users when power network failures occur due to natu-
ral disasters; 2) maintaining and improving power quality, frequency, and voltage;
and 3) reducing electricity costs by storing electricity obtained during off-peak times

109
110 Fundamentals of Microgrids

when its price is lower and discharging electricity during peak periods when its price
is higher instead of purchasing higher cost electricity [3].
To be successfully deployed, microgrids must be capable of providing a fully
integrated electrical production system which is often enhanced by a utility inter-
connection. Energy storage systems provide a number of benefts when incorporated
into electrical grids; they: 1) enable time-shift of energy delivery; 2) supply capacity
credit; 3) provide grid operational support; 4) provide transmission and distribution
support; 5) help maintain power quality and reliability; and 6) allow improved inte-
gration of intermittent generation [2].
For microgrids, the benefts of energy storage systems include grid benefts plus
enable digital controls and smaller-scale energy storage systems to provide more
consistent voltage and frequency with more reliable kVAR control [4]. Energy stor-
age is considered to be among the most promising technologies for mitigating volt-
age and/or frequency deviations [5]. When a voltage dip occurs, the charged energy
storage system can rapidly feed energy back into the microgrid to provide stabil-
ity [4]. Energy storage also supports electrical generators by accepting block loads
without fuctuations in frequency [4]. This capability makes it possible to deploy
renewable resources in far greater proportions than a utility grid could support—up
to and exceeding total system demand [4]. Some energy storage systems can supply
power more rapidly and at lower cost than would be required to bring additional non-
intermittent generation online.
Like central utility grids, microgrids must resolve issues associated with intermit-
tent electrical loads. While central grids are likely to balance supply and demand for
power with excess capacity, microgrids are more likely to incorporate energy stor-
age and load response systems. For microgrids, the presence of intermittent loads
and variable sources with power-electronic converter interfaces may lead to power
quality issues. These issues are most often voltage variations, frequency variations,
and waveform distortions which are commonly referred to as harmonic distortions
[5]. Passive fltering can be used to reduce harmonic distortions, which may require
capacitors and inductors. Active fltering is emerging as an alternative that could be
realized within the interfacing converter of an energy storage system [5].

ELECTRICAL ENERGY STORAGE

One common problem with electrical generation has to do with having adequate sup-
plies available to meet periods when electrical demand loads are highest. To satisfy
the peak load requirements, additional generation must be available or loads must
be reduced. Maintaining the additional generation capacity online to meet peak-
ing needs requires additional energy consumption. When the electricity is generated
using fossil fuels, atmospheric carbon emissions result. When demand moderates,
generators must still remain online, thus producing more power than is needed.
Consider all the greenhouse gas emissions that could be reduced if additional gener-
ating capacity (new power plants) were not required for peak periods. There are ways
to store large amounts of electrical power and to release it during peak load condi-
tions. Energy storage systems provide load-leveling capabilities, increase microgrid
capacities, and help ensure uninterrupted service.
Energy Storage Technologies for Microgrids 111

There are many uses for storage systems. They can provide energy balancing by
shifting and leveling loads, help meet peak demand situations by releasing spinning
reserve power, and increase capacities. For example, standalone microgrids that have
solar photovoltaic (PV) systems often generate excess electricity during daylight
hours. Since the demand for the power is less than the output of the system, battery
banks can be used to store the power until needed, improving system capacity. The
batteries can serve multiple purposes such as stabilizing current and voltage, and
providing surge currents to variable loads when needed. Examples of variable loads
include electric motors, pumps, and fans.
The applications of storage technologies for microgrids are similar to those of
the larger utility companies. Long-duration and short-duration applications require
capacities for prolonged discharges and include time-shift of energy delivery, opera-
tional support, power quality, reliability, and integration with intermittent sources of
energy [2]. Examples of long-duration applications include mitigating transmission
curtailments, time-shifting renewable generation, and load shifting. Short duration
applications include regulation control, fuctuation suppression, frequency excursion
suppression, and grid voltage stability [2]. Other storage applications that can be mit-
igated are infrequent or frequent discharges. Energy storage can be accomplished by
installing storage systems at the utility substations, community facilities, residences,
and commercial end-user facilities (see Figure 7.1).
There are a number of different types of battery storage systems that are used
for microgrids. These include mechanical energy storage, electrical/electrochemi-
cal energy storage, chemical energy storage, biological energy storage, and thermal
energy storage.

MECHANICAL ENERGY STORAGE

Common mechanical energy storage systems include pumped storage hydroelectric-
ity, compressed air energy storage (CAES), and fywheel energy storage.

PUMPED STORAGE HYDROELECTRICITY

Hydroelectric systems typically have a dam that stores water in a single reservoir.
When electricity is needed, gates open that allow the water to fow to the turbines.
Water exits via the tailraces and enters the river below the dam. To reuse the same
water to generate additional hydroelectric power, the primary strategy is to construct
additional dams downstream to form more reservoirs at lower elevations.
Pumped hydro storage is an alternative that recycles the water repeatedly at the
same site. A pumped storage hydroelectric plant uses two or more reservoirs, with
at least one located at a much higher elevation than the other. The reservoir at lower
elevation is called the lower reservoir and the one at higher elevation is called the
upper reservoir. The storage concept involves reusing the water from the lower res-
ervoir (after it has passed through the turbines) by pumping it to the upper reservoir
to generate additional electricity. This type of energy storage system uses excess
electricity, usually generated by the hydropower site, to pump water to higher alti-
tude where it is stored as gravitational potential energy [2]. During periods of low
 112

FIGURE 7.1 Microgrid confguration with both substation and community energy storage.
Fundamentals of Microgrids
Energy Storage Technologies for Microgrids 113

demand for electricity, such as nights and weekends, water is stored by reversing
the turbines (or providing an alternative water pumping system) and pumping the
water from the lower to the upper reservoir. The stored water is later released, passes
through the penstock, turns the turbines, and generates electricity as gravity causes
it to fow back into the lower reservoir. The round-trip effciency of pumped hydro
systems is between 75% and 78% [2]. The energy losses are mostly due to the ineff-
ciency of pumping water from a lower to a higher elevation against the force of grav-
ity. However, pumped storage plants have higher operating costs than conventional
hydropower plants due to the added equipment and costs associated with pumping
water uphill to refll the upper reservoirs [6].
Pumped storage hydropower systems are generally either open-loop or closed-
loop systems. An open-loop system has a continuous source of downstream water
that is pumped uphill to an upper storage reservoir, typically pumping water that
has already passed through the dam up to the storage reservoir above the dam [6].
Closed-loop systems pump water from a lower storage reservoir that is not continu-
ously flled with water and is not connected to a fowing source of water [6].
To make the investment of constructing two reservoirs for pumped hydro stor-
age systems economically feasible, key variables include plant costs, power avail-
ability, and the value of electricity at different time periods. These systems have
the greatest economic effciency when there is a wide differential in the value of
electricity at low demand compared to high demand coupled with an abundance
of power available at low demand. While the cost difference to make pumped
hydroelectric storage economically attractive varies, price multiples for electricity
for peak demand periods compared to off-peak of fve to ten times are considered
reasonable.
Interestingly, of the range of electric storage system technologies available, the
majority of utility-supported storage systems use pumped hydroelectric storage
with a total of 176 GW installed in 2017. In the U.S., most pumped storage systems
were constructed between 1960 to 1990 (see Figure 7.2) [6]. California has the most
pumped storage capacity, with 3.9 GW, or 17% of the national total; other states
including Virginia, South Carolina, and Michigan have at least 2 GW of hydroelec-
tric pumped storage capacity [6]. In terms of total installed capacity, pumped hydro
is the predominate technology used to provide energy storage for microgrids.
The Gorona del Viento (GdV) El Hierro project, in the Canary Islands, is one
of the world’s largest standalone hybrid, fully integrated, renewable energy power
generation systems. The project’s goals were to: 1) reduce dependency on diesel-fred
generation by supplying all of the power required for the island’s 11,000 residents
(about 38.7 MWh annually); and 2) scale the microgrid to provide greater operational
stability and security. It incorporates wind power (11.5 MW) and solar PV genera-
tion with pumped hydro storage (200,000 m3 of storage or 11.3 MW) which stores
surplus wind energy by pumping water up 700 meters (2,300 feet) to a lake located
in the crater of an extinct volcano. This island microgrid project started production
in June 2015 and has since supplied the island with almost half of its total electricity
requirements [7]. Table 7.1 provides a summary of the project’s electrical genera-
tion performance from January 2016 through December 2017, the frst two years of
operation. The renewable output increased in 2017 from 2016 as operators fne-tuned
114 Fundamentals of Microgrids

FIGURE 7.2 U.S. pumped storage installations. (Source: U.S. Energy Information
Administration [6].)

the controls and multiple generation systems involved. The share of electricity gen-
eration from renewables is greater during the summer months as output from the
solar plant increases. In the third quarter of 2018, the GdV project successfully sup-
plied 100% of El Hierro’s electricity for a total of 46 days, with 18 days of continuous
100% generation during a sustained period of high winds [7].

COMPRESSED AIR ENERGY STORAGE

Compressed air storage (CAES) has proved to be an affordable technology used to
provide power and pressure for mechanical systems. Storage tanks with suffcient
volume are an important component of compressed air systems. A storage tank is
used as an air reservoir that allows system pressure to remain relatively steady even
during air-demand surges and swings [8]. Without proper storage, the compressed
air system may experience sudden pressure losses during any sharp air-demand
increases throughout the day [8]. Installing storage tanks is a more energy-effcient
strategy to satisfy momentary demand surges; plus they prevent compressors con-
trolled by an on/off or load/unload methods from rapidly cycling [8]. Longer cycles
allow a load/unload compressor’s sump more time to release pressure and operate
at a lower sump pressure while unloaded, thus saving energy [8]. Increased stor-
age allows compressors in inlet-modulation or variable-speed modes to maintain a
steadier output profle [8]. Large-scale CAES applications must be designed to con-
serve the heat energy associated with compressing air since dissipating heat lowers
the energy effciency of the storage system [9].
CAES plants can be used for microgrid storage applications. However, variable
loads can cause voltage and frequency instabilities [10]. To maintain system stabil-
ity, microgrids must generate power based on present conditions [10]. Compressed
air plants are similar to pumped hydro powerplants in terms of their applications,
output, and storage capacities [11]. Instead of pumping water between reservoirs
during periods of excess power, a CAES plant compresses ambient air and stores
Energy Storage Technologies for Microgrids 115

TABLE 7.1
Electrical Generation of the Gorona del Viento El Hierro Microgrid Project
for 2016–17
Renewable Renewable Fossil fuel Fossil fuel
generation generation generation generation Total
(wind & (wind & solar) (diesel) (diesel) %of generation
Year/Month solar) MWh %of total MWh total MWh
2016
January 849 22.2 2,971 77.8 3,820
February 1,860 53.5 1,615 46.5 3,475
March 1,572 40.2 2,343 59.8 3,915
April 1,325 36.3 2,330 63.7 3,655
May 962 25.4 2,327 74.6 3,789
June 2,099 53.9 1,793 46.1 3,892
July 2,635 66.0 1,336 34.0 4,071
August 2,340 53.4 2,038 46.6 4,378
September 2,266 56.6 1,739 43.4 4,005
October 767 19.8 3,111 80.2 3,878
November 1,060 29.3 2,559 70.7 3,619
December 1,076 27.1 2,394 72.9 3,970
Total 18,861 40.6 27,606 59.4 46,467

2017
January 1,146 29.9 2,691 70.1 3,837
February 1,518 44.5 1,891 55.5 3,409
March 2,231 57.5 1,648 42.5 3,879
April 1,041 27.5 2,745 72.5 3,786
May 1,555 40.8 2,254 59.2 3,809
Jure 2,315 61.2 1,467 38.8 3,782
July 3,234 78.3 896 21.7 4,130
August 2,562 57.8 1,372 42.2 4,434
September 2,436 62.4 1,465 37.6 3,901
October 1,039 26.1 2,947 73.9 3,986
November 853 24.7 2,594 75.3 3,447
December 1,362 37.6 2,262 62.4 3,624
Total 21,32 46.3 24,732 53.7 46,024

Source: data from [7].

it under pressure in tanks, underground caverns, or depleted natural gas reservoirs

[11]. This enables a CAES to be used to balance fuctuations in power generation and
consumption since the excess power compresses and stores air [10]. When electric-
ity is required, the pressurized air is heated and expanded in an expansion turbine
driving a generator for power production [11]. The CAES uses an air fow control-
ler to enable the microgrid to track the various load demands and maintain a stable
frequency [10].
116 Fundamentals of Microgrids

Germany’s Huntorf compressed air energy storage plant is the world’s frst and
still largest utility-scale CAES plant. The 321 MW plant has operated since 1978,
functioning primarily for cyclic duty and ramping duty, and as a hot spinning reserve
for the industrial customers in northwest Germany. The plant levels the variable
power from numerous wind turbine generators in Germany. This plant and one in
McIntosh, Alabama both use a diabatic CAES method, where the compression of the
combustion air is separated and independent from the actual gas turbine process [11].

FLYWHEEL ENERGY STORAGE

Flywheel energy storage systems (FESS) store and release energy due to torque.
FESS use a fywheel which typically spins at a very high rate in a vacuum and stores
energy as rotational energy [12]. This spinning mass, called a rotor, rests on bearings
that facilitate its rotation [2].
The components of these systems include a rotor and bearings that are housed
in a sealed containment that reduces friction between the rotor and the surrounding
environment and provides a safe guard against hazardous failure [2]. A typical FESS
fywheel has a shaft with a rotor attached and a motor generator that both drives
the shaft and extracts energy [13]. Modern fywheels use rotors made of composite
materials and are capable of spinning at speeds of 100,000 rpm or higher [13]. Some
have massive metal rotors but the rotational speed of these is limited by their ability
to resist higher centrifugal forces [13]. Flywheels use either mechanical bearings
or magnetic bearings (or super-conducting magnets) to reduce friction and improve
durability [12]. Increased storage effciency is achieved by reducing friction when
a fywheel is used to store energy for longer periods of time since mechanical fy-
wheels dissipate most of their energy during the frst hour after charging [12]. To
minimize energy losses, most newer fywheels use magnetic bearings and operate
in a vacuum chamber [13]. For charging, electricity powers a motor-generator that
spins a shaft connected to the rotor to store energy [2]. When discharging, the stored
kinetic energy is converted into electricity by allowing the momentum to power the
motor-generator [2].
Flywheel energy storage systems can be used in microgrid applications to provide
a boost in power output during periods when peaking power is needed and more
costly that baseload power.

ELECTRICAL/ELECTROCHEMICAL ENERGY STORAGE

Types of electrical/electrochemical energy storage systems include capacitors, bat-
teries, fuel cells, and grid storage. Battery systems are sometimes used by utilities as
an operating reserve. When a sudden drop of electric supply happens, battery stor-
age systems provide reserve power until large-capacity generation becomes avail-
able [14]. Batteries can be either vented cell (wet cell) or sealed cell (gel cell) [15].
In sealed cell batteries there is a minimum amount of electrolyte absorbed in a gel;
they require less maintenance than traditional wet cell batteries as there is no need to
add water [15]. Batteries used for stationary power systems (SPS) must perform well
Energy Storage Technologies for Microgrids 117

at low and high temperatures, and have a high energy density and long cycle life for
deep discharge applications [15].
Battery storage systems can be used in microgrids for ancillary services, load
shifting, renewable energy integration, and behind-the-meter applications. The
types of services that battery systems offer include providing frequency response,
reserve capacity, black-start capability, power storage for electric vehicles, mini-grid
upgrades and support for self-consumption of rooftop solar power [16].

LEAD-ACID BATTERIES
The lead-acid batteries used for microgrids are similar to common automobile bat-
teries used in vehicles with internal combustion engines. They are among the most
ubiquitous batteries used today and almost all components can be recycled. Lead-
acid batteries are commonly used to provide electrical storage for reserve power in
remote applications such as telecommunications sites. However, for utility applica-
tions they require a warehouse-full of interconnected batteries to store electricity.
During charging cycles, lead-acid batteries generate heat which must be dissi-
pated. To provide the best reliability, reserve batteries need to be selected for high
temperature applications [17]. When rated for such conditions, the batteries have a
theoretical maximum ten-year life when operated at 25°C (77°F) [17]. In practice,
the lifecycle of lead-acid batteries is much less (about fve years) due to widely vari-
able ambient conditions. Typically, a lead-acid battery loses 50% of its service life
for each 10°C increase in ambient temperature above its normal temperature rating
[17]. While relatively inexpensive, lead-acid batteries have a low energy density, are
heavy, often do not respond well to deep discharging, and since the lead (Pb) is toxic
their use may be restricted in some applications or locations [16]. The Pb in these
batteries contaminates the environment if disposal is not properly handled. For these
reasons, lead-acid batteries are being replaced with lithium-ion batteries for many
applications.

LITHIUM-ION BATTERIES
Lithium-ion (LI) batteries exchange lithium ions (Li+) between the anode and
cathode, both of which are made using lithium intercalation compounds [16]. For
example, lithium cobalt oxide (LiCoO2), originally introduced in the 1980s, was the
active positive material in the original LI battery designs [16]. Advantages of LI
batteries include higher specifc energy, lighter weights, higher energy, and more
power density compared to other battery technologies, ability to provide high-power
discharge capability, excellent round-trip effciency, a relatively long lifetime, and
a low self-discharge rate [16]. The lifecycle of LI batteries varies widely depend-
ing on cell design and operating conditions, ranging from 500 to 20,000 full cycles
depending on the physical design and type of technology used [16]. Lithium-ion
batteries offer good charging performance at cooler temperatures and provide fast-
charging within a temperature range of 5°C to 45 °C (41°F to 113°F) [18]. Prismatic
LI batteries are among the largest types. They are used for electric vehicles and in
applications previously supported by lead-acid batteries including backup power and
118 Fundamentals of Microgrids

off-grid telecom systems [19]. For renewable energy storage, large-format prismatic
lithium iron phosphate (LiFePO4) batteries are often used [19].
The costs for LI battery systems have been declining. In 2015, LI batteries ranged
from $1,000 to $2,000 (U.S.) per kW. By late 2019 prices for vehicular LI systems
had dropped below $200/kW. While considered to be an expensive storage option, it
is anticipated that LI batteries for utility applications will decline from about $1,200
per kWh today to about $400 per kWh by 2035 [20]. This trend in declining costs
has been noticed by electric utilities. In Arizona, the 20 MW Pinal Central Solar
Energy Center coupled a utility-scale 20 MW solar plant (258,000 panels with track-
ing capability) with 10 MW of LI battery storage systems, a project that powers the
equivalent of 5,000 homes. The Hornsdale Power Reverse, installed in 2017 in South
Australia, is the world’s largest LI battery storage facility with a 100MW/129MWh
capacity.

SODIUM SULFUR BATTERIES

Sodium and Sulfur (NaS) battery banks can store large amounts of electricity. High-
temperature batteries such as NaS batteries use liquid active materials and a solid
ceramic electrolyte made of beta-aluminum that also serves as the separator between
the battery electrodes [3]. Typically, the anode material in these systems is molten
sodium and the anodes rely on sodium-ion transport across the membrane to store
and release energy. The cathode for the most common NaS battery confguration is
molten sulfur [3].
The development of NaS battery banks eliminates the inconveniences and obsta-
cles associated with lead-acid batteries. By bridging electrodes with a porcelain-like
material, a room-sized bank of durable NaS batteries will last approximately 15
years. Use of NaS battery banks also reduces the threat of environmental impacts.
For future microgrid applications, NaS batteries hold potential to transform how
electricity is stored and delivered to meet peak power demands [21].
According to Stow Walker of Cambridge Energy Research Associates, by “using
NaS batteries, utilities could defer for years, and perhaps avoid, construction of new
transmission lines, substations and power plants” [21]. This is possible since the NaS
batteries can be charged during periods of low electrical demand, such as nights or
weekends when electrical costs are lowest, and then discharge power during peak
demand conditions. The battery banks can be more conveniently located near exist-
ing substations. Electric utilities beneft since the battery banks can provide backup
power during power outages and be used in combination with solar and wind power
production [21]. For microgrids, their modularity enables them to be scaled down
and sized to meet variable load conditions. In these applications, electricity stored
during peak production periods can be released on demand when additional capacity
is needed.
Costs for NaS batteries have dropped considerably. In 2007, the cost was approxi-
mately $2,500 (U.S.) per kilowatt or about 10% more than the cost of building a new
coal-fred power plant to produce electricity [21]. Today, the costs for the total system
installation for an NaS battery energy storage system ranges between $263/kWh and
$735/kWh [16]. This rapid cost decline has opened new markets for NaS systems
Energy Storage Technologies for Microgrids 119

such as those for microgrid applications. A disadvantage of NaS storage systems

is their relatively high annual operating cost which can be $40 to $80/kW [16].
However, their advantages far outweigh the added costs. NaS batteries are much
smaller in size than most other batteries, have high round-trip effciencies, and all
components can be recycled. They do not require additional fuel and do not emit
greenhouse gasses [21].
NaS battery systems are a proven technology that is being used by electric utili-
ties in the U.S. and Japan. Completed in 2008, the Rokkasho-Futamata Wind Farm
was the largest and among the frst combined wind generation (51 MW) plus bat-
tery energy storage (34 MW) facility to be completed in Japan. It houses one of the
world’s largest sodium sulfur battery assemblies and uses the NaS batteries for load
leveling, enabling the storage of low-cost, off-peak wind power for sale or distribu-
tion during peak demand times. The energy storage cycle effciency of the system is
89% to 92% which is higher than pumped hydro.

VANADIUM REDOX BATTERIES

Vanadium redox batteries (VRBs) are fow batteries that were pioneered in the
Australian University of New South Wales (UNSW) in early 1980s. The Australian
Pinnacle VRB bought the basic patents in 1998 and licensed them to Sumitomo
Electric Industries (SEI) and VRB Power Systems. VRBs have long lifecycles, high
energy effciencies (up to 85%), long durations (1–20 hours) with continuous dis-
charge and high discharge rates, quick response times, and heat extraction capabili-
ties [16]. Low electrolyte stability and high costs are among the disadvantages [16].
VRB systems with storage capacities up to 500 kW (5MWh) have been installed in
Japan. VRBs have also been used in power quality applications. Japan’s Tomamae Wind
Villa Power Plant (34.6 MW), completed in 2005 at a cost of $72 million, continues to
be one of the world’s largest vanadium redox fow battery energy storage installations.
At the time of commissioning it was Japan’s largest wind power plant. The vanadium
fow battery system was installed at the existing Tomamae Wind Villa with the intent to
provide wind power smoothing for the intermittent and variable wind plant.

ZINC-AIR BATTERIES
Metal-air energy storage systems offer a long life in a safe and non-toxic package.
A rechargeable capability has been developed for the zinc-air energy storage tech-
nology common in applications such as backup power for cellular communication
towers [4]. The batteries can be 95% discharged and can be recharged with no cycle
limit. Rechargeable zinc-air battery systems are among the most economical elec-
tricity storage technologies and include integrated controls with monitoring at the
cell level [4]. Zinc-air batteries do not overheat or discharge dangerous concentra-
tions of hazardous gases and they operate in a range from 0°C (32°F) to 50°C (122°F)
without derating [4]. Life expectancy is at least twice that of lead-acid batteries. The
next generation of zinc-air storage will be offered in capacities at the megawatt scale,
well suited for hybrid microgrids, and will provide an attractive total cost of owner-
ship [4].
120 Fundamentals of Microgrids

HYDROGEN ENERGY STORAGE

Common forms of chemical energy storage systems include hydrogen (H2), biofuels,
and fossil fuels. Hydrogen energy storage, used in vehicular transportation systems,
is rarely found in microgrid systems. Today, fossil fuels (typically natural gas, oil,
and coal) are primarily used in both utility-scale electrical systems and microgrid
applications to generate the needed H2. This may change in the future as renewable
hydrogen technologies become more commonplace.
Hydrogen gas offers promise as a form of energy storage if derived in a sustain-
able manner, meaning from some way other that using a fossil fuel. One methodol-
ogy for making renewable hydrogen is to produce the H2 from a biofuel. Another
is using solar–hydrogen production technologies. The process uses solar-generated
electricity to split water into its components (H2 and O2) via electrolysis, then stores
the extracted hydrogen for later use. The hydrogen can then be transferred from stor-
age and used to produce electricity using fuel cells or by an engine that converts the
energy into electricity. Though the use of this technology is not widespread, there
are microgrids that use H2 electrolysis processes in about 30 countries. Hydrogen
can also be used in vehicles as the combustion process is similar to using gasoline.
A beneft of using renewable hydrogen as a fuel is that it produces only negligible
pollution.
One strategy for microgrid generation is to produce hydrogen during off-peak
periods or times when there is excess renewable electricity. An example is using wind
power at night when wind speeds tend to be greater and electrical power require-
ments are often less. The hydrogen can be converted back to electricity to provide
constant power when the renewable source is unavailable, helping with microgrid
stabilization [24]. Hydrogen can be recombined with other chemical and compounds
for other uses. For example, captured CO2 can be combined to produce a synthetic
natural gas that can be used in power plants or transportation applications [24].

THERMAL ENERGY STORAGE

Examples of thermal energy storage include molten salt energy storage, water, ice
storage, or seasonal thermal storage. To increase functional capacities, concentrat-
ing solar power (CSP) technologies often use thermal energy storage. Common heat
transfer fuids include synthetic oils, molten salt, and pressurized water. The fuids
are used to transfer heat to water which changes state to steam to drive a steam
turbine. These often use parabolic trough collector systems, one of the most tested
and proven types of CSP technologies. Molten salt energy storage is most commonly
used for solar thermal microgrid applications.
Built in three 50 MW phases, the Andasol Solar Power Station (150 MW) in
Aldeire y La Calahorra, Spain, was the world’s largest and frst commercial-scale
solar parabolic trough CSP power plant to combine parabolic trough solar CSP with
molten salt energy storage (MSES) technology [25]. The plant is confgured with
solar arrays, thermal storage systems, heat exchangers, steam turbines, generators,
and condensers plus dry cooling systems to reduce water consumption [25]. The
net electrical capacity at the site is 150 GWh per year [25]. Able to store 7.5 hours
Energy Storage Technologies for Microgrids 121

of solar thermal energy, it achieves a plant capacity of 39% with a 95% system eff-
ciency [25]. It was completed in 2011 at a cost of $1.24 billion.
Water also can be used directly as a heat storage mechanism without necessarily
having to change state. The University of the Sunshine Coast (USC), Queensland,
Australia, used a water battery system with over 6,000 solar panels and a thermal
energy storage tank to reduce grid energy use at the Sunshine Coast campus by 40%
[26]. The massive rooftop solar system constructed at USC is connected to a thermal
energy storage battery with a thermal chiller and includes a real-time monitoring
system [26]. When the sun shines, solar energy powers the thermal chiller to chill
water which is stored in a 4.5-million-liter tank and used to air condition the entire
campus [26]. The system delivers 2.1 MW of electricity and is expected to save more
than $100 million in grid-supplied electricity costs over a 25-year period [27].

SUMMARY
Central problems with the use of electricity are that electricity must be used the
moment it is produced and that it cannot be directly stored. When comparing gen-
eration system capacities, it is important to assess the ability of each type of storage
system to store energy and to recapture stored energy [28]. This comparison should
consider the instantaneous power, total energy production, and the degree to which
energy can be stored and then dispatched from the storage system when needed
[28]. As Whiting notes, stored energy “that can be generated when it is not needed,
and then used when it is needed, makes it possible to convert energy generated by
intermittent and variable sources to energy that can be dispatched as baseload” [28].
These are central issues that must be addressed when designing electrical energy
storage systems for microgrids. Categories of storage technologies include electri-
cal energy storage, mechanical energy storage, electrical/electrochemical energy
storage, chemical and biological energy storage, and thermal energy storage. There
are battery storage systems that use lead-acid, lithium-ion, sodium-sulfur, and vana-
dium redox technologies. Any of these technologies can be used to store power for
microgrids.
Microgrids provide a ready market for energy storage. Unlike hydropower and
geothermal generation resources, renewables such as solar and wind power are clas-
sic examples of resources that provide intermittent generation. To increase capaci-
ties, meet periods of high demand, and smooth the electric power provided to the
system, energy storage is often a necessity. Reserve capacity is needed to main-
tain high-penetration microgrids [29]. There is a growing realization that electrical
energy storage systems will be a key component of future electricity transmission
networks, particularly those with heavy dependence on renewable resources [30].
Modern energy storage systems: 1) enable a match between supply and demand; 2)
replace ineffcient auxiliary power production; 3) ensure electric grid stability with
a diversifed energy supply and increased levels of renewable penetration; 4) ensure
security of supply; and 5) facilitate distributed generation [30]. There are numerous
types of electrical and thermal energy storage technologies, differentiated by power
and energy density, physical size, cost, charge and discharge time periods, and mar-
ket readiness (see Figures 7.3 and 7.4) [30].
122 Fundamentals of Microgrids

FIGURE 7.3 Comparative power, energy, and discharge durations for selected storage tech-
nologies. (Source: International Electrotechnical Commission, EES Technologies [22].)

FIGURE 7.4 Positioning of energy storage technologies. (Source: EPRI, Sandia National
Labs [23].)
Energy Storage Technologies for Microgrids 123

Conversion losses are inevitable in any energy storage system charging and
discharging cycle. Use of renewable energy in microgrids introduces the problem
of intermittent generation. Fast-ramping generation and storage assets working
in concert with the necessary control devices can rapidly compensate for inter-
mittent generation [29]. Flywheels, batteries, or other storage technologies can
serve as auxiliary generators and provide ride-through capability [29]. There
are other types of energy storage systems that can provide longer duration stor-
age for microgrids. These include mechanical energy storage systems that store
energy such as compressed air or as higher elevation water as in pumped storage
hydropower systems. In terms of total megawatts of installed storage capacity,
pumped storage hydroelectricity is the primary technology used for microgrid
applications.

REFERENCES
1. Microgrids at Berkeley Lab (2018). Microgrid defnitions. https://building-microgrid.
lbl.gov/microgrid-defnitions, accessed 24 January 2020.
2. Carnegie, R., Gotham, D., Nderitu, D. and Prekel, P. (2013, June). Utility scale energy
storage systems – benefts, applications and technologies. State Utility Forecasting
Group. https://www.purdue.edu/discoverypark/energy/assets/pdfs/SUFG/publications/
SUFG%20Energy%20Storage%20Report.pdf, accessed 19 May 2020.
3. International Electrotechnical Commission (2011). Electrical energy storage.
4. Sauty, F. and Tomlinson, C. (2016, February). Hybrid microgrids: the time is now. http://
s7d2.scene7.com/is/content/Caterpillar/C10868274, accessed 24 January 2020.
5. Marine Microgrids. Aalborg University. https://www.et.aau.dk/research-programmes/mic
rogrids/mission-and-focus-areas/maritime-microgrids, accessed 24 November 2018.
6. U.S. Energy Information Administration (2019, October 31). Most pumped storage
electricity generators in the U.S. were built in the 1970s. https://www.eia.gov/today
inenergy/detail.php?id=41833, accessed 21 November 2019.
7. Andres, R. (2018, October 2). El Hierro third quarter 2018 performance update. http://
eua nmear ns.com/el-hierro-thi rd-quarter-2018-performance-update, accessed 1
December 2019.
8. Carpenter, K. (2018). Compressed air systems, in Energy Management Handbook
(Roosa, S. ed.). Fairmont Press: Lilburn, Georgia, page 592.
9. Wikipedia. Compressed air energy storage. https://en.wikipedia.org/wiki/Compressed
_air_energy_storage, accessed 7 December 2018.
10. Latha, L., Palanivel, S. and Kanakaraj, J. (2012). Frequency control of microgrid based
on compressed air energy storage system. Distributed Generation and Alternative
Energy Journal, 27(4), pages 8–9.
11. Energy Storage Association (2018). Compressed air energy storage (CAES). http://ene
rgystorage.org/compressed-air-energy-storage-caes, accessed 1 December 2018.
12. Hanson, G. (2019, December 20). What is fywheel energy storage? https://www.wis
egeek.com/what-is-fywheel-energy-storage.htm, accessed 24 January 2020.
13. Breeze, P. (2018). Power System Energy Storage Technologies. Academic Press: New
York, NY.
14. Research Interfaces (2018, April 14). Lithium-ion batteries for large-scale grid energy
storage. https://researchinterfaces.com/lithium-ion-batteries-grid-energy-storage,
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15. Murdoch University. Stand-alone power supply systems. http://www.see.murdoch.edu.
au/resources/info/Applic/SPS, accessed 20 December 2018.
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16. International Renewable Energy Agency (2017). Electricity storage and renewables:
costs and market to 2030. http://www.irena.org/publications/2017/Oct/Electricity-stora
ge-and-renewables-costs-and-markets, accessed 6 December 2018.
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Troubleshooters. Fairmont Press: Lilburn, Georgia, page 31.
18. Lithium ion rechargeable batteries. Technical handbook. http://www.sony.com.cn/pr
oducts/ed/battery/download.pdf, accessed 6 December 2018.
19. Richmond, R. (2013, February). Lithium-ion batteries for off-grid systems – are they a
good match? Home Power, page 153.
20. MaRS Cleantech. The future of microgrids. https://www.marsdd.com/wp-content/u
ploads/2016/10/Future-of-Microgrids-Residential.pdf, accessed 17 December 2018.
21. Davidson, P. (2007, July 5). New battery packs power punch. USA Today, page 3B.
22. International Electrotechnical Commission (2011). Electrical energy storage, white
paper. Geneva, Switzerland. http://www.iec.ch/whitepaper/pdf/iecWP-energystorage-
LRen.pdf, accessed 24 January 2020.
23. U.S. DOE/EPRI, Sandia National Labs (2013, July). Electricity storage handbook in
collaboration with NRECA. https://www.sandia.gov/ess-ssl/lab_pubs/doeepri-electri
city-storage-handbook, accessed 22 November 2019.
24. Thomas, J. (2013, April). Hydrogen: a promising fuel and energy storage solution.
Continuum Magazine, 4, page 22.
25. Power Technology. The Andasol solar power station project. https://www.power-te
chnology.com/projects/andasolsolarpower, accessed 22 November 2019.
26. May, J. (2019, November 27). Using renewables. Solar energy produced “water bat-
tery” wins global award and saves 40% of university’s energy use. https://usingrenewab
les.blogspot.com/2019/11/solar-energy-produced-water-battery.html?spref=fb&fbclid
=IwAR1ahyK21gTfWkSrF6mzlU0LPYqDciAHvSF2J0ET2rZPuegRscyboKVFnQk,
accessed 27 November 2019.
27. University of the Sunshine Coast (2019, October). Sunny approach to cooling campus
wins global award. https://www.usc.edu.au/explore/usc-news-exchange/news-archiv
e/2019/october/sunny-approach-to-cooling-campus-wins-global-award, accessed 27
November 2019.
28. Whiting, G. (2019). Electric generation capacity and 10% renewable energy goals.
International Journal of Energy Management, 1(3), pages 8–25.
29. GTM Research (2016, February). Integrating high levels of renewables into microgrids:
opportunities, challenges and strategies. www.sustainablepowersystems.com /wp-conte
nt /uploads /2016 /03/G TM-Wh itepa per-I ntegr ating-High -Levels -of-Renewables-into
-Microgrids.pdf, accessed 16 January 2019.
 8 Hybrid Generation
Systems for Microgrids

ENERGY RESOURCES FOR MICROGRIDS

Most energy resources available can be used to generate electricity for microgrids.
Despite the empowering benefts of local control over generation, there are down-
sides associated with the use of standalone generation that are specifc to the tech-
nologies deployed. This is true for both fossil fuel-fred and renewable generation.
Diesel fuel has pollution and supply chain issues. Solar power cannot be directly
produced at night. Wind power has intermittency issues associated with the wind’s
variability at any given location. Such issues must be addressed and overcome when
microgrids are used for power generation. How can these problems be resolved?
Combing different types of generation is common approach.
Utility companies and independent power producers are seeking standardized
microgrid models that offer a wider range of benefts for consumers [1]. There is a
need for power reliability and scalable plug-and-play electrical generation systems.
In a push for more scalability and improved sustainability, more electric utilities
are considering hybrid generation microgrid models [1]. An important feature of
microgrids is the mix of energy resources often used for electrical generation. Many
microgrids are being confgured as hybrid generation systems, those that use mul-
tiple technologies to achieve their resiliency goals. Having multiple forms of genera-
tion offers microgrid developers fexibility in microgrid design and confguration.
This morphological convergence is a reason why hybrid electricity generation tech-
nologies are often considered in the design of modern microgrids.
Distributed energy generation technologies are often interpreted as sustainable
system innovations that support the emergence of a new technical regime by pro-
moting creativity and ultimately providing sustainable power generation [2]. Past
research has proven that energy use, local actions, and environmental policies are
closely linked to the concept of sustainable development [3]. Sustainability rankings
of key electricity generation technologies indicate that distributed energy generation
technologies, renewable-based electricity generation technologies, and combined
heat and power (CHP) plants are more congruent with the principles of sustainable
development than their conventional, large-scale counterparts [2].
From the perspective of sustainability advocates, a clean energy economy pow-
ered by both renewables and energy effciency would be considered the most sus-
tainable energy planning scenario available [4]. Traditionally, microgrids have
served a single entity, such as a university or hospital, and have been powered by one
source of fuel. They were often built using existing infrastructure and equipment [5].
Microgrids also allow for the use of clean and effcient distributed energy resources
such as storage, wind, solar, and combined heat and power, often in combination [5].

125
126 Fundamentals of Microgrids

These networks that provide multiple forms of generation and have internal distribu-
tion are hybrid microgrids. They are characterized by having more than one form
of renewable generation, various forms of energy storage, and a central center for
monitoring, communications and control. Locations with electrical loads often have
generation or energy storage systems on-site (see Figure 8.1).

HYBRID GENERATION SYSTEMS

Like larger utilities that provide electrical power, microgrids must provide for the
needs of their customers by providing electricity that meets fuctuating baseloads
and variable electrical demand. These loads can fuctuate hourly or daily and are
subject to seasonal variability. This challenge can be met by using a strategic mix
of generation resources. Having multiple generation technologies available allows
microgrids to function under various conditions of electrical loads and provide a
more resilient operation.

WHAT ARE HYBRID POWER SYSTEMS?

Hybrid electrical systems attempt to achieve greater independence from the central
grid by using multiple generation systems. Hybrid energy systems (HES) combine
two or more energy conversion mechanisms, or two or more fuels for the same mech-
anism to generate electricity or power [6]. When integrated, they have the potential
to overcome limitations inherent in either, such as balancing power or increasing
system effciency [6]. A hybrid renewable energy system (HRES) uses two or more
types of renewable energy to generate electricity or power. For hybrid systems,
energy storage systems are both an electricity power source and a load.
Hybrid renewable energy systems are usually (but not always) labeled by nam-
ing the dominate generation system frst. For example, a solar thermal hybrid gen-
eration system would refer to a HES that predominately generated electricity using
solar thermal energy coupled with a less dominate form of generation, such as diesel
gensets. In this type of confguration, there is no question that this represents a HES
as there is clearly more than a single type of generation technology being deployed.
A question that seems to be unresolved is whether or not a system that uses one
type of generation (e.g., solar) combined with one form of battery storage (e.g.,
sodium-sulfur or lithium-ion) can be defned as a hybrid system. The argument in
favor of categorizing such a system as a hybrid alludes to that fact that when batteries
are used, they can be considered to be a form of generation when discharging energy.
The argument against calling such confgurations hybrid systems is that there are not
two technologies used for direct electrical power generation and that batteries are
used as a storage medium only. As the use of battery storage systems expands, the
frst argument is becoming more widely adopted.
Typically, a hybrid system might contain alternating current (AC) diesel genera-
tors, direct current (DC) diesel generators, a compatible distribution system, loads,
renewable power sources (wind turbines, biomass and hydroelectric generators,
geothermal generation, or photovoltaic power sources), energy storage, power con-
verters, rotary converters, coupled diesel systems, dump loads, load management
 Hybrid Generation Systems for Microgrids

FIGURE 8.1 Microgrid confguration using hybrid distributed generation systems and energy storage.
127
128 Fundamentals of Microgrids

options, or a supervisory control system [7]. Larger systems (>100 kW), typically
consist of AC-connected diesel generators, renewable generation sources, and
loads, and occasionally include energy storage subsystems [7]. Below 100 kW,
combinations of both AC- and DC-connected components with energy storage are
common [7].

ADVANTAGES OF HYBRID GENERATION

Hybrid generation systems are seen as a solution by utility companies to achieve
scalability and standardization of microgrid models that maximize the benefts for
both companies and end users [8]. Power reliability is an important goal in the design
and development of hybrid generation systems. These systems must effciently and
economically satisfy the loads for the microgrid to be workable.
Hybrid power generation systems can be used for remote area power system
(RAPS) applications. According to Electropedia, certain hybrid renewable power
generation systems (e.g., solar and wind power combinations) have the following
advantages [9]:

Complementary generation: the renewable electrical generation systems can

be confgured to be complementary. For example, during the summer
months when there is a lack of wind there is often ample sunlight. During
winter months there is less sunlight, but stronger winds are more prevalent.
Supply diversity: two or more different energy sources provide a diversity of
supply, reducing the risk that power outages might occur.
Reduced equipment costs: high cost ancillary equipment (e.g., batteries and
inverter) that are required for a single system can be specifed to carry
the full system load. A second system can be added without increasing its
capacity or adding cost for more of these components.
Lower energy storage requirements: because of the supply diversity, the
required capacity of an energy storage system can likely be reduced to
lower the cost of the total system.
Loads sharing: the required generating capacity of solar and wind energy con-
version units can be reduced since the total load is shared [9].

To assess the feasibility of hybrid systems the comparative advantages and disad-
vantages of the various generation systems considered must be weighed against their
costs for installation, maintenance, and operation. This can be a complex undertak-
ing as hybrid systems can be confgured in innumerable ways. The various combina-
tions might include any of the following:

Fossil fuel generation: internal combustion engines, Rankin cycle engines, gas
turbines, Stirling engines, microturbines, and others.
Renewable energy generation: solar photovoltaics, solar thermal, concentrat-
ing solar power, wind turbine generators, hydropower, biomass combustion
systems, geothermal fash and binary technologies, and others.
Hybrid Generation Systems for Microgrids 129

Fuel cells: solid oxide, proton exchange membrane, phosphoric acid, molten
carbonate, etc.
Storage: high-power supercapacitors, fywheels, fow batteries, lead-acid bat-
teries, lithium-ion batteries, sodium-sulfur batteries, reversable fuel bat-
teries, thermal storage, compressed air, pumped hydropower, biofuels,
hydrogen, etc.
Control systems: the system hardware and software components, sensing sys-
tems, functions, and algorithmic capabilities that orchestrate operations and
enhance effciencies.

EXAMPLES OF HYBRID GENERATION

Hybrid microgrids are becoming a preferred approach to delivering cost-effective,
reliable power in locations beyond the reach of larger electric utility infrastructure
[10]. There are numerous templates for hybrid electrical generation systems that can
be used for microgrid applications. Typical models combine fossil fuel generation,
one or more forms of renewable energy, and energy storage in a confguration with
a microgrid control system. Examples of the types of combinations are described in
this section.

DIESEL AND RENEWABLE HYBRID SYSTEMS

Remote locations such as mines, drilling sites, or harvesting centers are beyond
connections to national electric grids and often employ diesel generation for
electric power. These are typically small-scale microgrids. Fuel must be deliv-
ered to the generator which can be costly due to the remote location of such sites.
When the diesel gensets are combined with renewable energy sources such as
wind turbines or solar panels we refer to them as hybrid systems. With hybrid
systems two goals are important—reducing fuel use and maintaining system
reliability [11].
Hydro, wind, or solar power can reduce the reliance on power produced from gen-
erator sets, reducing fuel consumption and maintenance costs while offsetting weak-
nesses [10]. The diesel generators frm the renewable sources and follow the loads.
Sophisticated direct digital controls (DDC) link the generation systems. Energy
storage enhances systems helping the generator sets respond smoothly to signifcant
fuctuations in output from the renewable resources, while maintaining consistent
voltage and frequency [10].

NATURAL GAS AND RENEWABLE ENERGY SYSTEMS

Advances in technologies supporting natural gas-fred steam turbines have led to their
increased use in hybrid electrical generation systems, linking them with renewable
energy generation (see Figure 8.2). These advances, including digital trip systems,
electronic speed governors, and software capabilities, have provided improvements
in monitoring, safety, reliability, effciency, and performance [12]. Today’s advanced
steam turbine systems are used for direct power generation, district heating, and
130 Fundamentals of Microgrids

FIGURE 8.2 Microgrid confguration using both natural gas, solar PV, and WTGs.
(Adapted from [9].)

seawater desalinization, and can be combined with waste-to-energy, biomass, and

solar thermal generation [12].
Decentralized applications that combine heat and power systems with renewables
and storage create more resilient generation systems capable of providing continuous
electrical generation for remote locations and businesses seeking to lower costs. Oil
felds in remote areas of Peru exhaust natural gas which is relieved into the atmo-
sphere or fared. An interesting solution has been proposed to optimize the oil-feld
production facilities’ electrical system and lower costs which involves combining
wind power with natural gas to provide electricity [13]. The project proved that the
use of a hybrid wind–thermal natural gas system to generate electricity would enable
a reduction in the use of fuel gas that is required to supply electricity for feld opera-
tions [13].

SOLAR AND WIND POWER

A common confguration for microgrids is to combine solar PV with wind turbine
generators (WTGs). The logic is that solar energy is abundant during the daylight
hours and that winds tend to be stronger at night, especially over land areas of the
northern hemisphere. Often this combination uses some kind of battery storage. A
micro-controller can be used to ensure optimization of linked solar and wind genera-
tion systems and improve their effciency.
A waste water treatment facility serving Atlantic City, New Jersey has a hybrid
solar-wind power plant that generates over 40.8 million kWh of electricity annu-
ally (see Figure 8.3). The plant has an all-electric feet of support vehicles that are
recharged on-site using electricity generated by the hybrid system. Excess electricity
is sold back to the electric grid powering the nearby casinos.
There are numerous microgrids that use these generation sources that are planned
or under construction. EnSync Energy Systems announced a partnership with
WindStax Energy to develop a microgrid for a new trucking terminal in Parma, Ohio
Hybrid Generation Systems for Microgrids 131

FIGURE 8.3 Hybrid wind and solar PV generation for the Atlantic City wastewater plant.

in 2019 [14]. The microgrid will use a 495 kW solar PV system, have eight WTGs
that add 48 kW, and also feature 760 kW of energy storage [14].
Prior to ramping up to full operation, microgrids are tested. Ameren Corporation
and S&C Electric Co. recently proved that their automated microgrid can success-
fully island and provide utility-scale power without help from the larger electric
grid [15]. In Champaign, Illinois, the companies used a 50 kW installation to test
the microgrid’s capabilities by supplying power to an Ameren research facility for
a 24-hour period [15]. The entire microgrid includes 225 kW of solar and wind
generation plus 500 kW of battery energy storage [15]. By powering the facility for
the duration of the testing, the microgrid proved that it is capable of operating at
utility-scale voltages and can seamlessly transition from grid-connected to islanded
modes [15].

SOLAR AND GEOTHERMAL ENERGY

A project in Nevada’s Great Basin is unique in that it offers an example of combining
a medium enthalpy, binary cycle geothermal plant with solar PV and solar thermal to
generate electricity—a triple generation plant (see Figure 8.4). It was the world’s frst
plant to couple these three forms of generation technologies. The frst phase of the
Stillwater Project began with a 33.1 MW geothermal binary plant which was com-
missioned in 2009 [16]. In 2013, a 26.4 MW solar project using concentrated solar
power (CSP) thermal technology was initiated on the site. The augmentation project
relies on linear parabolic trough systems to add energy to the incoming geothermal
fuid, which allows the binary plant to increase output [16]. The project includes col-
lectors, a heat exchanger, circulating pumps, and a control system integrated with the
geothermal plant [16]. The solar arrays add about 17 MW of thermal energy, plus an
132 Fundamentals of Microgrids

FIGURE 8.4 ENEL Green Power North America’s Stillwater plant in Fallon, NV. (Sources:
Idaho National Laboratory and ENEL Green Power of NA [17].)

equivalent of 2 MW of boost in power generation to the geothermal power plant [16].

The plant generates enough electricity to power 15,000 residences [17].
Using a combination of technologies with different generation profles increases
energy availability and reduces intermittency [17]. Geothermal (baseload capable)
and solar (an intermittent resource) power are complementary technologies when
used for electricity generation. The geothermal plant pumps heated geothermal brine
and transfers the heat to a secondary fuid, isobutane, which fashes into a steam-like
substance spinning the turbines as it expands [17]. Having yielded its heat, the brine
is circulated back into the Earth while the isobutane cools, condenses into a liquid
state, and begins another boil-and-expand cycle [17]. For the solar thermal process,
the sun’s rays focus onto tubes of demineralized water [17]. The heat from this water
is transferred to the incoming geothermal brine, increasing the amount of energy
available to boil the isobutane and creating more power to spin the turbines that pro-
duce electricity [17]. The plant’s use of air as a cooling medium is important as water
shortages have intensifed throughout parts of the western U.S. [17]. In addition,
there are 240 acres (97 hectares) of adjacent solar PV panels that work in tandem
with the geothermal system [17].
The complementary nature of the hybrid generation technologies used at the
Stillwater plant support the project’s cash fow by improving effciency and reducing
production costs. The project offers an example of how renewable technologies can
work in tandem to optimize generation. Production from solar is higher during the
sunniest and hottest days of the year, when the geothermal plant’s thermal effciency
is lower [18]. During the sunniest part of the day, when the geothermal system’s
output declines, the solar PV output is at its maximum [17]. Likewise, when the
geothermal energy output strengthens during the cool desert nights, the solar PV
system is unable to generate electricity due to lack of sunshine [17]. The increased
Hybrid Generation Systems for Microgrids 133

electricity production during peak periods enables a load profle that better matches
production to loads.
The strategy to combine renewable sources at a single site utilizes previously
installed assets which maximize the project’s return on investment. Combining sev-
eral renewable power generation technologies increases output without increasing
emission or environmental impacts by sharing the existing electrical interconnection
substation, transmission lines, access roads, control building, and other common
facilities [16]. Post-completion research has determined that by combing the hybrid
generation technologies the overall output at the Stillwater plant was increased by
3.6% [18].

NUCLEAR AND RENEWABLE ENERGY

The main purpose of a nuclear-renewable hybrid energy system (N-R HES) is to
use nuclear energy in combination with variable renewable energy sources such
as wind and solar, biomass energy, or others to support the electrical and thermal
requirements of electricity generation, fuels production, and chemical synthesis [19].
Synergistic benefts of these systems might include reducing costs, limiting water
use, maximizing dispatchable power, improved grid support, or more effcient uti-
lization of capital [20]. The design of the nuclear reactor could be sized and opti-
mized for the particular industrial microgrid that it serves. It is conceivable that
combining these dissimilar systems to support process applications can reduce costs
and decrease greenhouse gas emissions (GHG) in the manufacturing, industrial, and
transportation sectors [19].
The major components of an N-R HES system would include nuclear reactors
with steam generation, renewable power generation, industrial process loads, and
storage capabilities. Flexible generation often has greater value in electricity markets
than baseload or variable supplies [19]. Flexible N-R HES architectures include the
following [20]:

Tightly coupled N-R HES: in this architecture, nuclear and renewable gen-
eration sources and industrial processes would be linked and co-controlled
behind the electricity bus, such that there would only be a single grid con-
nection. The closely coupled system would be managed by a single entity to
optimize proftability for the integrated system [20].
Thermally coupled N-R HES: this architecture would thermally integrate sub-
systems and tightly couple them to the industrial processes, but the nuclear
and renewable electrical subsystems could have multiple connections to the
same grid balancing area and would not need to be co-located. They would
be centrally controlled to provide energy and ancillary services to the grid.
The thermally integrated subsystems would need to meet industrial pro-
cess requirements considering the required heat quality, the heat losses to
the environment, and the required exclusion zone around the nuclear plant.
These systems would likely be managed by a single fnancial entity [20].
Hybrid N-R HES: this confguration would be electrically coupled to industrial
energy users but lack direct thermal coupling of subsystems. This design
134 Fundamentals of Microgrids

would allow management of the electricity produced within the system

(e.g., from the nuclear plant or from renewable electricity generation) prior
to the grid connection. Although there would be no direct coupling of ther-
mal energy to the industrial processes, the system could include electrical
to thermal energy conversion equipment to provide thermal energy input
to the industrial processes. These systems might have multiple connec-
tion points to the grid. Molten salt reservoirs could provide thermal energy
storage to generate electricity. Electrical-to-thermal energy conversion
becomes economical when the cost of producing heat drops below the cost
of producing heat from combustion-fred process heaters [20].

The design and confguration of the hybrid options that combine nuclear power with
renewable energy resources would vary based on loads, effciencies, availability of
water, and types of renewable generation and storage systems. For example, it is pos-
sible to design the plant to generate clean hydrogen with any excess electricity using
a steam electrolysis plant.

FUEL CELLS AND RENEWABLE HYBRID GENERATION

Using fuel cell technologies within microgrids is a complementary use of the technolo-
gies. Fuel cell use in microgrid confgurations is growing as applications are found that
are economically feasible particularly for stationary applications. About 80% of Bloom
Energy’s deployments of fuel cells are for microgrid applications [21]. Microgrids
using fuel cells can readily separate from the grid without impacting reliability and the
quality of electricity [21]. This capability plus their ability to quickly generate electric-
ity makes them compatible with hybrid generation systems that use renewable energy.
Fuel cells are a reliable clean energy source that is modular, scalable, and
emissions-free. Fuel cells are not as cost-effective as most forms of conventional
generation but they are suitable for making use of renewable energy and can be
incorporated with community-scale energy systems [22]. Other benefts of fuel cells
include low noise levels during operation and a relatively small installation footprint
[23]. Despite these merits, there were only 116 MW of fuel cells deployed to support
microgrids by 2016 [23].
Fuel cells are similar to batteries. They generate electricity from an electrochemi-
cal reaction using hydrogen and require a constant fuel supply [23]. Fuel cells can
operate and generate electricity so long as the fuel, normally hydrogen, is available.
While hydrogen is abundant, it is usually produced by reforming fossil fuels such
as natural gas, methane, or butane. Renewable hydrogen can be produced using a
renewable energy source and electrolysis to split water into its elemental compo-
nents. Though the effciency of fuel cells is much better that of gas-fred turbines
and they produce only half the emissions, they are much more expensive than gas
turbines on a per watt basis [23].
Examples of fuel cell-only microgrids include the University of Bridgeport, in
Connecticut, which is supplied electricity by an investor-owned fuel cell power plant. It
is confgured for baseload power, net metering, and CHP. A sample of the many exam-
ples of fuel cells being linked with hybrid renewable energy systems are noted below.
Hybrid Generation Systems for Microgrids 135

The University of California San Diego microgrid produces 92% of its elec-
tricity and 95% of its heating and cooling loads using a fuel cell powered
by directed biogas. The multi-generator system has a fuel cell (2.8 MW), a
roof-mounted solar PV (3 MW) system, a steam turbine (3 MW), plus two
gas turbines (13.5 MW each) [24]. Electricity is provided to the campus
12 kV distribution system [24].
The Gordon Bubolz Nature Preserve in Appleton, Wisconsin is powered by a
microgrid that includes solar PV (200 kW), a hydrogen fuel cell (30 kW), a
micro-turbine (65 kW), a natural gas generator (60 kW), and a lithium-ion
battery storage system (100 kW) [25]. The microgrid’s integrated distrib-
uted energy resources (DERs) are managed by an energy control center
using a software platform that autonomously confgures the DERs to opti-
mize the effciency and cost-effectiveness of the combination of energy
resources being used at any given time [25].
The Santa Rita Jail, a microgrid demonstration project in Dublin, California,
is confgured with fve wind turbine generators (2.3 kW), a solar PV
array (1.2 MW), two diesel generators (1.2 MW), a fuel cell (1 MW), and
advanced energy storage (2 MW) [26]. It has a DER management system
which reduces peak demand during normal grid-connected operation or
during demand response events [26].

Using the methane emitted from landflls reduces GHG emissions. In Riverside,
California methane gas from a local landfll is used to power fuel cells [21].
Wastewater treatment plants, dairies, and agricultural processing plants offer addi-
tional opportunities to use methane for biogas-fueled fuel cells [21].

RENEWABLE CO-GENERATION
Co-generation normally refers to the process by which electricity is generated on-site
by a user to displace electrical energy purchased from a utility [27]. Historically, the
requisites for co-generation are: 1) high electric demand with heavy electrical con-
sumption; 2) a suitably large thermal load; and 3) high demand and/or unit energy
costs [27]. Benefts of these systems include reduced heat losses and higher effciency.
Though primarily considered when using fossil fuel generation, co-generation is
also feasible in renewable energy applications. Examples of applications include CHP
systems that are based on biofuels, solar, or geothermal energy. Trigeneration refers
to the simultaneous generation of electricity plus useful heating and cooling from a
combustion process or a solar heat collector [28]. Hybrid renewable energy systems
can be used on a dedicated site to provide renewable co-generation or trigeneration.
In a microgrid confguration, two solar plants, one thermal and a separate solar PV
array, can be used to provide combined heat and power. Solar PV combined with a
fuel cell can be confgured to provide micro-combined heat and power systems.
Renewable co-generation can be achieved with the use of a biogas created from
organic wastes. Biologically derived biogases (also called biomethanation) are
produced as metabolic products of microorganisms called bacteria and archaea
[29]. Biogases are waste products from agricultural processes and are composed
136 Fundamentals of Microgrids

of methane gas and carbon dioxide with trace quantities of hydrogen or nitrogen.
The waste gases can be produced by using anaerobic fermentation processes. These
gases can be used as a renewable power source in biogas co-generation systems
[29]. Anaerobic digestion can occur at mesophilic (35–45°C) or thermophilic tem-
peratures (50–60°C) but supplementary sources of heat are required to reach their
optimal temperatures [29]. This heat can be provided by a biogas CHP unit as a
standalone system or supplemented with solar thermal heat.
Waste streams might include cattle dung which produces high concentrations of
methane gas or waste from municipal sewage. These biogas engines are linked to an
alternator to produce high effciency electricity which enables end-users to maximize
the electrical output of the system and optimize the plant’s economic performance
[29]. The benefts of using biogas produced by this process include: 1) production of
renewable power using CHP; 2) disposal of problematic waste products; 3) diver-
sion of waste from landflls; 4) production of a low-cost, low-carbon fertilizer; 5)
avoidance of landfll and feedlot gas escaping to the atmosphere; and 6) reduction of
carbon emissions [29].

SUMMARY
Hybrid energy generation systems are commonly used in microgrids. They generate
electrical power by relying on the use of two or more types of generation technologies.
To be effective, these systems must overcome the inherent limitations of providing
electricity with a single energy source. While there are many potential combinations
of hybrid generation systems that have been used in microgrid deployment, this chap-
ter detailed the examples that included diesel and renewable hybrid systems, natu-
ral gas and renewable energy systems, solar and wind power, solar and geothermal
energy, nuclear and renewable energy, fuel cells, and renewable hybrid generation.
Hybrid systems can be used to generate AC or DC power or both. Many renewable
energy systems natively generate DC power. When coupled with DC electrical loads,
equipment costs can be reduced. Figure 8.5 graphically depicts the typical confgu-
ration of hybrid generation systems using fossil fuels and renewables. Renewable co-
generation and trigeneration systems were also considered. Trigeneration (providing
cooling, heat, and power) is a form of hybrid generation and refers to the simulta-
neous generation of electricity and useful heating and cooling from a combustion
process or a renewable energy source.
Energy storage is often coupled with hybrid generation systems. Since electricity
cannot be directly stored, energy storage systems suffer from energy losses due to
conversion losses. There is debate in the industry as to whether or not an electrical
generation system that uses battery storage in conjunction with a single generation
technology constitutes a hybrid system.
To assess the feasibility of hybrid systems the comparative advantages and dis-
advantages of the various alternative combinations of generation systems must be
considered. Using two or more different energy sources provides a diversity of sup-
ply, reduces the risk that power outages might occur, and improves overall system
reliability and resiliency. The benefts of co-locating multiple renewable generation
types at or near a single facility include having access to more accurate resource and
Hybrid Generation Systems for Microgrids 137

FIGURE 8.5 Hybrid confguration using fossil fuels and renewables. (Adapted from [7].)

environmental data, reductions in shared equipment, lower operations and mainte-

nance costs, and the effcient harnessing of resources such as institutional capital or
a knowledgeable team of available professionals [16].
Providing microgrid power with multiple generation technologies increases cost.
These costs must be outweighed by the benefts of the services provided. There are
three value propositions that overlap, increasing the value of hybrid systems for
microgrids but also making the control systems more complex [30]. The market is
being driven by a combination of: 1) resilience and reliability concerns; 2) sustain-
ability and climate concerns increasing the rate of solar PV adoption; and 3) the
decline in costs for batteries and other forms of energy storage that can be used for
demand charge reduction [30].
The clean energy economy is powered by both renewables and energy effciency.
Microgrids use hybrid generation to increase the use of renewables, improve gen-
eration effciencies, and reduce GHG emissions. In an effort to deploy electrical
generation models that are more scalable and sustainable, today’s electric utilities
are exploring the use of hybrid microgrids. Hybrid generation systems have been
successfully deployed in military, community, and industrial microgrids.

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 9 Community and
Local Microgrids
Today, the majority of active microgrids provide electricity and sometimes heat to
a single customer or entity. Many of these microgrids operate using fossil fuels,
renewables, or a combination of both. Military bases and hospitals that require reli-
able sources of emergency power in the event of grid failures are among the many
examples of contemporary microgrid-capable facilities. On a larger scale, microgrids
allow communities to be more energy independent and in some cases provide lower
cost electricity that is more environmentally friendly [1]. Community microgrids
serve a targeted group of customers, such as municipal or public facilities, as hosts
or tenants [2].

COMMUNITY MICROGRIDS
Community microgrids typically cross public rights of way and serve to modern-
ize local utility infrastructure, providing resilient power for vital community assets
[2]. Community microgrids come in a variety of designs and sizes but are gener-
ally integrated into utility networks. A community microgrid can power a single
facility like the Santa Rita Jail microgrid in Dublin, California or power larger
groups of connected buildings. For example, in Fort Collins, Colorado, a microgrid
is part of a larger goal to create an entire district that produces all the energy that
it consumes [1].
A community microgrid is a coordinated local grid area served by one or more
distribution substations and supported by high penetrations of local renewables
and distributed energy resource (DERs) such as energy storage [3]. Community
microgrids are a new approach to designing and operating electric grids. They rely
heavily on DERs to achieve a more sustainable, secure, and cost-effective energy
delivery system while using power generated by renewables for prioritized loads
over indefnite durations [3]. Key features of community-scale microgrids include: 1)
high penetrations of renewable generation and DERs; 2) effcient load design which
includes load balancing and fattening capabilities to reduce peaks and transmission
costs; 3) ability to island critical loads; and 4) a scalable solution which spans one or
electrical more substations [3].

DRIVERS FOR COMMUNITY-SCALE MICROGRIDS

Community microgrids are developed to support specifc local goals and meet local
requirements and mandates. They may also be used to reduce costs, or connect to a
local resource that is too small or unreliable for traditional grid use. They are used
for off-grid and grid-connected applications.

141
142 Fundamentals of Microgrids

There is a need for microgrid deployment in the world’s developing and devel-
oped countries especially for off-grid situations and village-scale community elec-
trifcation programs. For developing countries, providing and maintaining energy
access is an important driver for off-grid renewable energy systems that are often the
most economical solution for providing electricity [4]. For developed countries, off-
grid systems consist of two types: 1) mini-grids for rural communities, institutional
buildings, and commercial/industrial plants and buildings; and 2) self-consumption
of solar power generation for residences [4].
Mini-grids are particularly relevant for island states. There are more than 10,000
inhabited islands around the world and an estimated 750 million islanders [4]. Many
of these islands, especially those with fewer than 100,000 inhabitants, rely on die-
sel generators for their electricity production and expend considerable funds on
imported fuels [4]. Those that are tourist destinations are particularly sensitive about
the pollution caused by fossil fuel generation. It is easier to locate clean energy gen-
eration near population centers from an environmental perspective. Due to delivery
costs for diesel to remote locations, renewable generation is often a cost-effective
replacement for diesel generation which creates market opportunities for off-grid
renewable energy systems [4].
There are a number of drivers for the development of community microgrids.
As they are already a conventional form of emergency or backup power for
individual buildings and campuses, expanding existing microgrids can provide
emergency backup generation for entire communities. Fossil fuel-fred central
power stations that are located in or near cities are notorious point sources of
pollution especially in developing countries. Restricting the use or eliminating
these central stations and replacing them with renewable energy microgrids is a
cause for the development of community microgrids. The present vulnerabilities
of the utility grid create yet another driver to consider independent local power
systems as an alternative. Reducing the impacts from power outages are a reason
that municipal leaders consider enabling energy production closer to cities by
using microgrids.
Cities large and small are taking initiatives to tap local energy resources and build
energy infrastructure that will expand their tax base, diversify energy supplies, and
address the need for expanded services for denser urban populations. Cities are see-
ing dramatic population growth along with a need for energy master planning and
integrated energy systems that optimize effciency and reduce waste [5].

U.S. MUNICIPAL RENEWABLE ENERGY GOALS

Over 90 U.S. cities, ten counties, and two states have made commitments to use
100% clean or renewable energy by 2050 [6]. According to the Sierra Club, “a com-
munity is powered with 100% renewable energy when the amount of energy gener-
ated from renewable energy sources in the community (or brought into it) equals
or exceeds 100% of the annual energy consumed within the community” [6]. This
defnition supports the net zero community power concept. To achieve this goal,
nuclear, natural gas, coal, oil, or other forms of carbon-based energy are not included
as renewable energy sources.
Community and Local Microgrids 143

There are a few cities that have already met their renewable energy goals. Examples
include Aspen, Colorado; Rock Port, Missouri; Georgetown, Texas; Kodiak Island;
and Burlington, Vermont [6]. Other larger cities (e.g., Orlando, Los Angeles, San
Francisco, Saint Louis) have also set such goals within time frames of their choos-
ing. Goals are being established that identify the total (often a percentage) of the
community’s energy supplies that will be met locally using distributed generation.
However, due to the costs of replacing the existing fossil fuel-based infrastruc-
ture, the feasibility of meeting 100% renewable energy goals for some cities will be
challenging if not impossible. There are several reasons for this:

• Such goals require concerted efforts over long periods of time and must be
continuously supported by multiple governmental administrations.
• Reaching the goals may require public–private partnerships with local
corporations and energy suppliers. Some local governments are unfamil-
iar or uncomfortable with the process of creating and supporting such
collaborations.
• While some cities may be able to meet the goal with little cost, most will
fnd the goal costly.
• Existing electrical power infrastructure may not have been amortized.
While renewable generation might be in some cases less expensive, changes
over time could dramatically increase electrical rates.
• If costs for electricity increase substantially as a result of the changeover to
renewables, ratepayers and taxpayers might challenge the goal periodically,
creating political conficts.
• Given the regional nature of renewable energy availability, creating and
maintaining dispatchable electric baseload power using only renewable
energy can be diffcult. Providing a diverse and workable set of DERs many
also prove challenging.
• The goals often exclude mobility fuels, such as diesel and gasoline, whose
regulation may be beyond the reach of the local governmental entity.

Goals to transition to 100% renewables appear artifcial and, in some cases, unreal-
istic. Transitioning away from fossil fuels completely may actually not be necessary
in all instances to meet local environmental, carbon reduction, and economic goals.
Should the targets be less? Perhaps, less challenging incremental goals targeting
reductions of 40% to 80% in fossil fuel shares should be established for some com-
munities as an alternative. Regardless, the institution of goals to incorporate greater
amounts of renewable energy suggest that there will be a growing demand for com-
munity microgrids.

TYPES OF MICROGRIDS
Microgrids can be classifed by their applications. Examples include mobile
microgrids, utility distribution microgrids, community microgrids, military
microgrids, industrial microgrids, campus microgrids, virtual power plants, and
others.
144 Fundamentals of Microgrids

MOBILE MICROGRIDS
A feature of many electric supply confgurations is that their infrastructures are fxed
in place and incapable of mobility. Once the grid infrastructure fails, they are unable
to provide local power to a targeted group of loads. A mobile microgrid is defned
as an independent, deployable power solution that can be used to supplement power
sources in the event of a disruption to grid-supplied power [7]. The primary advan-
tages of mobile microgrids include their smaller size, transportability, mobility,
and adaptability. They can be readily placed into operation to provide local power.
Many, such as fuel cell systems, are modular and can be deployed by truck or ship.
If needed, several mobile microgrids can be linked together to create a larger power
source [7]. These features make them useful in the event of power outages due to
extreme weather events, for the provision of temporary power to secluded locations,
or for special events or military operations.
Traditional types of generation for mobile microgrids include diesel or natural gas
gensets, solar PV installations, or fuel cells. Special conditions create unique oppor-
tunities for mobile microgrids. A consideration for military feld operations is that
noise, exhaust, and the infrared signature from a mobile diesel generation system
might reveal a stationary location to an enemy. A mobile microgrid with solar PV
and battery storage might be preferable.
There are many confgurations available for mobile microgrids. One manufac-
turer utilizes a solar hybrid inverter and charge controller system that can autono-
mously confgure the DERs into a range of different variations to provide a resilient,
effcient, clean, and cost-effective combination of energy resources at any given time
[7]. Their advanced mobile microgrid incorporates a 9 kW solar photovoltaic energy,
144 kWh lithium-ion battery energy storage system, a 10 kW methanol reformer-
based, hydrogen fuel cell system, plus an industrial ethernet switch for control and
remote connectivity—all transportable in a 20ʹ×8ʹ intermodal freight container [7].

LOCAL SERVICE MICROGRIDS

Many communities view microgrids as a way to provide electricity for critical ser-
vices during a crisis and enable emergency response (e.g., police, fre, and local hos-
pitals). Microgrids are capable of providing power to local water supply and sewage
systems. Local microgrids have multiple customers in close proximity with demand
resources on the consumer side of delivery points. They can be designed to meet
community objectives and may be consumer owned (e.g., by the locality). They are
locally confgured with a central distribution system, multiple generation resources
and energy storage technologies to improve resiliency and reduce production costs
(see Figure 9.1).
The value of local microgrids goes much deeper; not only may a microgrid deter
economic calamity, but it may also enhance community prosperity [5]. Microgrids
draw coveted high-tech industries to cities by offering the reliable, premium power
and cleaner energy services that commercial enterprises require. In addition, many
communities are seeking proven approaches to address climate adaptation and
reduce greenhouse gas emissions, and are investing in more sustainable energy
delivery systems [5].
Community and Local Microgrids 145

FIGURE 9.1 Confguration for community microgrids with energy storage.

MILITARY MICROGRIDS
Military microgrids have evolved from strategic decision-making and policy-mak-
ing directives. Military bases are venues for management, training, housing, and
important tactical initiative launching pads. The U.S. military is the world’s largest
single consumer of energy. It has developed two key policies to deal with climate
change: 1) reducing its contribution to global warming by reducing its greenhouse
gas emissions; and 2) maintaining capabilities to assist foreign (primarily allied)
governments with coping with extreme disasters and to offer emergency assistance
when directed [8]. Established policies include the 2012 and 2014 versions of the
U.S. Department of Defense Climate Change Adaption Roadmap. It mandates more
aggressive adaptation and sustainability measures requiring base commanders to
integrate climate change projections into their installation master plans and insti-
tutes directives for “climate-specifc plans and guidance” in procurement activities
[8]. U.S. military bases are also under mandates to have the capability to maintain
electrical power for mission-related services for as long as two weeks should exter-
nal grid-supplied power be unavailable or disabled. Microgrids for the military can
serve both base requirements and tactical efforts in the feld.
Energy assets and systems for military operations are in a state of constant adap-
tation. Priorities for each support system can change in a moment, creating a need
for electrical generation mobility. In many cases, the military places premiums on
power accessibility, reliability, and equipment durability. Power systems can be dis-
rupted despite being served by existing distribution grids. For these reasons, military
microgrids have received renewed attention. They are being developed to support
mission-critical facilities and are expanding at many military bases. Diesel genera-
tion systems, once considered a mission mainstay, are now considered by military
logistics experts to be a weakness. Diesel fuel use has been proved to be highly
questionable in feld operations, especially when supply chain costs might include
146 Fundamentals of Microgrids

risking the lives of service personnel. Transporting fuel in war zones is one of the
most dangerous jobs in the world and diesel fuel can cost up to $400 per gallon by
the time it is delivered to front line units [9]. Substantial cost savings are possible
when renewable energy can be forward deployed to replace diesel.
Key drivers for military microgrids include cost savings, reduced risks due to
energy pricing variability, greater deployment of renewable energy, and improved
energy security [10]. Driven in part by the doctrine of energy surety, military
microgrids are characterized by diversity of mission, changing technologies, the
need for just-in-time (JIT) integration, and the imperative to reallocate resources
rapidly as missions vary and assets change [11]. Often bases may be located in or
near urban centers, yet in times of grid failure, military operations must continue.
Loss of power to mission-support operations present tactical risks to command
response capabilities during national emergencies.
For military microgrid applications, there is a premium for energy systems that
can reconfgure themselves within limits [11]. Military needs are best met through
solutions that do not require constant reconfguration and can be reused at multi-
ple military installations [11]. They also prefer decentralized power systems with
energy storage capabilities near living and working areas. This prevents the poten-
tial of the destruction of a single power plant causing complete loss of base power.
Cybersecurity defenses to protect power generation facilities are more readily dis-
patched. These mission-critical capabilities provide strong arguments for microgrids
to be considered as the frst option for providing electricity.
Military bases are planning to integrate a variety of DERs into their microgrids.
The Marine Corps Air Station Miramar in San Diego, California is incorporating
new and existing resources that include a solar PV (1.6 MW), landfll gas (3.2 MW),
diesel generation (6.5 MW), and a natural gas power plant [10]. A diagram of the
Fort Sill, Oklahoma microgrid confguration for (20 kW solar, 2.5 kW wind power,
480 kW gas/diesel, 56 kW lithium-ion storage) is shown in Figure 9.2 [12]. Other
U.S. examples of military microgrids can be found at Camp Pendleton South in
California (525 kW solar, 200 kW gas/diesel), Fort Carson in Colorado (2,000 kW
solar, 3,000 kW gas/diesel with integrated vehicles), Joint Base Pearl Harbor Hickman
in Honolulu, Hawaii (146 kW solar, 50 kW wind power), Maxell Air Force Base in
Alabama (1,300 kW gas/diesel), and West Point in New York (249 kW solar), among
many others [9].

INDUSTRIAL MICROGRIDS
Today’s industrial microgrids are often confgured similarly to those industrial sites
that produced their own power prior to the development of electrical grids. Cosidine
et  al. [11] describe industrial microgrids as focusing on process loads, costs, and
energy resources:

Industrial sites with high power requirements have long relied on site-based genera-
tion. For some, such as aluminum producers, electric power dwarfs all other supplies.
If a site has power requirements similar to the capacity of commercial generating
plants, in-sourcing this generation is a natural decision. Some processes, notably in
Community and Local Microgrids 147

FIGURE 9.2 Microgrid for military base [12].

chemical processing and in regulated pharmaceutical environments, are subject to

very large costs for power interruption. A small interruption in power may cause very
large process costs, in lost product, in equipment degradation, in lost certifcation, and
in high start-up costs afterward. Other sites use large amount of energy, but in a form
other than of electrical power. In particular, some plants rely on thermal energy. These
may form wood-based products or be laundry facilities. Steam or hot water may drive a
signifcant part of their activities. Once they have a boiler in place, using excess capac-
ity to generate electrical power is a natural afterthought [11].

A key advantage of industrial microgrids is the inherent capability of co-locating

energy generation with existing electrical loads. Industrial sites are usually owned
by a single controlling management structure which enables microgrids to be more
rapidly installed.

UTILITY DISTRIBUTION MICROGRIDS

There are a growing number of utilities that have begun smart grid deployments and
are now grappling with a new set of technical, regulatory, and fnancial challenges
that indicate that the industry is undergoing evolutionary changes [13]. Identifed
trends include the integration of DERs and their associated assets, and changing busi-
ness and regulatory approaches that require a far more sophisticated, reliable electric
network which involves greater participation by customers and third parties in energy
management and electric generation [13]. Some electric utilities are experimenting
with the development of microgrids to support operations and improve services.
Many are being developed in partnership with local communities and stakeholders.
Utility distribution microgrids are identifed by ownership and their ability to supply a
central distribution network. They typically connect many unaffliated end-users with
148 Fundamentals of Microgrids

multiple types of generation and energy storage [14]. These microgrids can be utility
owned, utility managed, or co-managed by the utility and microgrid owner.
Microgrids managed or co-managed by public utilities provide an alternative to
potential major capital investments. Rather than developing additional generation
and transmission infrastructure to supply a remote local area, a grid-connected util-
ity microgrid can reduce costs of service for the local utility [15]. For example, if a
new substation or substation upgrade is required to meet increasing electric demand
or resolve power quality issues, a local microgrid with on-site generation could meet
the requirement without the investment associated with conventional solutions [15].

CAMPUS MICROGRIDS
Campus microgrids typically link a number of buildings owned by a single entity (i.e.,
university or corporate) on a single site. These buildings may use combined heat and
power generators to supply the majority of their heat and electricity [14]. One of the
best-known and most sophisticated microgrids in the U.S. is the 42 MW microgrid
operated by the University of California at San Diego (UCSD), where administrators
have formed public–private partnerships with federal agencies and utilities to incu-
bate smarter, cleaner technologies [16]. The mission of this microgrid is to “promote
multiple objectives, including lower energy costs, improved resiliency, and enhanced
reliability” [16]. The university microgrid uses a diverse set of generation sources: a
2.8 MW fuel cell powered by waste methane from a local wastewater treatment plant,
a 4 million gallon (15.1 million liter) thermal storage system, 2.0 MW of photovoltaics,
plus 35 kW of solar concentrating photovoltaics [16]. The microgrid generates 92% of
the university’s power, and saves the campus $850,000 monthly in energy costs [16].
The microgrid for a college campus might be custom confgured to restore power
to select facilities that provide critical services in the event of a power outage. For
example, it might be designed to restore power for emergency lighting, research
labs, and security and medical facilities, but perhaps not the natatorium or academic
offces [17]. With critical operations available, the college can maintain a minimal
and crucial level of service so that when the central grid power is restored, the cam-
pus can more quickly resume normal operations [17].
The Alameda County Santa Rita Jail, about 70 km east of San Francisco,
California, is an example of a campus microgrid with a peak demand of 3 MW (see
Figure 9.3). The jail, designed to house 4,000 inmates, is the site of a microgrid dem-
onstration project which has approximately 1.5 MW of solar PV, a 1.0 MW molten
carbonate fuel cell, backup diesel generators that can function in grid-connected or
island modes, and a 2 MW/4 MWh lithium-ion (LI) battery bank for load balancing
[18]. The LI battery system and a sophisticated switch allow the jail to island and
reconnect to the utility grid at will [18].

VIRTUAL POWER PLANTS

A virtual power plant (VPP) is a network of decentralized, medium-scale power
generating units such as wind farms, solar parks, combined heat and power (CHP)
systems, storage systems, and fexible power consumers [19]. By pooling diverse
Community and Local Microgrids 149

FIGURE 9.3 Confguration of the Alameda County Santa Rita Jail microgrid.

generation assets, and linking them through a central control center, the VPP behaves
in relationship to the grid as a single controllable entity, similar to a microgrid. The
interconnected units are remotely dispatched through a common control center and
though interconnected are independent in their operation and ownership [19]. A VPP
uses advanced software and technology to monitor and coordinate power generation
assets and controllable loads, simulating the processes that would be expected from
a conventional electrical power plant. The bidirectional data exchange between the
individual plants and the VPP not only enables the transmission of control commands
but also provides real-time data on the capacity utilization of the networked units [19].
During periods of peak load, the VPP relieves the load on the grid by smartly dis-
tributing the generated electricity [19]. The power generation and consumption of the
networked units in the VPP can be traded on an energy exchange [19]. In some con-
fgurations, it is possible to sell and purchase units of electricity using a smartphone.
Microgrids can be confgured to operate either as a VPP or to mimic their capabilities
and services. Similar to conventional power plants, cyberattacks are a threat to VPPs.
The real-world working applications for virtual power plants are by defnition
diverse. In the U.S., a VPP may not necessarily involve the actual deployment of
electrical generation sources. VPPs might access utility demand response and peak
pricing programs as primary resources. When aggregated, the VPP mimics the char-
acteristics of a traditional power plant delivering peak capacity, electrical energy, or
grid reliability regulation services as needed by a utility or independent system opera-
tor (ISO) [20]. In Europe, a VPP typically refers to aggregating supply side resources,
most often a diverse pool of renewable distributed energy generation (RDEG) and/
or wholesale renewable energy sources [20]. More confounding, the term VPP might
also refer to the ability of commercial consumers in countries such as Denmark to
purchase capacity at the wholesale level via an auction from baseload fossil fuel facili-
ties for short periods of time. Statkraft, a Norwegian company, has operated one of
Europe’s biggest power generation facilities as a VPP since 2011 [21]. Their VPP in
Germany has a 12,000 MW capacity, enough power for fve million homes [21].
150 Fundamentals of Microgrids

VPPs often provide services to the host grid in exchange for preferred pricing.
Flexible power-consuming equipment (e.g., motors and pumps) can be operated on
optimized price schedules by using electricity when it is inexpensive and electric
demand is low [19]. The VPP central control system helps stabilize grid power before
balancing is required [19]. If a grid imbalance is imminent, the signals from the sys-
tem operators are processed in the central control system and converted into control
instructions for the pre-qualifed units effectively keeping the grid in balance by
delivering frequency control reserves [19]. If an unexpectedly high feed-in devel-
ops, it is possible to shut down generation assets within seconds and avert critical
grid situations [19]. When excess supply is available it can be stored. According to
Andreas Bader, vice president for sales for Statkraft, “We can connect batteries from
Spain with wind farms in Germany, and that makes it scalable” [21].

EXAMPLES OF COMMUNITY AND LOCAL MICROGRIDS

Traditionally, microgrids have served only one user, such as a university or hospital,
and provide the host campus with an independent energy supply. In some U.S. states
(e.g., New York), the community-based focus is to connect multiple users through
DERs with more reliable and secure energy sources [22]. Community microgrids
build upon existing electrical system infrastructure and equipment, connect mul-
tiple users in a neighborhood, and provide local power generation and distribution
[22]. The process of building a community microgrid typically involves beginning
with a basic confguration that addresses the community’s key priorities or pain
points [23]. These are identifed problems or issues that have come to the atten-
tion of the community and require resolution. To address these, communities often
begin by constructing a foundational microgrid [23]. Incremental improvements
and expansions of the foundational microgrid evolve over time ultimately forming
a more complex microgrid [23]. Examples of operational community microgrids
include those on Kodiak Island, in Borrego Springs, and on Long Island which are
next discussed.

KODIAK ISLAND
Kodiak Island in Alaska is often used as an example of a remote community-based
island microgrid. It is one of the largest such microgrids in the U.S. to use renewable
energy. Its microgrid operates using 5 MW hydroelectric power, a large 9 MW wind-
farm, a gas/diesel gen-set system, and 5 MW of energy storage. The system is rated
at 75 MW and provides power to the island’s 15,000 residents using 99% renewable
energy. Storage systems have lead-acid batteries and fywheels. Two fywheels are
used stabilize the microgrid and a highly dynamic industrial load [15]. These fy-
wheels: 1) provide frequency regulation and demand smoothing; 2) relieve stress on
existing battery systems, extending their useful life; 3) manage intermittency from
the wind turbine generators; and 4) reduce reliance on diesel generators [15].
The use of renewables combined with storage technologies caused electrical costs
to decline to about $0.14/kW, saving the community roughly $4 million annually
compared to using diesel-fueled generation systems [24].
Community and Local Microgrids 151

BORREGO SPRINGS MICROGRID

Borrego Springs, California is somewhat remote and supplied with electricity by a
single transmission line. If the electrical feed de-energizes, the community has no
electricity. To prevent loss of power, the community developed the frst microgrid in
the U.S. to rely only on solar energy and storage during planned outages [14]. Many
of the microgrid’s DERs are owned by the residents.
The Borrego Springs Microgrid, serving 2,780 customers, was developed in an arid
California location subject to dry conditions and extreme temperatures. Average max-
imum/minimum winter temperatures are 69°/43.4°F (20.6°/6.3°C) and 106.8°/74.9°F
(41.6°/23.8°C) in July [26]. This solar-storage microgrid is a proof-of-concept model
of an unbundled utility microgrid. Distribution assets are owned by San Diego Gas
and Electric (SDG&E), a public utility, while some of the distributed power genera-
tion assets are owned by customers [26]. Thus, it provides an example of an unbun-
dled utility microgrid. As it provides services to the community, the Borrego Springs
Microgrid is also considered to be a distribution company microgrid.
The total microgrid installed capacity is about 4 MW (see Figure 9.4), with the
main technologies being two 1.8 MW diesel generators, a large 500 kW/1,500 kWh
battery at the substation, three 50 kWh batteries, six 4 kW/8 kWh home energy stor-
age units, about 700 kW of rooftop solar PV, and 125 residential home area network
systems [27]. The microgrid control systems incorporate supervisory control and
data acquisition (SCADA) capabilities on all circuit breakers and capacitor banks,
feeder automation system technologies (FAST), and outage management systems
which provide price-driven load management for its customers [27]. The cost of the
project was $15.2 million, supported by the U.S. DoE ($2.8 million), San Diego Gas
and Electric ($7.5 million), and public–private sources ($4.9 million) [28].

FIGURE 9.4 Borrego Springs microgrid. (Source: National Energy Technology Laboratory [25].)
152 Fundamentals of Microgrids

LONG ISLAND COMMUNITY

The Long Island Community Microgrid Project (LICMP) is being developed as a
multi-stage project in East Hampton, New York. It is a community that experiences
recurring electrical outages primarily due to storm damage. A solar PV siting survey
was performed and found over 30 possible sites, such as vacant land, rooftops, and
parking areas, with a total potential capacity of 32 MW. The survey led to a com-
munity microgrid design that would use local solar and energy storage for electrical
generation.
Key partners in the LICMP are PSEG Long Island, Long Island Power Authority,
Suffolk County Water Authority, and the Springs Fire District [29]. The community
microgrid benefts over 3,300 account holders and a population of roughly 10,000
local residents. The project goals include: 1) reducing dependence on the transmis-
sion grid and oil-based generators; 2) increasing the penetration of local renewable
energy; 3) maintaining electric services for critical loads during grid outages; 4)
demonstrating the feasibility of using energy storage in utility grid operations to
increase local renewable generation; and 5) decreasing fossil fuel consumption and
transmission costs [29]. The Long Island Community Microgrid includes the follow-
ing features [30]:

• 15 MW of new solar PV generation

• 5 MW/25 MWh energy storage facility plus three smaller energy storage
facilities
• enhancing monitoring, communication and control systems
• provision of indefnite renewables-driven backup power for multiple critical
loads that include a fre station and water pumping stations
• providing utility-scale peak shaving
• demonstrating robust community microgrid capabilities over a substation
grid area
• showcasing how to design and operate electric community microgrids with
local renewables and other DERs [30]

The benefts provided by of the LICMP include [30]:

• providing local renewable energy with reduced dependence on centralized,

non-renewable power, and oil-fueled peak generation facilities
• reducing peak power demand by over 8 MW
• avoiding over $38 million in local transmission systems upgrade costs with
the potential of avoiding an additional $300 million in future transmission
upgrades if the LICMP is replicated within the region
• reducing capacity charges and energy arbitrage costs
• generating $32 million in wages and other economic value during the construc-
tion phase of the project, with millions more during ongoing operations [30]

A catalyst for this project was the impact of superstorm Sandy in 2012, which wiped
out parts of New Jersey and New York [31]. The damage to utility infrastructure
Community and Local Microgrids 153

prompted the community to create the microgrid and ultimately provide half of its
grid-area electric power requirements from solar power [31].

SUMMARY
Community microgrids are miniature versions of the larger grid to which most are
interconnected. According to the Clean Coalition, an organization that supports
microgrid initiatives, a community microgrid is a “coordinated local grid area served
by one or more distribution substations and supported by high penetrations of local
renewables and other DERs, such as energy storage and demand response” [32].
Community microgrids offer a fexible and scalable means of expanding the benefts
of local distributed energy solutions to provide resiliency, reduced carbon emissions,
and energy cost management within networks of energy users [22].
Microgrids are commonly categorized by the types of local areas and commu-
nities they serve. Examples of community-scale microgrids include mobile, local
service, utility distribution, military, industrial, and campus microgrids plus virtual
power plants. VPPs are typically a network of decentralized, medium-scale power
generating units that link renewable and fossil-fred generation with fexible power
consumers using a central control center. Community microgrids typically serve an
entire substation, are installed on the consumer side of the meter, provide backup
power, and are more readily replicated and scalable across the distribution grid when
comparted to traditional microgrids [32].
Motivations to develop community microgrids vary widely. Communities and
cities are seeking ways to act locally to solve large-scale problems. To be viewed
as meaningful, this requires fnding ways to respond to problems associated with
energy and environmental issues. Other communities seek improved reliability and
lower costs. Community microgrids are seen as solutions that have the potential to
supply electrical power in periods when the central grid fails. They also reduce util-
ity costs, provide new infrastructure and employment, and expand the local govern-
ment’s tax base [33]. Many communities see local microgrids as a means of meeting
their goals to reduce both greenhouse gas emissions and fossil fuel consumption.
This is accomplished by relying on renewables for electrical generation coupled with
the use of sophisticated control systems and energy storage technologies. Regardless,
it is common that community microgrids deploy both renewables and fossil fuel
(notably natural gas and/or diesel) in their operating confgurations to generate
electricity.
Military microgrids are motivated by the need to provide mission-critical feld
support, maintain base readiness, or meet policy goals. Dependency on grid-based
electricity is problematic for military operations in an era when central generation
and transmission can be easily targeted. Climate change is also a driver for mili-
tary bases. U.S. military offcials view climate change as a “secondary but insidi-
ous threat, capable of aggravating foreign conficts, provoking regional instability,
endangering American communities, and impairing the military’s own response
capabilities” [8]. Renewable energy microgrids help military bases reduce their reli-
ance on diesel fuel and reduce their carbon footprint.
154 Fundamentals of Microgrids

There are many examples of community microgrids. Successful examples of

microgrid deployment include those for the communities of Kodiak Island, Bonita
Springs, and Long Island. Most are fueled by using combinations of renewables
and fossil fuels. The Isle of Eigg off the coast of Scotland has its own microgrid
that uses diesel generators, 110 kW of hydropower with two generators, 2 kW
provided by four wind turbines, plus 32kW of solar PV [34]. The system offers
improved load management and continuous electricity with 95% from renewable
energy sources [34].
Successful microgrid deployment is achieved with community involvement and
support. Microgrids can be designed to be locally responsive and confgured to meet
local needs. They can more easily fulfll the design purposes of local communities
than by grid integration based on central generation and far-off service centers [11].
Microgrids offer more options for balancing intermittent energy generation than do
larger grids, because the tradeoffs are visible and local [11].

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and wildfre. https://microgridknowledge.com/community-microgrid-fre, accessed
27 December 2019.
156 Fundamentals of Microgrids

32. Clean Coalition. Community microgrids compared to traditional microgrids. https://cl

ean-coalition.org/community-microgrids, accessed 30 November 2019.
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 10 Ghana’s Transition to
Renewable Energy
Microgrids
Ishmael Ackah, Eric Banye, Dramani Bukari,
Eric Kyem, and Shafc Suleman

INTRODUCTION
Microgrids are considered to be one of the best alternatives for providing electric-
ity to remote locations with small populations. They can be designed to use local
resources, scaled to the required loads, and rapidly deployed. Using conventional
electricity transmission networks as a means of promoting access to electricity faces
geographic, fnancial, and technical challenges. This is because many rural com-
munities are sparsely populated and located far from grid connections. Such chal-
lenges have led to increased interest in off-grid and microgrid solutions. Ghana is not
an exception to this trend. The country established a target of achieving universal
access to electricity by 2020. The government and private sector companies invested
in off-grid and microgrid projects to provide services to the remaining areas and
island communities. There are notable differences in the services and results of the
government model compared to the private model of ownership and operation.
This chapter highlights the viability of solar photovoltaic (PV) microgrids for the
rural electrifcation in Ghana. It offers an analysis of the regulatory and fscal situa-
tion and offers recommendations for the use of renewables within a microgrid regu-
latory framework. To these ends, this chapter examines the microgrids deployed by
both the government and private investors. It assesses the differences in tariff struc-
tures, customer services, and reliability. Building upon the work of past researchers,
this analysis highlights the viability of microgrid solar PV systems for rural electrif-
cation systems. The chapter reports on the fndings from a study that uses a purpose-
ful sample of households and applies the subject evaluation method for an overall
assessment. These fndings indicate that expenditures on electricity using microgrids
were lower compared to the alternative of using kerosene and dry cell batteries.

ACCESS TO ELECTRICITY IN AFRICA

Universal access to affordable and reliable electricity in the least developed countries
is a top priority in meeting the goals of sustainable development. About one billion
people globally live without electricity, more lack suffcient or reliable access to
electrifcation, and about three billion cook or heat their homes with polluting fuels.

157
158 Fundamentals of Microgrids

Renewable energy (RE) is one of the vital ways to help countries develop modern,
low cost, secure energy systems. Solar PV microgrids are a viable method to close
the electricity access gaps in southern Asia and sub-Saharan countries [1,2].
Solar generation technologies offer a rapid, cost-effective means of providing
electricity to 600 million Africans who presently lack access to modern utility-scale,
grid-provided electricity [3]. Solar PV offers a modular solution for both on- and
off-grid applications which can provide electricity to single homes or microgrids for
loads ranging from several kilowatts to many megawatts [3].
Isolated microgrids utilizing solar PV can provide electricity to entire communi-
ties in a single project, enable interconnections with the local grid at a later date, plus
reduce operational costs [3]. Africa’s microgrids are usually small in scale and range
from 8 kW to 10 MW. However, large-scale industrial customers such as industrial
operations offer opportunities for larger solar PV systems up to 40 MW. Solar PV
microgrids offer important economic benefts for rural communities as either the
sole source of electricity generation or in hybrid confgurations with other genera-
tion sources. In Africa, installation costs for standalone solar PV microgrids or solar
PV-hybrid microgrids range from $1.9/W (U.S.) to $5.9/W for systems greater than
200 kW [3].

GHANA’S RENEWABLE ENERGY ACT

Ghana enacted its renewable energy act (Act 832) in 2011 to promote the develop-
ment, utilization, management, and supply of heat and power delivered in an effcient
and environmentally sustainable manner. The Act seeks to improve energy access
from Ghana’s RE sources. The country’s access rate in 2018 was 85%, which means
about 4.5 million people lack access to electricity. It supports the development of a
framework for the utilization of RE and provides enabling legislation to attract RE
investments.
Act 832 enlightens two important issues that require investigation: 1) how to
attract renewable energy investments to Ghana; and 2) how to improve access to
renewable energy. The focus of our study was to provide a viability analysis for RE
projects to clarify the challenges and risks for investors wanting to understand the
RE investment environment in Ghana. The study focused on solar PV microgrid
investment viability in select rural communities that lack access to Ghana’s national
grid. This will inevitably improve energy access in those rural communities which
lack grid-supplied electricity.

MICROGRID SOLAR PV SYSTEM VIABILITY IN GHANA

In Ghana, more than 85% of the communities with populations greater than 500 have
access to grid-supplied electricity [4]. About 15% of Ghana’s population live in rural
and sparsely populated communities and are not connected to the national grid [5].
Many communities with populations under 500, such as those in the Volta Lake area
and in isolated lakeside communities, lack access to electricity. Grid-based connec-
tions to remote communities require costly underwater cables, transmission lines,
and distribution lines. Dispersion and maintenance issues make grid connections
Ghana’s Transition to Renewable Energy Microgrids 159

uneconomical in such instances. Therefore, the use of distributed generation (DG) is

often the most technically and economically viable solution [5].
Ghana’s central government is targeting the construction of 55 renewable energy
microgrids by 2020 with the ultimate aim of developing 300 microgrids by 2030.
The targeted locations for microgrid deployment are lakeside, island communities
and rural off-grid communities [5]. In 2016, fve microgrid projects in island com-
munities using solar and solar–wind hybrid technologies with diesel gensets were
deployed.
One theme of the fourth annual Renewable Energy Fair organized by the Energy
Commission of Ghana in October 2018 was how to exploit energy resources at the
district level. One of the technical sessions focused on whether the state or the pri-
vate sector is best positioned to use RE to deliver access to electricity. The manag-
ing director of the local microgrid company indicated that the main challenges to
microgrid development in Ghana are the viability of a project’s fnances and regula-
tory support. Act 832’s aim of attracting and promoting private sector investments
to supply RE to rural communities must focus on providing a viable business envi-
ronment for private sector participation to meet the country’s energy requirements.
The Energy Sector Management Assistance Programs (ESMAP) developed
fve business models to generate and distribute electricity to these remaining com-
munities. Advantages and disadvantages for the investment models are shown in
Table 10.1 [4]. None emerges as a universally superior model. The ability to meet the
requirements of Act 832 is hampered by the ESMAP (2016). The key disadvantage
of the private ownership model is a lack of investment because of revenue collection
risks, high transaction costs, and concerns regarding the technical and managerial
capacities of community-based models. This highlights the main problem of our
study: how viable are solar PV microgrids for meeting Ghana’s rural community
electricity requirements?

PERSPECTIVES ON MICROGRIDS
Solar PV systems are nascent infrastructure projects in Africa. They often face
problems and business development challenges. Solar microgrid projects require the
engagement of many diverse stakeholders. Large projects have higher costs making
them less attractive as investment opportunities. The lack of development cost infor-
mation is a problem as there is no coordinated effort to document the installed costs
of solar PV projects in Africa or across specifc market segments. Gollwitzer et al.
relied on an analytical framework and the common-pool resource theory to analyze
rural microgrids [6]. They considered enabling sociotechnical and political condi-
tions, resource system characteristics (governance of local resources by, e.g., elite
groups, donors, or international non-governmental organizations, governments, and
civil groups), institutional arrangements, and environmental conditions that infu-
ence the viability of rural microgrid projects [6]. Rule-of-use issues surfaced which
prohibit using energy intensive appliances (e.g., irons) or installing technologies to
control usage. Time-of-use was identifed as being an important consideration as
businesses were encouraged to operate during the daylight hours when household
electric demand was lower and discouraged from operating during evenings when
160 Fundamentals of Microgrids

TABLE 10.1
Models for Microgrids Investments [4]
Microgrid business
model Description Advantages Disadvantage
Public model Public sector Customers have No role for private sector; highly
provides generation low tariffs. reliant on cross-subsidies.
and distribution.
Private model Private sector Less reliant on High revenue risks, high
provides generation cross-subsidies. transaction cost, less interest
and distribution. from the private sector; likely to
result in high cost refective
tariffs.
Mixed model (public Possible conficts over the
generation, public long-term regarding
distribution, private responsibility on reinvestments;
management model) lack of precedents.
Power purchase Clear division of Require recurrent subsidies (can
agreement (PPA) responsibilities; be through cross-subsidies).
model (generation customers have
private (on the basis lower tariffs.
of a PPA), public
distribution model
Community model Community Concerns regarding technical
acceptance and managerial capacities.

more electricity is required by households (i.e., for lighting and entertainment).

There were concerns about tariff structures and the variable willingness and ability
of customers to pay for services. Their study failed to capture an in-depth analysis of
participatory governance and energy access in rural microgrid electrifcation.
The International Renewable Energy Agency (IREA) identifed three issues that
needed to be addressed to resolve data collection problems in Africa [3]. First, a
standardized data collection system was needed that was agreeable to and imple-
mented by stakeholders. Second, governments, international development organiza-
tions, regulatory authorities, development banks, lending institutions, and others that
provide public fnancing and fnancial assistance to RE projects must be included in
the data collection process. Third, coordinated support for RE projects to include
sharing information on costs and trends needs to be encouraged [3].
Unlike other small-scale electrifcation approaches such as pico-lighting or solar
home systems (SHS), microgrids have greater potential to enhance local economic
growth and productivity [7]. For remote locations, solar PV microgrids combined
with battery storage are often cost-competitive compared with diesel-based power
generation. Alternatives to the solar PV microgrids include SHS Table 10.2.
In India, microgrids offer opportunities for rural electrifcation yet there has been
little private investment [7]. Microgrids provide a collective solution at a relatively
TABLE 10.2
Theoretical Review of Global and African Perspectives
Author Title Methodology Findings/recommendations
International Renewable Solar PV in Africa: costs Sidewise analysis. Findings: Solar PV microgrids are an attractive rural electrifcation option.
Energy Agency (2016) [3]. and markets. Solar PV project cost data are not systematically collected in Africa.
Recommendation: Coordinate efforts to collect the installed costs of solar
PV, across markets in Africa to improve policy-making and share
experiences among countries and regions.
Comello et al. (2016) [7]. Enabling microgrid Lifecycle cost analysis and Findings: Microgrids offer the potential for rural electrifcation while
development in rural India. stakeholder interviews. benefting economic growth and productivity. In India, developers do not
need a license to operate a microgrid solar system. There are no legal or
regulatory frameworks that specify what happens if a central grid is
extended to an area covered by a microgrid. Microgrid investments are
disadvantaged in central grid extensions because of subsidized central
grid tariffs.
Recommendations: Develop state-level regulations for microgrids that
address these problems.
Ghana’s Transition to Renewable Energy Microgrids

Bhattachayya S. (2014) [9]. Viability of off-grid Financial analysis— Findings: Regulatory uncertainties and the potential of grid extension can
electricity supply using levelized cost of hinder the business potential of a microgrid power system.
rice husk: a case study of electricity. Recommendations: Expand microgrids and extend services to consumers
south Asia. who are willing to pay to increase the economics of scale and scope. The
issues of regulatory uncertainties for microgrids should be solved to
reduce the risk of access to project funds.
(Continued)
161
 162

TABLE 10.2 (CONTINUED)

Theoretical Review of Global and African Perspectives
Author Title Methodology Findings/recommendations
Bhattachayya C. and Palit, Microgrid based off-grid Analytical framework: Findings: Microgrid and off-grid systems are required to enhance universal
D. (2016) [8]. electrifcation to enhance structured interviews, access to electricity. The private sector must be involved.
electricity access in focus group discussions. Recommendations: Provide regulatory clarifcation, strong institutions at
developing countries. the meso and local level with appropriate institutional arrangements,
access to soft funding, and bundling of projects. Employ standard
processes, metrics, and delivery of electricity to enable win–win
situations for all key stakeholders.
Gollwitzer et al. (2018) [6]. Rethinking sustainability Semi-structured interviews. Findings: No model of sustainable management of rural microgrids exists
and the institutional which contributes to high failure rates.
governance of electricity
access with microgrids:
electricity as a common
pool resource.
Knuckles, J. (2016) [12]. Business models for Business model analytical Findings: The study identifes 29 confgurations of elements within
microgrid electricity in framework and microgrid business models that supply the large and growing unmet
pyramid markets. interviews. demand for electricity in these markets.
Arranz-Piera et al. (2018) [5]. Microgrid electricity service Field survey, interviews. Findings: Residential electricity loads dominate rural electricity demand in
based on local agricultural Ghana. It is not proftable from the prospective of an entrepreneur with
residues: feasibility study 100% private funding; however, it is proftable with a 35% subsidy.
in rural Ghana. Recommendations: Develop solar PV to supplement biomass generation.
Fundamentals of Microgrids
Ghana’s Transition to Renewable Energy Microgrids 163

lower cost by offering basic electrical services. They increase local productivity and
promote economic development [8].
Using a comprehensive lifecycle cost analysis Comello et  al. determined that
microgrids using solar PV are more economical than incumbent energy services
available to households that lack central grid connections [7]. Entrepreneurs in India
do not require certifcation or licenses to start a microgrid project. Investments in
microgrids would be jeopardized if a central grid were extended because govern-
mental electricity subsidies typically fail to cover the full costs of grid-supplied
power. Therefore, in India threats of future central grid extensions create barriers to
microgrid project fnancing and development [7,9].
Financing microgrid projects is challenging due to the limited number of bank-
able contracts with consumers. Governments and international agencies can support
project fnancing through grants, loans, guarantees, and tax credits [9]. Regulatory
supervision of microgrid projects is undefned in many south Asian countries. This
creates potential for monopolistic exploitation, supply quality issues, and disputes
between suppliers and consumers [9]. There is no legal or regulatory framework for
rural microgrid projects that resolves what happens when a central grid is extended
to areas already served by microgrids thus stranding the investments in off-grid
assets [7,9,10]. Bhattachayya and Palit identifed regulatory uncertainties and a pol-
icy vacuum that hinders the growth of solar PV microgrids serving rural areas [8].
Strengthening the regulatory environment is one of the prerequisites for attract-
ing private investments in solar microgrid projects [8,9]. Microgrid electrifcation
involves a natural monopoly, control schemes to protect consumers and investors,
service quality monitoring, plus information incident reporting [8]. To be success-
ful regulations must: 1) avoid confusion about the service areas; 2) protect investors
from the threat of central grid extension; 3) ensure quality and reliability of services;
4) promote health and safety; 5) ensure transparency and fow of relevant informa-
tion; and 6) ensure fnancial sustainability through tariffs and support systems.

ENERGY REQUIREMENTS OF RURAL COMMUNITIES

There is a lack of modern energy services in rural communities in sub-Saharan
Africa where over 80% of rural people live without electrical power [10]. There is a
need to accelerate access to electricity in remote and sparsely populated rural com-
munities. Microgrids offer a modular and competitive solution [10]. Bhattacharyya
and Palit noted that microgrids are a recent development for providing electricity to
rural communities [8]. The challenges they face include business risks associated
with unknown consumer markets, weak institutional arrangements, non-supportive
regulatory and policy frameworks, limited access to low-cost fnancing, and inad-
equate local skills and capacities [8].
Solar PV microgrids can offer electricity to rural communities using three busi-
ness models: lighting only, lighting plus, and anchor loads. Lighting only models
use micro systems to provide lighting to rural households, small villages, hamlets,
or concentrated populations. Each user gets two light points plus a mobile charg-
ing point with electrical demand limited to 10W per household. These solar energy
applications are adequate to displace the harmful effects of using kerosene lamps.
164 Fundamentals of Microgrids

The lighting plus model provides electricity to other households and the local com-
munity. Households with higher electricity demand and greater ability to pay for
services can be supplied power while meeting commercial electrical demand. The
anchor load model is a variation of the lighting plus option. It has an anchor elec-
tricity user (e.g., a telecommunication tower or local industry) that provides the base
electric load and the excess supply is distributed to the community for their lighting
systems [8].
Arranz-Piera et al. identifed four main categories of electricity demand require-
ments in rural communities in a microgrid confguration: residential, institutional,
commercial, and industrial [5]. Residential communities include private households
that use electricity for lighting, air conditioning, refrigeration, and entertainment.
Institutional consumption includes the electrical consumption of public institutions
in the community [5]. Public lifting, water pumping, and electricity use in religious
buildings, schools, and health centers are examples. Commercial consumption repre-
sents electricity consumed by small commercial entities such as dressmakers, shops,
bars, and hairdressers. Their electrical consumption is related to each community’s
characteristics. Industrial consumption represents the electricity needed by small
industrial consumers and their usage depends on their loads and operating cycles.
Examples include water purifcation operations, irrigation farming, and food pro-
cessing operations (cocoa, millet, shea butter), among others.
Gollwitzer et al. in their study assessed the social and political impacts of rural
microgrid development in East Africa. They determined that electricity consumers
in rural communities struggle fnancially and have less ability to pay tariffs that
refect the total cost of providing electricity [6]. For solar PV microgrid users, meter
installation is expensive which means small DG systems must charge fat tariffs
which creates incentives for increased usage by customers [6]. They also engaged the
common pool resources theory which notes that social institutions can be formed to
achieve sustainable management of rural microgrid systems [6].
Building upon the work of these past researchers, our analysis highlights the
viability of microgrid solar PV systems for rural electrifcation in Ghana. We assess
the regulatory and fscal situation with a goal of recommending a RE and microgrid
regulatory framework. In the absence of electricity supplied by a central grid, people
in rural areas must rely on kerosene, diesel, or small RE generation. As an alterna-
tive, how viable are solar PV microgrids for providing electricity for isolated rural
communities?

METHODOLOGY
Our study applied a cross-sectional method to examine the socioeconomic impacts
of microgrids to provide off-grid electricity services in selected communities in
Ghana. Using the renewable energy technology (RET) penetration barriers research
methodology proposed by Painuly, interviews were conducted with consumers in
selected communities, power sector representatives, and members of the Ghana
Energy Commission [11]. A combination of structured questionnaires and inter-
views were used to study 300 respondents in eight communities in four regions in
Ghana. The subjective evaluation method (SEM) was used to examine the impacts of
Ghana’s Transition to Renewable Energy Microgrids 165

access to microgrids on survey respondents. In addition, a descriptive analysis of the

respondent’s satisfaction levels and factors that inhibit or promote their productive
use of electricity was conducted. The information collected from the feld investiga-
tion was then vetted and captured using a CSPro template. The captured data were
cleaned to avoid errors before analysis.

DISCUSSION OF FINDINGS
The categories of fndings regarding microgrids in Ghana included policy and regula-
tory aspects, differences between private and government microgrids, plus differences
in reliability, capacities, technologies, and tariffs. Social impacts included the various
impacts of the projects on household expenditures, the work of women, and education.

MICROGRID POLICY AND REGULATION IN GHANA

Countries that have successfully developed local microgrids have carefully fostered
the social, environmental, and economic conditions, needed to create a sustainable
regulatory and fnancial scheme specifc to the country. Ghana’s central government
through its Energy Commission has drafted microgrid regulatory policies which
promote development in off-grid communities and regulate private sector engage-
ment. These regulations apply to the development and operations of microgrids with
generation capacities up to 1 MW. Persons and companies installing and operating
microgrids that provide between 100 kW to 1 MW of DG capacity are required to
obtain a license. Applicants are obliged to apply for and obtain an additional license
if an existing system is expanded beyond 100 kW capacity.

PRIVATE AND GOVERNMENT MICROGRID SYSTEMS

Microgrid developments are relatively new in Ghana as most are less than fve years
old. Efforts to develop and increase access to electricity using microgrids in mostly
rural communities face practical diffculties including system management, weather,
and technical challenges. The ability of consumers to pay for the services provided
is an economic concern. Successful operational models include private and govern-
ment-managed systems.
Government-managed systems in Ghana currently operate in a few island commu-
nities as it would be uneconomical to connect them to the national grid. Microgrids
in these communities offer the most viable option for providing electricity as they
are isolated by Volta Lake. Four communities in four districts beneft from the gov-
ernment-managed microgrids: Pediatorkorpye in Ada East, Atigagorme in the Sene
district, Kudorkope in Krachi East, and Agilakorpe in Krachi West. These projects
began operating in 2016. Energy Commission data shows that over 6,000 inhabit-
ants in about 417 households were connected to these microgrids. Ghana’s central
government in collaboration with the World Bank funded the development of these
projects through the Ghana Energy Development Access Project (GEDAP) which
were offcially turned over to the Volta River Authority, the main government agency
responsible for generating and supplying electricity.
166 Fundamentals of Microgrids

Private investment in microgrids is limited as the systems are developed and

operated by a private entity without government funding. Only a few companies
have ventured into this business. Black Star Energy, a Ghanaian company special-
izing in microgrid development, was the frst private entity to be licensed to operate
solar powered microgrids. The company now operates 15 projects in the Ashanti
region with ongoing developments in nearby regions. The four communities being
considered for microgrids are Aniatentem, Affulkrom, Amanhyia, and Odumasi, all
in the Bekwai Municipal Assembly.

CAPACITY AND RELIABILITY

Government-managed solar PV microgrids were constructed with a combined
energy capacity of 650 kWh/day. The microgrid confgurations included a backup
diesel generator to provide supplementary power. These DG microgrids are low volt-
age consisting of a three-phase backbone feeder with a single-phase lateral that con-
nects single loads at the customer’s premises. In addition, the systems are confgured
with a dedicated feed for high effciency light emitting diode (LED) street lamps
throughout the villages. Households are connected and paid in accordance with a
contract tariff class which is determined by their monthly electricity consumption.
Private model microgrids use solar PV and battery storage. The capacity of the
systems ranges from 5 kW to 20 kW with a sizeable development pipeline. They are
designed with the ability to be scaled to meet household and commercial electrical
demand.
The electrical capacities of microgrids developed by both the government and pri-
vate operators were below consumer expectations. It was revealed that the electricity
supplied to end-users could not support the load of some of their home appliances.
This was more prevalent in communities with government-managed microgrids.
Private model customers who could afford to pay for access to additional power for
their home appliances were supplied with more electricity. Our results indicated that
private model consumers were more satisfed with the reliability of the electricity
supplied than those under the government model. The reliability of the solar PV and
battery systems were somewhat affected by weather and technical challenges in the
island communities.

TECHNOLOGIES
To comply with the licensing provisions, applications for microgrids must include
information about the technologies to be used, installation capacities, and the experi-
ence the company has in microgrid deployment. The technologies deployed by the
government and privately owned businesses are similar as they use solar PV designs
based on semiconductor materials that directly convert sunlight to electricity. The
electricity supplied is direct current (DC) which reduces costs and losses as AC/DC
inverters are not required.
Systems under the government model sell electricity on a pre-paid basis using an
energy daily allowance (EDA) with smart-metering to eliminate defaults. Consumers
cannot acquire electricity unless it is approved by a community-based operator.
Ghana’s Transition to Renewable Energy Microgrids 167

However, the system is unable to automatically detect illegal connections and notify
authorities which decreases tariff collections. It relies on the manual checks by a
community-based operator.
Unlike government microgrids, private systems provide their consumers with
opportunities to request and remotely purchase electricity via a mobile transaction
whenever more power is required. Users can also notify operators via text message
of faults, though operators normally perform weekly system checks. The detection
technology used by private microgrids makes it impossible for users to engage in
illegal connections.

TARIFFS AND RATES

The government is bound by its uniform national tariff (UNT) which regulates fees
charged to residents of rural island communities that use electricity from solar PV
microgrids. The UNT mandates that all domestic customers pay the same tariff for
electricity. The UNT rates are important to end-users in remote communities served
by microgrids. The island communities using the government model are covered
by the UNT and their subsidized tariff rates are relatively low. The most a typical
household spends for electricity is between 25 and 35 Ghȼ monthly (1 Ghanaian
Cedi = 0.18 USD) with some households spending as little as 10 Ghȼ per month. The
median monthly income in Ghana is 4,906ȼ GHS ($853 USD).
Consumers served by private developers do not enjoy government-subsidized tar-
iffs. Microgrids developed and operated by private entities such as Black Star Energy
have tariffs higher than those charged by the government. Tariffs are guided by the
levelized cost of energy and designed to recover all costs invested in developing the
microgrid. Under this system household spending for electricity ranges from 35 Ghȼ
to 50 Ghȼ per month.

IMPACT OF MICROGRID DEVELOPMENT

Analysis of data from households under both government and privately managed
models reveals that there have been positive improvements in people’s lifestyles in
the communities of Pediatorkorpye, Atigagorme, and Kudorkope. These impacts
were economic, social, and educational.

IMPACT ON EXPENDITURES FOR FUEL

The total and average fuel consumption and expenditures for fuel declined due to the
community microgrid projects. The data and observations made from discussions
with community members indicate that a considerable amount of funding has been
expended to secure indigenous energy sources (e.g., kerosene, dry cell batteries) for
lighting. To estimate the household expenditures, the avoided costs of fossil fuel
purchases and travel expenses to the market town to purchase those fuels must be
included. The average expenditure on fuel was much greater in the government com-
munities. Village residents could only travel by motor boat to purchase fuel, at a cost
of at least 10 Ghȼ per person for a round-trip journey on market days. The average
168 Fundamentals of Microgrids

monthly expenditure on fuel per household was about 30 Ghȼ to 40 Ghȼ. The situ-
ation with communities under the private model is similar but they could travel any
day of the week to secure fuel for lighting.
Analysis of the data has established that households under both the private (57%)
and government (62%) models reduced their expenditures for fuel. Those under the
private model saved about 5 Ghȼ to 7 Ghȼ per month while those under the govern-
ment model saved between 5 Ghȼ and 10 Ghȼ per month.

IMPACT ON WOMEN
When the welfare of women in rural communities improves so does the welfare of
their entire family. The surveys indicated that microgrid projects have improved the
lives of local women and they are happier. It was found that women feel more secure
with solar lighting at night which provides better illumination and facilitates mobil-
ity. Women generally indicated that they had more free time as they were relieved
from the previous duties of fnding fuel for lighting and other activities. They now
use this time to engage in commercial activities and leisure. While few women par-
ticipate in commercial endeavors, those who do sell fsh, pure water, and ice cream.
They have indicated that their incomes have increased by 40 Ghȼ to 60 Ghȼ per
month as a result of having access to the electricity supplied by the microgrids.

IMPACT ON EDUCATION
The impacts of microgrid development on education in communities under the
government model were more pronounced than in communities under the private
model. All four communities have schools but student attendance and performance
were lower prior to the development of the microgrids. School attendance has since
improved. Daily learning hours increased from an average from two to three hours
to fve to six hours per day—almost twice the previous number of hours.
The impact of solar PV microgrids on education under the private model was
less than in the communities under the government model. The main reason is that
there were no schools situated in those communities and children must travel long
distances to attend school. Student attendance had not increased as compared to the
communities under the government model. However, it was reported that learning
hours had improved to an average of four to six hours per day.

CONCLUSIONS AND RECOMMENDATIONS

For Ghana’s rural communities, solar PV offers a renewable energy solution for gen-
erating electricity that is a vast improvement over the use of fossil fuels. To assess the
viability of solar PV microgrids in Ghana, we initially provided an analysis of the
data obtained from the surveyed companies and communities. The literature review
indicated that the regulatory environment is crucial for microgrid viability. Ghana
has policies to promote, develop, and use microgrid systems in off-grid communi-
ties and regulate private sector engagement in microgrid development. Licenses are
required to install and operate microgrids. Regulations apply to microgrids with DG
Ghana’s Transition to Renewable Energy Microgrids 169

capacities from 100 kW to 1 MW. Ghana has both private and government models
for ownership and operation of solar PV microgrids.

CONCLUSIONS
Our analysis revealed interesting fndings regarding the capacities and reliability
of private and government solar PV microgrids serving the communities stud-
ied. Irrespective of ownership, generation capacities are unable to meet consumer
demand because capacities were unable to handle the loads of some residential appli-
ances. Unlike the government model, private companies allowed customers to pur-
chase additional electricity according to their needs if they had the ability to pay.
This is contrary to the view that additional electricity generation is not required in
rural communities; more capacity is actually needed. Solar PV microgrid capacity
and supply must be adequate to continuously meet consumer loads.
It is diffcult for system operators to mandate which appliances consumers use and
when they can use them. To be successful, the government model must mimic the
private model by improving fexibility and allowing consumers to purchase power
as needed. Interestingly, despite having diesel generators to provide backup power,
the government model was less reliable than private systems that used only solar
PV with battery storage. The backup diesel generators were unable to resolve reli-
ability problems amidst weather and technical challenges. This suggests that solar
PV microgrids may not need diesel backup generation to maintain reliability. Good
management and assessment of environmental and technical challenges can make
solar PV microgrids more reliable.
Generally, the government-owned business model uses older technology. While
project development approaches are similar, the privately owned business model was
found to provide better performance, better reliability, improved monitoring of ille-
gal activities, better fault reporting, and greater revenues from sales. The private
model avoided power losses, detected illegal activities, and allowed customers to
purchase power as needed. The private model for solar PV microgrids is more cus-
tomer-focused, and responds to the issues of proftability, sustainability, and viability.
Customers under the government model enjoyed subsidies under UNT yet costs
were not offset. Tariffs under the private model were higher than those under the
government model. However, despite the subsidies, government customers had more
power supply and reliability problems.
The socioeconomic benefts of microgrids that provide solar-generated electricity
to rural communities are important. Indoor air quality is improved as there is less
reliance on kerosene as a fuel source. Other benefts include cost savings on fuel
purchases, improvements in the welfare of women, and educational benefts such
as increased hours of learning. With solar-generated electricity, household expen-
ditures were much lower when compared to previous expenditures on kerosene and
dry cell batteries. Cost savings were among the benefts for households supplied with
electricity by both privately operated and government-operated microgrid systems.
Women now enjoy improved security and have more free time, which is used for
commercial and leisure activities. Remarkably, commercial activities performed as a
result of greater access to electricity increased incomes by about 40 Ghȼ to 60 Ghȼ
170 Fundamentals of Microgrids

monthly. Concerning education, students in the various communities under the two
models had increased hours of learning due to solar PV microgrids. Attendance
improved at schools under the government model.
Community, environmental, and geographic factors have benefcial effects on the
acceptance and adoption of solar PV microgrids. For instance, the analysis showed
that in some rural communities prior to the operation of the microgrids, electricity
was expensive because of travel costs associated with transport by boat to buy fuel.
The transportation costs increased the expense of fuel acquisition. The development
of solar PV microgrids brought relief, saved time, avoided risks associated with river
transport, and eliminated transportation fees. In one community, morning weather
patterns affected the supply of electricity from the solar PV microgrids, emphasizing
how weather can impact the viability of solar PV microgrids. Consequently, to fully
assess the benefts and viability of solar PV microgrids, the community, environ-
mental, and geographic aspects must be considered.
Solar PV microgrids in rural communities are economically and technologically
viable using the private business development model. The viability of microgrids
depends on adopting the appropriate technologies for development and operation
considering metering systems, fexibility in demand, power loss prevention, revenue
generation, detection of illegal activities, and reporting of faults. Other factors may
also impact the viability of a microgrid.

RECOMMENDATIONS
Private participation in solar PV microgrids is generally preferable and must be pro-
moted rather than the governmental model. The private model takes contingent steps
with the help of technology to avoid risks and ensure reliability, proftability, and
sustainability. The government should refrain from the policy of extending subsidies.
This is because the government may fail to make the necessary transfer to the private
entities which impacts the operation of private companies and electrical power reli-
ability. Furthermore, in every solar PV microgrid project, emphasis should be placed
on providing the capacity consumers require. To be successful microgrid operators
must supply power to match customer loads. This necessitates predictive forecast-
ing of energy demand. We recommend that a cash fow analysis be performed for
each project to establish the proftably and fnancial sustainability of the various
microgrid alternatives.
Providers should be mindful that provision of electricity has benefcial social and
economic impacts on communities and creates commercial initiatives. Developers
and researchers should be concerned with the present need for electricity in rural
areas and its multiplier effects such as lifestyle improvements, new business develop-
ment, and expanded economic activities.

ACKNOWLEDGMENTS
This chapter is an updated version of an article entitled “Ghana’s Transition to
Renewable Energy Microgrids: An Assessment of Ownership, Management and
Performance Dynamics” that was originally published in the International Journal
Ghana’s Transition to Renewable Energy Microgrids 171

of Strategic Energy and Environment Planning, Volume 2, Issue 3, Stephen Roosa,

Ph.D. (editor) in March 2020. The editor extends thanks and credit to the Association
of Energy Engineers, Atlanta, Georgia for use of previously published material and
to the authors who allowed the article to be republished.

REFERENCES
1. United Nations (2018). Sustainable development goals report 2018. New York.
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pic/energy/overview#3, accessed on 24 November 2019.
3. International Renewable Energy Agency (2016, September). Solar PV in Africa: costs
and markets. https://www.irena.org/publications/2016/Sep/Solar-PV-in-Africa-Costs-a
nd-Markets, accessed 9 August 2019.
4. Energy Sector Management Assistance Program (2016). Ghana: microgrid for last-mile
electrifcation. Exploring regulatory and business models for electrifying Lake Volta
Region. The World Bank. Knowledge Series.
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Velo, E. (2018). Microgrid electricity service based on local agriculture residue: feasi-
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6. Gollwitzer, L., Ockwell, D., Muok, B., Ely, A., and Ahlborg, H. (2018). Rethinking
the sustainability and the institutional governance of electricity access and microgrids:
electricity as a common pool resource. Energy Research and Social Sciences, 39, pages
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7. Comello, S., Reichelstein, S., Sahoo, A., and Schmidt, T. (2016). Enabling microgrid
development in rural India. World Development, 93, pages 94–107.
8. Bhattacharyya, C. and Palit, D. (2016). Microgrid based off-grid electrifcation to
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12. Knuckles, J. (2016). Business models for microgrid electricity in base of the pyramid
markets. Energy for Sustainable Development, pages 67–82.
 11 Local Energy Supply
Possibilities—Islanding
Microgrid Case Study
István Vokony, József Kiss, Csaba Farkas,
László Prikler, and Attila Talamon

INTRODUCTION
In low-voltage distribution systems, some networks are not operated and maintained
by an authorized distribution system operator (DSO). These subnetworks are usu-
ally connected to the synchronous system at a single point. The accountable mea-
surement is resolved exclusively at this specifc connection point. After that point,
submeters serve as a basis for accounting among users. At these network endpoints
voltage-related problems arise frequently since the grid is often in poor condition
after the connection point. There are two common solutions to this problem: 1) elim-
inate the subnetwork and substitute it with a conventional system from the medium-
voltage (MV) to low-voltage (LV) transformer endpoint; or 2) provide an operational
microgrid island system for consumers at the statutory level. In this chapter, electri-
cal service quality is analyzed, construction and operational requirements are cited,
and through on-site measurements, a renewable energy mix optimizer application is
introduced. Based on the measurements and operational experience, a calculation
methodology is established to compare a traditional solution with the island opera-
tion possibilities. By comparing network development costs and islanding solution
costs, an optimal weight factor can be defned which can be used as an effective
investment decision support parameter.
Over the last century, the world’s electricity supply has been provided primarily
by centralized power systems using conventional power plant technologies—com-
busting fossil fuels (coal, natural gas, etc.)—or nuclear energy or renewables such as
large hydroelectric power plants [1,2]. In these systems the power plants, producing
hundreds of megawatts or even gigawatts of power, transfer electricity to distribu-
tion networks and then to the end-users through a transmission network. However,
in the last few decades, production has shifted somewhat to the consumer side with
much smaller energy generation units [3]. An ever-increasing number of these use
renewable energy. Another major change is that information technology (IT) systems
are now linked to electricity production and supply support processes. Rather than
rebuilding the aging network, new island microgrid systems using distributed power
generation and energy storage technologies should be developed [4].

173
174 Fundamentals of Microgrids

There are special locations (e.g., on remote islands, in mountainous areas) where
the only way to provide electrical power is to establish local energy systems. The
local island microgrid solution can be competitive in cases where a synchronous
network is available, but new approaches are needed for economic reasons. One
catalyst for new approaches to providing electricity is the growing renewable genera-
tion industry.

INTERNATIONAL OVERVIEW
According to the International Energy Agency, over one billion people live without
electricity, accounting for 17% of the Earth’s population. Almost all of these peo-
ple live in developing countries in Asia or Africa, where local renewable electrical
energy generation can often be the most economical solution.
Many available electrical system standards lack explicit specifcations for the
power quality of off-grid systems (i.e., island microgrids). We can use the protocol
for networked systems, though there are partial regulations in European Norms (EN)
61000 standards [5,6]. Power quality, however, holds special importance in partial
systems, because the intermittent behavior of the weather-dependent renewables
(sun and wind) results in signifcant power fuctuations which also impacts supply
voltages. Inverters operating in island mode must also comply with the Institute of
Electrical and Electronics Engineers (IEEE) 519-014 standards [7,8].
The local grid defnitions developed by the Smart Grid Interoperability Panel
(SGIP) [9] provide several defnitions for networks that can be operated in island
mode:

• According to the CIGRÉ (International Council on Large Electric Systems),

microgrids are networks with consumers and distributed generation units
that can be operated independently of the main electrical grid (see Figure
11.1). These units connect to one single central control unit. The defnition
is congruent with that given by the U.S. Department of Energy. The SGIP
notes that these defnitions disregard off-grid systems that are grid-indepen-
dent or grids not connected to a main network [9].
• Given the above, a new defnition for microgrid is proposed: a distribution
grid that consists of consumers and distributed power generators and can
be operated independent of the electricity system by islanding at one single
central regulator (see Wissner et al. [10]).

The SGIP also specifes smaller units as nanogrids or picogrids [9]. Picogrids are
device level systems. The nanogrid lacks a precise defnition; it usually indicates a
local energy community smaller than a microgrid which can be operated in island
mode independent of the main grid. The SGIP has noted the inaccuracy of the defni-
tions of a nanogrid [9]. Almost all the defnitions concur that the nanogrid is a direct
current (DC) system. In most cases, a nanogrid is defned as a single building or a
building complex, which consumes only a few kW.
Defnitions for islanded operation of a local grid include that of the International
Electrotechnical Commission (IEC) which states it is a specifc part of the electricity
Local Energy Supply Possibilities 175

FIGURE 11.1 Potential smart microgrid [6].

system that is not connected to the interconnected system but is nevertheless ener-
gized [9]. Island in a power system is “a portion of a power system that is discon-
nected from the remainder of the system but remains energized” [11].
There are several forms of islanding as detailed by IEEE [8]. A common feature
is that all assume a distribution network that is not electrically connected to the main
grid due to intended or unintended (i.e., due to a fault) disconnection. An islanded
microgrid grid can be characterized based on its size according to IEEE [8]:

Local island: producers and consumers located within a facility/building.

Secondary island: several producers and consumers connected to the second-
ary winding of a MV/LV transformer.
Side island: consumers and producers connecting to one side of a distribution
network.
Section island: one branch with its consumers and production units.
Substation bus island: a part of a network supplied by a substation bus.
Substation island: a whole district supplied by the substation.

In Kempener et al. the off-grid networks are defned as those that are not used or do
not depend on the electricity provided by the interconnected power grid [12]. Within
these networks, we distinguish those using renewable energy and traditional ones
which use primarily diesel generators.
The voltage quality supplied by the islanding system—unless indicated differently—
must comply with current regulations for a low-voltage connection point. The voltage
at the point of connection shall be within a ±10% range over the course of a one-week
measurement period under normal operating conditions in 95% of the averaged values
for any ten-minute period [13]. All ten-minute averages of the one-week measurement
period must fall within ±10% of the nominal value. The maximum voltage increase
may exceed 115% of the nominal voltage; at the same time, the voltage drop may not
reach 80% of the nominal average voltage for any one-minute interval.
In the case of islanding supply, it is highly probable that the condition “there is
electricity in its surroundings” is unmet, which may exempt the service provider from
176 Fundamentals of Microgrids

troubleshooting obligations. The lack of service is more likely caused by weather

conditions (local production failure) than by a fault in the licensee’s machinery.
Any possible operation after interconnection and disconnection (such as island-
ing) must occur according to the IEEE 1547 standards. Bhatacarya et al. mention
that the relevant standards do not include specifcations for off-grid networks, but
suggest that they be more permissive than the requirements for the electricity grid
[14]. This contradicts Bollen et al. who state (although it is not explicitly about the
off-grid network, but only about microgrid operating in islanding) that a system
operating in island mode may not have worse indicators than what is established as
quality requirements for interconnected electrical grids by the EN 50160 standards
[15]. In fact, it is assumed that quality indicators may show even better results than
those in the distribution network.

GUARANTEED SERVICE LEVELS

While there are guaranteed service level requirements for off-grid systems, the
issue is relevant. The Council of European Energy Regulators (CEER) urges meet-
ing the Fit Compliance team required regulations [16,17]. For example, neither the
requirements of the Hungarian Energy and Public Utility Regulatory Authority
nor of the UK’s Offce of Gas and Electricity Markets (OFGEM) for the guaran-
teed service level concerning an islanding system are, as yet, determined [18,19].
However, they are similar to the Microgeneration Certifcation Scheme that states
that off-grid systems can receive feed-in tariffs if they meet the specifcations for
microgrids [20,21]. In such cases, off-grid systems are to be treated as any other
casual system.
It is likely that the existing guaranteed service level requirements will be applied
in a similar manner to that of an interconnected system, but doing so may result in
additional costs [22–24].

CONSTRUCTION ASPECTS
During the construction stage of a microgrid project, many components of an island-
ing system need to be considered (e.g., on-site measurements, location and size of
capacitors, voltage regulators, reactors, protection devices, and transformers) [25,
26]. Planning for the anticipated consumer loads and their load characteristics needs
to occur prior to construction and reevaluated annually in the light of any proposed
changes. By determining the characteristics of the production units and defning
black start capability, the behavior of the islanding microgrid can be defned when
frequency and/or voltage changes occur.
The limit values of voltage asymmetry must be identifed, stability limitations
must be specifed, and the specifcations for the protection devices must be provided.
The potential of future microgrid expansion should also considered.
Transient voltages can occur when large loads (e.g., motors) are started; an action
plan is needed for this situation (e.g., apply soft start capabilities for motors). This
is particularly important if the island microgrid is weaker than the distribution net-
work, as voltage dips due to the motor starting will be more signifcant. System
Local Energy Supply Possibilities 177

grounding (earthing) is also important; all pertinent guidelines for interconnected

networks should be followed.
If there is inadequate generation capacity in the island, appropriate load shedding
strategies must be implemented [27]. If there is an emergency diesel generator, swi-
tchover specifcations are needed.
Because an island microgrid is a smaller system than a distribution network, cer-
tain problems that may arise in the interconnected power system may be more com-
mon when islanding:

Load asymmetry: careful attention must be paid to the proper phase assign-
ment; in the case of single-phase consumers, a blown fuse might cause sig-
nifcant asymmetry.
Inrush current: there may be smaller nominal power transformers in the
microgrid when operating as an island; in these instances, the inrush cur-
rent can be mitigated by properly sizing the system. Furthermore, IEEE
mentions an issue with motors in the island. As laboratory measurements
prove, when switching from one source direction to another, the motors
have an inrush current when started [8].
Power outages: for lighting devices, it is important to have a continuous supply
of electricity in the island. As in the case of power outages, depending on
the technology, it may require as much as a minute to recover the original
operation of the light source [28]. Depending on the type of the island, it
may be necessary to provide emergency lighting with a dedicated electrical
supply.
Frequency control: the primary controller must operate in isochronous mode.
If there is more than one generation unit, regulation requirements must be
determined. According to IEEE, the so-called V/Hz ratio should also be
monitored. This value is provided for each device (transformer, motor, etc.)
and operating at higher values may cause energy losses or damage due to
heating [8].

Employee training is important to keep the operating company’s technicians,

mechanics, and staff up to date on system maintenance and operations (how to man-
age black starts, what protection schemes should be used, etc.).

PLANNING PRINCIPLES
For an off-grid network using renewables, sizing must be based on the peak power
consumption and on the annual electrical demand [29]. This can be challenging since
supply power is to be provided for areas previously not electrifed, yet no measurement
results are available to gauge the requirements. In such cases, surveys can be used to
canvas consumer habits and needs of similar but previously electrifed districts [30].
An example from Bosnia and Herzegovina (Figure 11.2) shows a typical con-
sumer curve for households in sparsely populated rural areas [31]. In addition to
the daily consumer profle, it is also necessary to consider seasonal variations (see
Figure 11.3).
178 Fundamentals of Microgrids

FIGURE 11.2 Average customer profle in one-hour resolution.

FIGURE 11.3 Seasonal change in average consumption.

To avoid or manage these volatilities, one solution is to use energy storage tech-
nologies, typically battery energy storage.

OPERATIONAL ASPECTS
IEEE defnes the operating requirements for distributed resource island systems [8].
These include: 1) meeting the real and reactive power demand of the consumers; 2)
keeping the voltage and frequency close to their nominal values (this does not apply
Local Energy Supply Possibilities 179

to long-term islanding operation but to those parts of a microgrid system that become
islanded); and 3) providing the system with proper control capabilities. To have con-
trolling capability, a generation unit that can be operated outside the ranges defned
in IEEE 1547 is needed (i.e., if a motor requires a large amount of reactive power
to start, a generating unit must be available with suffcient reactive power capacity)
[32]. Fluctuations in load dynamics have to be adequately followed. This can be
achieved by incrementally ramping loads, load management, or load shedding.
It is necessary to provide adequate dynamic characteristics to follow the potential
changes. Such transient stability requirements arise when there is a sudden change in
load, a production unit outage occurs, or faults occur inside the island.
Protection devices different from the conventional ones are required (e.g., the
short circuit current is usually lower, so the conventional protection devices must be
tuned to these new requirements).
According to IEEE requirements, microgrids operating in island mode must
also have adequate dynamic characteristics [8,33]. They must be sensitive to sud-
den changes in voltage and frequency and capable of reacting properly to these
changes [34].
If relevant sources are missing, the dynamic behavior of the islanding opera-
tion’s voltage and frequency control device should be monitored by on-site mea-
surements [35].
Another important issue is the synergy of the island’s frequency and voltage sta-
bilizer device (for small systems this means a battery inverter) with other similar
devices of the island (photovoltaic inverters) [36]. Current international research
efforts are focused on coordinating the maximum power point tracking (MPPT)
functions, battery charging and lifecycle management functions, and islanding regu-
lations [37].

LOCAL SOLUTION: CONTAINER MICROGRID

Next, a specifc application is considered which is called a container microgrid.
This provides a detailed and measurable example of microgrid considerations. The
primary objective of container-scale microgrids is to have access to electricity in
areas where no synchronous network connection is possible because of high invest-
ment costs and/or a low rate of return. A mobile power plant is one solution to
this problem. It may be used in army feld practices, telecommunication equipment
operations, humanitarian missions, crisis or emergency situations, and in assisting
reconstruction or black starts.
For this application, a specifc container microgrid was made available to be exam-
ined and measured (see Figure 11.4). Based on a detailed analysis a decision support
application was created. The container was designed to operate as a microgrid in
island mode. It generates electricity mainly from renewable energy sources (solar
and wind power). This energy can be stored in batteries which can be used for buff-
ering. When the battery charge level falls below a specifed value (in this case 20%),
the automated system switches on a diesel emergency generator.
The main feature of the power plant is its mobility. All devices are placed in a 20-foot
long marine container. The container forms the structure’s base while in operation.
180 Fundamentals of Microgrids

FIGURE 11.4 Container microgrid when installed [38]. (Source: E.ON, Hungary grid inno-
vation department, 2016.)

Because of the standard size, it can be easily replicated and transported by boat or truck.
With a unique container being available for study, on-site measurements the operational
limits of several scenarios could be tested to assess the reliability of island operation.

CONTAINER MICROGRID ASSESSMENT

Small-scale microgrid island systems often utilize renewable energy sources such as
solar photovoltaic (PV) modules. These devices produce DC electricity; inverters are
needed to create three-phase alternating current (AC) network. To deal with the load
fuctuations and asymmetries as previously described, an adequate inverter design
must be used.
We used a number of investigative approaches to assess the transient behavior
of a small microgrid operating in island mode. Based on our results, on-site mea-
surements were performed for the energy container. In our investigations, various
asymmetrical and symmetrical load confgurations were used to simulate consumer
behaviors. During the investigation period, the inverters maintained the voltages and
the frequency within the permissible ranges (50 Hz ± 0.05% for frequency), regard-
less of the asymmetries or load fuctuations.
The electric parameters of the three-phase inverter that supplied this small-scale
islanding system are described as follows:

• nominal load capacity: continuous load 3.5 kVA

• overload capacity: up to 30 minutes with 4 kVA
• short-term overload (power boost) up to fve seconds with 10.5 kVA
Local Energy Supply Possibilities 181

• output voltage: sinusoidal, 230V ±2%

• frequency: 50 Hz +/- 0.05% (49.975 Hz to 50.025 Hz)
• total harmonic distortion calculated for voltages (THDu): < 2%

To investigate the transient behavior of the islanding system and the feeding inverter,
artifcial loads were used to simulate the load behavior of a residential consumer.
The switching events used to examine the transient behavior of the system are listed
below and the load changes in each phase are shown for the sample period 11:42 to
12:00 (see Figure 11.5). Only devices that could be found in a typical household were
used for the simulation.

• In the phase (denoted as “S” in Figure 11.5), a heating fan with temperature
control was operated that automatically cycled off when the required tem-
perature was satisfed (± 2kW changes on the power curve).
• The only change in the apparent power measured in phase S was the activa-
tion of a vacuum cleaner.
• The power peaks that took place simultaneously in all phases occurred
when the 3 × 980W consumer was energized.
• Specifc load peaks in phase T were caused by turning the microwave oven
on and off.
• At 11:56, phase S was switched off by the inverter for overload protection.
During the measurement periods, the root mean square (RMS) values, time
functions of the phase voltages, phase currents, and frequency of the con-
sumer island fed by the container were recorded.

FIGURE 11.5 Changes in consumer loads in each phase.

182 Fundamentals of Microgrids

Figure 11.5 depicts the resulting load fuctuations in each phase for the sample period.
Figure 11.6 illustrates the phase voltages maintained by the single inverter feeding the
islanding system. Generally, the inverter managed to cope with sudden load changes
and maintained voltages within the permitted ranges. The single exception happened
at 11:56 when phase S was switched off by the inverter for overload protection.
To conclude the on-site measurements, the annual energy consumption, maximal
power, plus the possible load asymmetries and fuctuations must be accounted for
when designing an islanding system. This is especially true if the consumer group
consists of only a few households. Within these parameters an appropriate solu-
tion can be established that is capable of supplying the microgrid’s consumers with
proper voltage quality.

DECISION SUPPORT FOR SOFTWARE DEVELOPMENT

As previously explained, in certain cases establishing an islanded microgrid can be
a valid alternative to extending a distribution grid. Next, a simple and easy-to-use
decision support tool developed by the authors of this chapter is introduced for use
by interested professionals.
For this example, an elaborated Microsoft Excel-based decision support software
provides a site-specifc technical proposal for implementation based on network
parameters, consumer data, conventional network development, or alternative solu-
tions (e.g., energy containers). The application consists of several imbedded work-
sheets (see Figure 11.7). Worksheets labeled “IN” contain input data that the user
needs to enter or download from another (e.g., measurement) database in advance.
These worksheets provide input data for worksheets that perform the substantive
calculations. The worksheet tag indicates which input data sheet contains input

FIGURE 11.6 Voltage fuctuations due to time-varying consumer loads.

Local Energy Supply Possibilities 183

FIGURE 11.7 Overview of worksheets for decision support Excel workbook.

information for the spreadsheet. These worksheets mainly include profles, type
information, and specifc costs. Cells with input data are highlighted on each work-
sheet (Figure 11.8).
Worksheets whose name begins with Arabic numerals contain diagrams that help
to evaluate the results. The planning steps follow each other according to the num-
bering of the worksheets. The selection of the components actually used and the
technical specifcations are indicated on these worksheets.
Results, including output data, are shown with a gray background (Figure 11.9). In
some cases, the value of some input data can also be changed by sliders or scrollbars
(Figure 11.8), which allow a quick overview of the effects of the various changes.

COST OF NETWORK DEVELOPMENT ALTERNATIVES

In addition to the technical solution of a container supply, it is also possible to estimate
the cost of the conventional network alternative (wire, earthworks, transformer, etc.)
This estimate accounts for three possible cost components: to build a medium-voltage
(MV) network, to install a MV/LV transformer, or to build a low-voltage (LV) net-
work. Cost estimates are based on the knowledge of specifc costs. After selecting
the appropriate wire types and setting the required lengths, the cost of constructing
the overhead transmission lines or cables can be estimated. For wiring, it is possible
to specify a mandatory amount for the transformer. The costs for this (in accordance
with the distribution rules) normally belong to the DSO. For this analysis the possibil-
ity of cost sharing between the customer and the service provider is not considered.

FIGURE 11.8 Example of cells with input data.

FIGURE 11.9 Example of cells displaying computational results.

184 Fundamentals of Microgrids

To examine the islanded system for each customer, the decision support Excel
workbook was used. In the created worksheets, the predefned equations calculate
the technical parameters of the supply of the insulated customer or consumer groups
by different inputs. As its name suggests, the fle is not a precision scaling program.
It is intended to approximate the parameters and costs of the microgrid and support
the process of deciding whether an islanded system is viable.
Essential data for load model:

• annual consumption (kWh)

• maximal demand (kVA)
• permitted daily maximum consumption (kWh)
• annual consumption profle, monthly breakdown

Adjustable parameters of the energy container:

• inverter rated power (kVA)

• PV rated power (kWp)
• battery capacity (kWh)
• costs (Ft)

After specifying the parameters, the application will perform the scaling of the sys-
tem and specify the data for the following items to be applied:

• PV rated power (kWp): determined by monthly production and consump-

tion (in the case of multiple consumers, the result of each profle).
• Inverter rated power (kVA): the maximum single-phase power requirement
is three times the one phase. Assuming a symmetrical three-phase layout,
the application can handle the asymmetric load distribution as well.
• Storage capacity (kWh): the capacity of containers is determined by approx-
imating the table based on the maximum production time (eight days) and
maximum allowable daily consumption.

Based on the determined values, it is possible to calculate how many sections of

a particular container type are required to be installed. This can be illustrated by
developing two diagrams of the intended system: 1) one to describe the monthly elec-
trical demand of consumers and the expected production of the solar PV system; and
2) another showing monthly production and consumption, maximum output from
overproduction, and corrected consumption using the previous maximum storage to
estimate the unmet system demand. The second diagram can show an estimate of the
long-term gap that can be overcome by providing electrical storage.
The technical calculations are an invaluable decision support tool. In addition,
an economic comparison can be made using the application to estimate the network
costs (transformer, MV and LV network), the wire types, and their predefned costs.
The network licensee and customer pricing can be specifed. The tool can be also
used to estimate the economic return of the comparative solutions over a 20-year
period from the perspective of the network licensee.
Local Energy Supply Possibilities 185

SUMMARY
Islanded operation of a local microgrid often refers to a specifc part of the electric-
ity system that is not connected to the interconnected system. There are a number of
forms of island operation. Any possible island operation after interconnection and
disconnection must occur according to the IEEE 1547 standards. Since an island
microgrid is much smaller than a distribution network, problems that occur in inter-
connected power systems may be more common when islanding.
Providing a quality electrical supply in a microgrid island operation requires a com-
plex analysis that has legal, technical, and economic considerations. Based on tests with
a sample container microgrid, this chapter defnes the key parameters needed for a
technical and economic analysis, and suggests decision-makers use a decision-support
spreadsheet for their assessments. Using this tool, the example island-based solution
becomes economically feasible when compared to the investment costs of establishing
a power supply network with public transmission lines and a conventional transformer.
The voltage quality requirements for islanding systems are the same as for low-
voltage connection points. The current requirements for service continuity would be
diffcult to apply to islanding systems. To resolve this, it is necessary to update the
relevant regulations, including the attributes of the guaranteed service level. For volt-
age quality, the issue of harmonic distortion is of utmost importance for microgrid
electricity production units and energy storage systems that can be connected to the
community internal network using inverters. These inverters behave as non-linear
generators, and because only a fraction of the usual short-circuit power is available
in the island, the voltage distortion they cause will be signifcantly greater than that
of the interconnected network.
Another important issue is the cooperation of the island’s frequency and voltage
stabilizer devices with the other similar devices of the island (e.g., additional solar
PV inverters). In the case of frequency control, the primary controller must operate
in isochronous mode; if there is more than one production unit, it must also be deter-
mined how they are regulated.

ACKNOWLEDGMENTS
This chapter is an updated and adapted version of an article entitled “Local Energy
Supply Possibilities—Islanding Microgrid Case Study” that was originally pub-
lished in the Energy Engineering, Volume 115, Issue 6, Steve Parker (editor) in 2018.
Reprinted by special permission of The Fairmont Press, Inc.

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 12 Energy Blockchain—
Advancing DERs in
Developing Countries
Alain G. Aoun

INTRODUCTION
Blockchain, a database shared across a network of computers, is a secure peer-to-
peer trading platform that has gained the interest of the world’s new businesses and
industries. In a future in which consumers are encouraged to become producers, and
everyone is encouraged to become entrepreneurs, energy blockchains have an impor-
tant role in smart grid frameworks. Blockchain has the potential to change people’s
digital lives and the ways transactions are processed. By eliminating the roles of
third parties in transactions, blockchain can make our systems more effcient, thus
reducing cost and improving reliability. As the renewable energy sector continues to
develop, the energy market is shifting toward smart decentralization which creates
new markets for microgrids. Nevertheless, in developing countries, the deployment
of distributed energy generation faces economic and fnancial barriers. Therefore, in
countries lacking distributed energy resources (DER), the integration of blockchain
and peer-to-peer energy trading creates incentives for end-users to invest in DERs
and to develop microgrids. When blockchain is integrated in the power network, it
enables the tracking of energy generated by DERs, supports the reporting of savings
from energy conservation measures, and facilitates the trading of CO2 credits.
How can the blockchain be modifed to serve the energy market and create oppor-
tunities for energy producers and consumers? This chapter addresses this question
by providing an overview of the blockchain mode of operation, highlighting the
potential of the blockchain in the energy trading business, and identifying the chal-
lenges and barriers confronting the development of the energy blockchain.
The World Energy Issues Monitor published a report by the World Energy
Council that offered an annual survey of key challenges and opportunities faced by
energy leaders in managing robust energy transitions [1]. Blockchain was identifed
as one of the most critical uncertainties within the digitalization elements and was
perceived by global energy leaders to be an issue of relatively high impact and uncer-
tainty [1]. Blockchain has the ability to change the way we manage, organize, record,
and verify transactions. According to Don Tapscott, Tapscott Group, the blockchain
technology that underpins cryptocurrency could revolutionize the world economy.
Blockchain’s model provides an opportunity to shift from a centralized transaction

189
190 Fundamentals of Microgrids

structure (exchanges, trading platforms, energy companies) to a decentralized sys-

tem based on peer-to-peer (P2P) trading.
The world’s electric grids are undergoing transformations to apply intelligent
technologies as a result of policies that encourage the use of renewable and DERs.
Such policies increase the involvement of electricity consumers in managing and
producing energy. Improving the reliability of today’s energy supply system is hin-
dered by the existing infrastructure of the centralized power supply system called
the electric grid. The grid’s unidirectional centralized energy system that supplies
electricity to passive customers using traditional sources of energy is shifting to
a dynamic, bi-directional network which is increasingly dependent upon DERs
(e.g., intermittent renewable energy, electric vehicles, and energy storage systems).
The diversity of the technologies, sources of energy, and power purchase agree-
ments (net metering and feed-in tariffs) have important roles in advancing the use
of DERs. In underdeveloped countries, DERs face economic, social, and environ-
mental challenges and barriers. These include community culture, dissatisfaction
with the existing infrastructure, scant fnancial incentives, and lack of enabling
legislation.
In communities that have low DER penetration and a high demand for clean
energy, the integration of blockchain and P2P energy markets can be an incentive for
community residents to develop DERs.
In this chapter, we highlight the key challenges and barriers facing the imple-
mentation of DERs in developing countries. We also identify how the application
of blockchain in the energy sector can introduce new incentives to develop DERs in
developing countries based on worldwide business startups.

BLOCKCHAIN OPPORTUNITIES FOR ENERGY TRADING

A blockchain is a distributed chronological ledger that is hosted, updated, and vali-
dated by several peer nodes, rather than by a single centralized authority. Eliminating
the central authority and having immutable transaction records that are validated by
several peers, the blockchain increases the simplicity, speed, and transparency of
transactions between two peers. An example of the implementation of blockchain is
the cryptocurrency Bitcoin. While credit card transactions require validation from a
bank and require time, blockchain doesn’t require central validation and two-party
transactions happen immediately [2].
Since blockchain offers a secure peer-to-peer trading platform, it has gained the
interest of businesses and industries in energy markets. The blockchain promises a
transactional platform that is fast and highly secure, has lower incidents of error, and
reduces capital requirements [3]. It allows companies to automate more while pro-
cessing greater volumes of data with fewer people at lower cost and risk. Companies
that market energy are dealing with greater requirements for reporting, transparency,
and security of data, which increases energy trading process costs and the need for
personnel and resources. Energy blockchain provides solutions for these challenges.
The energy sector is one of the industries where blockchain can have substantial
impact.
Energy Blockchain—Advancing DERs 191

Traditional transactional models are based on a centralized ledger structure (See

Figure 12.1). Transactions between network nodes occur only through an interme-
diary third party who maintains the ledgers. Involvement of an intermediary is
often necessary because it creates trust when transaction partners are unacquainted.
Intermediaries usually charge fees for their services. The involvement of intermedi-
aries increases the processing time required for transactions. Since all transactions
are linked and stored on a central server or infrastructure, centralized structures
have the disadvantage of a single point of failure. Alternatively, decentralized sys-
tems, such as the one offered by blockchain, have different network nodes that can
interact directly with each another without an intermediary. There are many ways
that transaction ledgers can be maintained. With a secure P2P distributed ledger
technology, problems associated with centralized structures can be resolved.
In a peer-to-peer energy trading system operating on a blockchain platform, any
individual member of the network can enter into an energy exchange with any other
network member without restrictions from a centralized authority or the need for an
intervening third party. P2P energy exchanges are possible using smart contracts in
which energy transactions are immediate, automated, and fexible based on supply
and demand in the system. Smart contracts are an appealing feature of blockchain
technology. A smart contract is an executable code that operates on the blockchain
to facilitate, execute, and enforce an agreement between untrusted parties without
the involvement of a trusted third party [4]. The purpose of a smart contract is to
automatically execute the terms of an agreement once its specifed conditions are
validated.
Blockchain technology has the potential to transform the entire contractual life-
cycle by minimizing the need for human intervention from the time of trade execu-
tion to the time of payment. Blockchain technologies will improve market effciency
and potentially open and disrupt energy markets creating unforeseen opportunities.
Among these is providing incentives for DER development in developing countries.

FIGURE 12.1 Centralized ledgers versus decentralized ledgers.

192 Fundamentals of Microgrids

DER CHALLENGES IN DEVELOPING COUNTRIES

Though microgrids provide a platform to implement more cost-effective DERs,
their development faces numerous technical challenges. Infrastructure associated
with grid capacity and stability are barriers to the integration of renewable energy
(RE) resources and distributed power generation. A microgrid’s need for dual-mode
switching functionality between grid-connected and island mode remains techni-
cally challenging. The conversion to island operating mode has two forms: 1) exe-
cuting a black start, which allows a short period of outage before reenergizing the
microgrid in island mode; and 2) performing a seamless transition within a short
time period after disconnecting from the main grid [5]. The transition of reconnect-
ing to the main grid also creates technical issues. Resynchronizing the two grids is
sometimes sensitive. Like any power system, microgrids need protection schemes
against external and internal faults.
The lack of skilled utility workers in some regional markets limits the imple-
mentation and development of DERs. Another barrier is the lack of awareness and
knowledge of personnel about the availability and performance of renewable energy.
The economic challenges that hinder the development of microgrids which use
renewable energy sources include market and fnancial barriers. Identifed market
barriers include the following:

• Inconsistent pricing structures can disadvantage renewables, especially

those in long-term power purchase agreements.
• Subsidies for fossil fuels used to generate electricity make it diffcult for RE
resources to compete.
• The failure of pricing methods to include externalities such as health,
social, and environmental costs underprices electricity that is generated
using fossil fuels.

Financial barriers include lack of adequate funding and fnancing for renewable
energy. The commercialization of DERs heavily depend on reducing the production
costs of RE, storage technologies, and energy management systems.
Many developed countries and developing countries are adopting and promoting
renewable energy resources and distributed generation to reduce their dependency
on fossil fuels. Increasing the penetration of RE into the power generation system
enhances their energy security. These countries have established numerous policies,
directives, and standards, and set targets to support the implementation of distrib-
uted generation, RE, and microgrid development. The problem is not the absence
of regulation but its weaknesses and ambiguities. Some regulations are undefned
or not clearly stated. An example is Article 16(1) of the European Union’s 2009/28/
EC Renewable Energy Directive which requires member states to take appropriate
steps to develop transmission and distribution grid infrastructure to allow the secure
operation of the electricity system. These directives can be diversely and subjec-
tively interpreted.
Another barrier to the development of RE resources is the adequacy of existing
transmission lines to transmit energy from the points of generation to the points of
Energy Blockchain—Advancing DERs 193

consumption. Existing regulatory barriers hinder efforts to deploy renewables and

expand microgrid markets. These include:

• lengthy administrative procedures for approval and permit

• policy instability with sudden changes and stop-and-go situations
• price competitiveness and cost friction, such as the direct and indirect costs
related to the process such as commissions, interest rates, taxes, etc.

Identifying renewable energy zones is a regulatory barrier to the development of RE

resources. Site selection is a regulatory issue during the design phase of large-scale
RE power generation projects due to possible site conficts with wildlife habitats,
water reserves, and other environmental concerns. Without clearly defned policies
and regulatory instruments associated with distributed generation grid penetration,
it is improbable that these systems can survive.

INCENTIVES FOR DEVELOPING COUNTRIES

In industrialized countries, blockchain applications compete with advanced tech-
nological solutions supported by solid infrastructure and are embedded in the
frameworks of trusted public institutions that enforce local regulations. In develop-
ing countries, this framework is not always available and often basic services (e.g.,
access to bank accounts) may be inaccessible. Alternatively, the market penetration
of smartphones in many developing countries is as high as in industrialized countries.
This has led many developing countries to adopt blockchain-based mobile money
transfer applications. An example is M-Pesa, a mobile phone-based money transfer,
fnancing, and micro-fnancing service launched in 2007 by Vodafone. According to
Vodafone, after ten years of operation M-Pesa is now available in ten countries with
more than 29.5 million active customers averaging 614 million monthly transactions
[6]. The M-Pesa case is one of several examples that proves that developing countries
offer fertile markets in which to implement new fnancial platforms.
The use of blockchain in the energy sector offers another potentially successful
application. Next, some of the new ideas for blockchain applications in the energy
sector based on real-world examples are introduced.

BLOCKCHAIN AND SMART METERS

Using blockchain and cryptocurrencies for monetary transactions is an achievable
and tested application of blockchain technology in the energy sector. Blockchain
eliminates the need for a third party in money transfer transactions and reduces
transfer costs by eliminating administrative fees, bank fees, and commissions. An
example of such an application is the United Nations World Food Program (WFP).
The WFP is expanding its Ethereum-based blockchain payments system to avoid
the transfer fees incurred when using the conventional banking system. The WFP
performed a pilot test in the Jordanian refugee camp of Azraq to successfully facili-
tate cash transfers for over 10,000 refugees on its blockchain payments platform.
According to Bernhard Kowatsch, the chief of Munich WFP’s innovation laboratory,
194 Fundamentals of Microgrids

the pilot project saved the agency $150,000 a month and eliminated 98% of the
bank-related transfer fees [7]. Blockchain decreases fundraising and operational
costs, improving transparency, accountability, and control over how funds are used.
Savings from using the blockchain’s platform can be reinvested.
An early application of the blockchain in the energy sector is through the installa-
tion of smart pre-paid electric meters that provide power to the end-user once money
is transferred from the end-user’s account to the utility account. This application
improves end-user payment discipline and reduces the cost of reading meters, bill-
ing, and collections. In Lebanon and many other countries, utility companies face
diffculties in collecting amounts due on unpaid invoices [8]. Pre-paid electric meters
offer a solution which decreases utility company losses, leads to lower energy rates,
and avoids increases in electricity prices.
Another application of blockchain for energy sector money transfers is demon-
strated by the South African company Bankymoon who use Bitcoin to perform
remote payment transactions with compatible smart meters. The application works
as follows: assume a donor wants to support a school in a developing country; the
donor can send cryptocurrency directly to the school’s smart meter, enabling elec-
tricity from the grid to be supplied to the school.

SMART CONTRACTS AND P2P ENERGY TRADING

Decentralized cryptocurrencies have been much more successful than many prior
incarnations of electronic cash [9]. The ability to conduct smart contracts via a plat-
form called Ethereum has increased blockchain applications. Ethereum is a public
blockchain platform that can support advanced and customized smart contracts using
a Turing-complete programming language [10,11]. The Ethereum platform supports
withdrawal limits, loops, fnancial contracts, and gambling markets. NXT is another
public blockchain platform that allows non-customized smart contract templates.
Smart contracts have a potentially major role in the integration of the blockchain in
the energy sector.
One application of energy smart contracts is managing peer-to-peer energy
transactions in private community microgrids (see Figure 12.2). U.S.-based startup
TransActive Grid, launched in early 2016, enables its users to trade energy using
smart contracts via blockchain. The project consists of connecting fve Brooklyn,
New York households with solar photovoltaic (PV) systems with nearby consum-
ers interested in buying excess electricity produced by their neighbors [12]. Similar
initiatives have been launched by Power Ledger in Perth, Australia and Grid
Singularity in Austria. In addition to energy exchange, Grid Singularity offers
data analysis, benchmarking, smart grid management, green certifcate trading,
and energy trade validation. Collected technical and fnancial data can be used for
real-time asset valuation of DER power plants. The collected data can be benef-
cial for refnancing or selling a power plant allowing investors to perform online
due diligence. Other uses of the collected data include assessments of generation
capacity, power availability, pricing, forecasting, and energy trading [13]. For elec-
tric utilities, collected data has a future role in the development of grid-balancing
mechanisms.
Energy Blockchain—Advancing DERs 195

FIGURE 12.2 Peer-to-peer energy trading in community microgrid.

Using blockchain platforms for P2P energy trading in community microgrids pro-
vides a competitive advantage for innovative retailers and a better return for excess
generation, plus a low-cost, transparent, secure, and instant payment system for elec-
tricity transactions. This model is ideal for households, building owners, and retail-
ers who produce renewable electricity using DERs.

ENERGY BACKED CURRENCIES

The lack of fnancial incentives or funds is the primary barrier facing the devel-
opment of distributed energy resources. This challenge applies to both developed
and developing countries. In 2016, approximately a third of Germany’s electricity
consumption was generated using renewables. During one winter day in February
2020, over 75% of the country’s electricity was generated by wind power. Despite
the success of this transition to renewables, the central government recently reduced
fnancial incentives for new RE installations, particularly solar PV [13].
An energy-backed currency might be the type of incentive needed to improve
the economic feasibility of renewable energy-based power generation. The concept
of an energy-backed currency is similar to the gold reserves that are used to stabi-
lize national currencies. An application of this concept is offered by the SolarCoin
Foundation, a nonproft organization. They focus on promoting solar energy genera-
tion by providing SolarCoin to solar energy producers [14]. Nick Gogerty and Joseph
Zitoli, two founders of the SolarCoin Foundation, had an idea for an energy-backed
currency called DeKo in 2011 [15]. In 2014, the DeKo was transformed by the
SolarCoin Foundation into a digital asset reward program for RE installations based
on a new cryptocurrency. SolarCoin is a digital currency backed by solar-generated
electricity, electronically representing a verifed 1 MWh of solar-generated electric-
ity. The main purpose of this initiative was to provide an incentive to produce solar
energy by rewarding SolarCoin to producers of solar electricity. SolarCoin is active
196 Fundamentals of Microgrids

in 17 countries and is intended for worldwide circulation. It can be exchanged for

other cryptocurrencies or conventional currencies. Holders can use their SolarCoin
to pay for products and services from participating merchants and service providers.
The Jouliette is another energy-backed currency named after the joule, an SI
energy measurement unit. The Jouliette is backed by physical energy production. In
September 2017, Spectral and Alliander launched the Jouliette token at De Ceuvel,
a city playground for innovation and creativity in Amsterdam and a showcase for
sustainable urban development [16]. A private smart grid made the Jouliette model
feasible for the De Ceuvel community. With the Jouliette token, the De Ceuvel com-
munity members make P2P energy transactions using blockchain. This ensures
that the transactions are secure, without the need of a bank or trusted third party.
Transaction histories can be shared with all community members enabling auto-
matic verifcation. The De Ceuvel community is exploring further applications for
the Jouliette tokens such as using it to trade for goods and services within the com-
munity [17].
Energy-backed currencies using blockchain might provide incentives for commu-
nities in developing countries, especially if combined with smart contracts and P2P
energy trading within community microgrids.

BLOCKCHAIN FOR ELECTRIC VEHICLE CHARGING

In some countries the private sector is not allowed to supply electricity to the util-
ity grid, or there are severe limitations which makes this infeasible. When incen-
tives and development funds for DERs in developing countries are lacking, using
blockchain for charging plug-in electric vehicles is an alternative. Widespread use
of electric vehicles (EV) becomes more feasible when drivers can universally access
charging stations [18].
A concern is how to simplify billing at charging stations, especially ones located
in public parking spaces. Blockchain can be used to build a simple, secure billing
model for EV battery charging and thus help remove this barrier. EV drivers could
park their vehicle at any blockchain-compatible charging station while the vehicle
autonomously logs on to a charging station and recharges automatically. Once the
vehicle leaves the parking space, the charging station automatically invoices the
driver for the electricity received using blockchain technology. Since EVs have
energy storage systems, excess energy stored in their batteries can be fed back to the
network with the owner earning money for storage services. The DAV Foundation’s
blockchain-based application for EVs is an example of this application which creates
possibilities for vehicle owners, mobility services, riders, and shippers. The DAV
Foundation’s token enables exchange of energy between the grid and EVs. The plat-
form records transactions and provides compensation using DAV tokens [19].
BlockCharge is another newly established blockchain application for EV battery
charging. It uses the Ethereum blockchain to facilitate EV charging. This project was
launched by the German utility Innogy, assisted by a company named Slock.it. The
concept of BlockCharge is based on the smart plug, which can be used as a normal
electrical outlet plug but is linked with an identifcation code [20]. Users install an
application on their smartphones to authorize the EV charging process. It connects
Energy Blockchain—Advancing DERs 197

to Ethereum blockchain which negotiates the price, records the charging data, and
manages the payment process (see Figure 12.3) [20]. BlockCharge uses a business
model based on the one-time purchase of the smart plug and a transaction fee for the
charging process [20]. BlockCharge is aiming for a worldwide authentication, charg-
ing, and billing system with no intermediary. Once induction charging for electric
vehicles becomes more widely adopted, applications like BlockCharge will manage
the entire EV charging process.
The application of blockchain technology for charging electric vehicles represents
a change in how private businesses interface with their customers. This model (see
Figure 12.3) is ideal for small businesses, shopping malls, offce buildings, and car
parks that offer customers renewable energy charging for their plug-in EVs.

KEY CHALLENGES AND BARRIERS

Blockchain energy-based applications provide solutions to the challenges and bar-
riers associated with the development of DERs. Despite the number of blockchain
startups that successfully operate worldwide, there are technological constraints that
challenge the broader implementation of blockchain in the energy sector.
Unlike cryptocurrency transactions, energy transactions involve physically deliv-
ering the electricity. A blockchain-based energy model must refect the physical
confguration of the power grid. The large scale of the blockchain required might
be a challenge due to the multiple interferences with the distribution or transmis-
sion networks. Implementing large-scale energy blockchains might cause network
capacity problems. Blockchains such as Ethereum and Bitcoin are only capable of
processing three to fve transactions per second [22]. Therefore, transaction capac-
ity has to increase signifcantly to counter this challenge. It is technically easier to
implement a blockchain-based energy model in small communities or in isolated or
independent microgrids.

FIGURE 12.3 Blockchain-based electric vehicle charging [21].

198 Fundamentals of Microgrids

Another problem is encountered with the installation of blockchain-compatible

smart meters. In addition to cost, technical challenges arise from the physical con-
nection between the electrical power system and the blockchain. These include infor-
mation sharing, privacy, and security.
Information sharing is an issue because of the transparent nature of the block-
chain ledger. Due to this, it might be possible to deduce from the blocks information
related to energy transactions such as consumption patterns, and the quantity and
price of purchased or sold energy. Such information might give indications to com-
petitors and be a problem for utility providers and industrial consumers.
Privacy is a concern in a fully functional blockchain-operated electrical energy
market. Because of the transparency of the ledger of the blockchain-trading infra-
structure it might be possible to deduce information about closed electrical energy
transactions. This could compromise the privacy of consumers, electrical utilities,
and other energy suppliers within the electrical power system.
To be considered as a large-scale energy solution, blockchain has to prove that it is
more effective and secure than other available alternatives. Due to the importance of
energy in national security plans, the security of the energy supply and data should
outweigh other considerations. Stability of a digital energy system is crucial to its
successful operation. It must operate without internal complications and be shielded
against cybercrimes and espionage. Thus, cybersecurity is a major challenge that
must be resolved prior to the broader implementation of blockchain in the energy
sector.

CONCLUSION
The fourth industrial revolution is associated with a global trend toward a decentral-
ized energy grid. Blockchain is the technology that can move the energy system from
its centralized form to a smart decentralized network more appropriate for microgrid
deployment. Blockchain is a database shared with a network of computers that acts
as a record of transactions [23]. Since transaction records are stored on multiple com-
puters and updated simultaneously, it’s much more secure than a centralized system
[23]. Blockchain can be viewed as an important overlay on the internet similar to the
world wide web in the 1990s.
Nevertheless, blockchain market infltration will be met with resistance because
it represents an extreme change to the present ways of doing business, especially
since it eliminates the need for trusted third party intermediaries. The frst stage of
phasing out intermediaries was initiated with the internet and blockchain will be its
second stage. Yet this resistance might be less in developing countries than in indus-
trialized ones. Like the integration of smartphones, developing countries represent
fertile markets for the growth and prosperity of blockchain technology. Blockchain
is an ideal technology for disrupting energy transaction processes.
The ability to conduct smart contracts via a platform is shown to enable and expe-
dite peer-to-peer energy trades which will further decentralize the energy markets of
the future. Electric vehicle charging offers an example. Considering the blockchain
potential in developing countries from the distributed energy perspective, this chap-
ter identifes the challenges and barriers associated with the development of DERs
Energy Blockchain—Advancing DERs 199

in developing countries and highlights opportunities associated with the integration

of blockchain-based solutions to overcome these challenges. Blockchain is offered
as an example of a transaction system that can support and incentivize microgrid
development. Moreover, this chapter provides a review of the existing worldwide
energy blockchain startups and details the major confronted limitations, related to
scalability, security, stability, and privacy.

ACKNOWLEDGMENTS
This chapter is a revised version of a peer-reviewed article entitled “Energy
Blockchain—Opportunities and Challenges in Advancing Distributed Energy
Resources” that was originally published in the International Journal of Strategic
Energy and Environment Planning, Volume 1, Issue 4, Stephen A. Roosa, Ph.D.
(editor) in November 2019. The editor extends thanks and credit to the Association
of Energy Engineers, Atlanta, Georgia for use of previously published material and
to the author of the chapter who approved that the article be republished.

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 13 Smart Microgrids

INTRODUCTION
This chapter considers smart microgrids. It explains what they are, how they work,
and the key differences between traditional and smart microgrids. The main objec-
tive of this chapter is to discuss how smart systems are integrated into microgrids.
Examples include advanced energy technologies and systems that enable the eff-
cient delivery of electrical energy.
Microgrids can generate electricity using fossil fuel, renewables, and other clean
energy technologies. Clean energy-based direct current (DC) microgrids are consid-
ered to be a revolutionary power solution [1]. Matching the electrical energy supplied
by microgrids with loads can be diffcult. The intermittency of power generation
associated with renewable energy (RE) can result in problems with power genera-
tion, distribution, and demand which contribute to electric grid instability [1]. Smart
microgrids use sensing systems and direct digital control (DDC) systems to over-
come these issues and enable their customers to connect to the supply networks in
real time.
Smart grids are modern electricity distribution systems that monitor, protect, and
automatically optimize the operation of interconnected elements including genera-
tion equipment, high-voltage distribution, automation systems, and energy storage
[2]. They are characterized by a bi-directional fow of electricity and information to
create an automated, widely distributed energy delivery network [2]. Like microgrids,
smart microgrids can generate AC or DC electricity. They offer the benefts of dis-
tributed computing and communications to deliver real-time information and enable
instantaneous balancing of electrical supply and demand at the level required for
each discrete device. A control system is a key feature of smart grids. Smart grid
controls are typically the central computer and load dispatch location from which the
distribution of total system generation is managed, and the monitoring and control
of system stability and load frequency is performed. Algorithmic software platforms
provide decision-making and predictive intelligence capabilities. Some elements of
the control system are decentralized and capable of independent operation.

SMART MICROGRIDS AND THEIR BENEFITS

As microgrids are being connected to smart grids, new theories have emerged rede-
fning how microgrids are deployed. These nascent microgrids have variously been
called advanced microgrids, advanced remote microgrids, or smart microgrids.
There are many benefts associated with smart microgrids and they employ a wide
range of technologies.

201
202 Fundamentals of Microgrids

ADVANCED MICROGRIDS
The Smart Energy Power Alliance (SEPA) has a working group that advocates
emerging concepts associated with microgrids [3]. SEPA has proposed a defnition
for advanced microgrids as “electricity delivery networks that are intelligently man-
aged, energy and resource effcient systems” [3]. They “interconnect, interoperate,
and optimize the performance of loads, distributed resources, and energy storage
using a layered control scheme, within defned electrical boundaries that act as a
single controllable entity with respect to the macrogrid at the point of common cou-
pling… they can island, disconnecting from the grid to enable it to operate in both
grid-connected or island modes” [3]. Advanced microgrids “balance supply with
demand in real time, schedule dispatch of resources, and preserve grid reliability”
[3]. They are designed to optimize energy profles and effciencies, enhance island
performance, and maximize the economic benefts associated with grid intercon-
nectivity [4].
A report by Sandia National Laboratories notes “a major goal for advanced
microgrid systems is to develop promising new solutions to integrating advanced
microgrids capable of operating in parallel with the utility distribution system and
transitioning seamlessly to an autonomous power system complete with its controls,
protection and operating algorithms. It is expected that advanced microgrids will
be felded in a wide variety of electrical environments ranging from substations to
building-integrated systems” [4]. It also suggests that applying new components to
advanced microgrids will entail advanced controls, operational methodologies and
protocols, and secure communications [4].

ADVANCED REMOTE MICROGRIDS

A subcategory of advanced microgrids is advanced remote microgrids. These
microgrids operate in very isolated locations, often in harsh environments such as
in caves, deserts, artic areas, or places at high elevations. They are often required
to provide continuous power and may require sophisticated and hardened con-
trol systems. While the defnition of advanced remote microgrids is somewhat
unclear, they have identifable attributes. Holdmann and Asmus have compiled
some of their unique features which they categorize as either mandatory or pre-
ferred [3].

Mandatory Microgrid Features

• High penetrations of local distributed and local renewable energy resources.
Remote microgrids should be capable of achieving instantaneous penetra-
tion from RE generation of 100% of the load with an annual average pen-
etration of 50% or more.
• At least one non-firm RE resource should be incorporated into the sys-
tem. Managing high penetration levels of variable RE resources such as
wind or solar is much more complicated than achieving similar levels
of penetration from baseload RE sources such as hydropower or geo-
thermal [3].
Smart Microgrids 203

Preferred Microgrid Features

• If the system uses a diesel generator, it must be capable of operating with
the diesel generator turned off when adequate RE resources are available.
• The controls platform will usually feature state-of-the-art technology
capable of managing high penetrations of RE resources. This control plat-
form would lean toward a distributed grid edge intelligence, with auxiliary
components required to regulate voltage and frequency, and leverage smart
inverters or direct current modular technologies to achieve continuous reli-
ability and resiliency.
• Smart meters or some other form of advanced telemetry are used for utility
billing purposes. This capability enables individual energy costs to be allo-
cated according to actual energy consumption. (This is vital for access to
energy from remote microgrids in places that operate using mobile phone-
enabled, pay-as-you-go business models.)
• The system will likely incorporate some form of energy storage with hybrid
energy storage solutions being ideal. This might include batteries, fy-
wheels, ultra-capacitors, thermal storage, or pumped hydro storage.
• The advanced remote microgrid would not be limited to the provision of
electricity but might also provide both heating and cooling (trigeneration)
and ultimately serve as a platform for other essential services.
• While capable of integrating the latest technology advances in DER, energy
storage, and controls, the design would reconcile operations and mainte-
nance challenges, and leverage remote monitoring, training, and trouble-
shooting opportunities [3].

Examples of advanced remote microgrids include the ones serving Kongiganak,

Alaska or McMurdo Station in Antarctica.

DIFFERENCES BETWEEN SMART GRIDS AND SMART MICROGRIDS

The key difference between a smart grid and a smart microgrid is the scale of the
network. The confguration of smart microgrids in some ways replicates the archi-
tecture of regional smart grids but on a smaller, more local scale. Smart grids are
utility-scale systems with substantial and large transmission and distribution systems
that operate at high voltages. Smart microgrids are local systems that use distributed
energy resources, and have internal transmission, smaller loads, and lower voltages.
Smart microgrid, therefore, refers to more than simply having a smart electric meter.
Smart grids and smart microgrids are both characterized by substantial use of
digital monitoring and control systems with automated decision-making capabili-
ties. Smart microgrids are often considered to be a subset of the smart grid when the
microgrid is operating in grid-connected mode. When operating in island mode, the
smart microgrid is independent and not considered to be a subset of the grid. Innovative
smart grid and microgrid confgurations use three primary layers of technologies [5]:

Power layer: consists of the conventional electric value chain, consisting of

generation, transmission, and distribution.
204 Fundamentals of Microgrids

Communications layer: those technologies, such as home, local, fuid, and

wide area networks, that connect and enable data transmission from the
power layer with the applications layer.
Applications layer: the higher-level layer of software and sensors that provide
control and vigilance mechanisms for monitoring utility distribution and
protecting the power system. It also provides electronic data storage and
software [5].

Microgrids when interconnected can supply power to consumers using either grid
power, microgrid generated power, or a combination of both. Smart microgrids can
operate in autonomous mode and provide power for uninterruptable power supply
(UPS) systems when main grid power is disrupted [1]. They can be confgured as
AC or DC networks or use a combination of the two. Any sort of electrical genera-
tion technology can be used. Smart microgrids might employ distributed automation
capabilities that allow individual devices to sense aspects of grid operating condi-
tions and make adjustments to improve power fow and optimize performance [5].
An example is offered by Strunz et al. who proposed an application for smart DC
microgrids using both solar and wind energy [6].
There are various other conceptual defnitions for smart microgrids. A smart
microgrid has also been defned as a more modern electrical grid that uses infor-
mation and communications technology to gather and act on data collected about
the activities of suppliers and consumers to improve the effciency, reliability,
economics, and sustainability of the production and distribution of electricity [7].
Others view smart microgrids as smaller, more automated and robust independent
grids (an extension to the regular microgrids) that use newer technologies, soft-
ware, and intelligent controls to manage the fow of electricity within networks
[8]. Their key components are distributed energy resources (DERs) such as solar
PV or wind energy, electrical loads, and storage devices such as batteries [8]. The
main features of smart microgrids are digital information and control, near-instan-
taneous response to optimize grid operations, and smart metering systems with
real-time management capabilities for energy consumption and electricity storage
systems [8].

BENEFITS OF SMART MICROGRIDS

The principle benefts of smart microgrids are associated with the technologies they
deploy. Smart microgrids can be considered to be an upscaled version of microgrids.
According to Niclas [8], the benefts of smart microgrids include:

Improvement over traditional grid: at the local level, smart microgrids are an
effcient means of cost-effectively integrating consumers and networks with
electricity distribution and generation.
Greater reliability: local power generation helps eliminate blackouts.
Technologies such as sensors and smart switches are capable of anticipat-
ing and repairing power disturbances rather than using manual switches in
traditional grids used to handle outages.
Smart Microgrids 205

Cost-effective: microgrids allow consumers to obtain electricity in real-time

at lower costs, as they rely on locally generated power to avoid using costly
peak electricity. The microgrid model also shields ratepayers from bear-
ing infrastructure improvement costs that are common in a traditional grid
model.
Encourages local employment: small communities with microgrids create
employment at the local level.
A methodology for future-proof grid: conventional grids are costly to extend
to local remote areas and may require many years to come online. Smart
microgrids are much better positioned than the centralized grid to meet the
future electricity needs of their customers. Local communities can reliably
depend on them to meet their energy needs quickly and effciently through
small local generators, solar generation, wind turbine generators, etc.
Reduces carbon footprint: smart microgrids are equipped to use waste heat
from their locally generated electricity. They can reuse the energy that is
produced during electricity generation for heating buildings or hot water
and for cooling and refrigeration purposes [8].

It is clear that smart microgrids are an extension to regular microgrids and a new
way of deploying microgrid technologies [8]. They use software and intelligent con-
trols to manage electricity fows in networks [8]. They also use DDC systems to a
greater extent and are remotely manageable.
Likely the key beneft of a smart microgrid has much to do with the costs. Since
these types of microgrids often digitally optimize their operation and management,
costs for electricity can decline over time. Electricity produced from RE resources
supports the development of smart microgrids, using the electricity effciently for
various on-site applications [1]. Smart microgrids are highly automated and can
operate independently with minimal human intervention.

TECHNOLOGIES USED FOR SMART MICROGRIDS

The technologies that are being deployed for smart microgrids involve enhance-
ments to sensor arrays, actionable switching, and digital control systems. They are
scaled to residential, commercial, and distribution system applications.

SENSOR SYSTEMS
Sensor system architecture incorporates sensors that acquire information from the
data environment, and uses communication devices and hubs to collect the sensor
data and relay it to a central repository [2]. Intelligent electronic devices (IEDs)
receive data from the sensors and power-generating equipment. Software scans
the data acquired and focuses on information that is of diagnostic interest. Control
actions are issued as needed such as tripping breakers or changing voltage levels to
maintain desired conditions [2]. With today’s micro processing technologies, IEDs
can perform multiple protection, self-monitoring, communication, and control func-
tions [2]. Sensors and software for smart microgrids with renewable generation (e.g.,
206 Fundamentals of Microgrids

wind and solar) must enable real-time operation and often require dynamic stochastic
optimal control (DSOC) with forecasting capabilities and characterization of power
outputs [9]. The increased use of advanced sensors and high-speed communications
networks on transmission systems is also improving the ability to monitor and con-
trol operations at substations and across transmission networks [10].

ADVANCED METERING INFRASTRUCTURE

Metering systems for smart microgrids are more than electric meters that record
KW and kWh usage. While smart microgrids use advanced metering infrastructure
(AMI), they also deploy communication networks that transmit utility data at pro-
grammed intervals, and management systems that receive, store, and process the
data obtained from the meters [10]. Electric usage data from AMI is highly granular
and can also be sent directly to microgrid central controls, building energy man-
agement systems, customer information displays, and smart appliances [10]. AMI
enables a wide range of capabilities that can provide signifcant operational and eff-
ciency improvements to reduce costs [10], including:

• remote meter reading and remote connects and disconnects

• tamper detection to reduce electricity theft
• improved outage management from meters that alert utilities when custom-
ers lose power
• improved voltage management from meters that convey voltage levels along
a distribution circuit
• measurement of two-way power fows for customers who have installed on-
site generation such as rooftop photovoltaics (PV)
• improved utility billing and customer support operations [10]

Providing AMI with customer-based systems and real-time rate utility structures can
be used to reduce electricity demand during peak periods [10]. For this to happen,
interventions must be programmed to reduce demand at critical times. Peak demand
reduction can lower costs by more than 30% depending on the rate design and type
of customer system [11]. AMI enhances the operational effciency of utilities and
provides microgrid operators with information that helps them to more effectively
manage their customers’ energy use [10].

TECHNOLOGIES
The technologies used in smart microgrids are often custom applied and designed
to resolve issues associated with their development and implementation. For exam-
ple, one way to maintain instantaneous power balancing is to provide controls that
actively resolve fuctuations in power and frequency in real time. Actively bringing
multiple generation systems on- or off-line can pose problems. Smart microgrids
employ advanced technologies and algorithms to resolve this. By using a decentral-
ized architecture of multi-agent systems to perform microgrid control and load-bal-
ancing functions, all options for generation can be digitally viewed as hierarchically
Smart Microgrids 207

equal [9]. As there is no central agent, any can be removed or added without recon-
structing the system; this capability improves system reliability, vulnerability, and
fexibility [9].
Smart microgrid technologies are decentralized and highly granular. They begin
with residential and small commercial applications and include those associated
with the microgrid’s electricity distribution system. They typically use renewable
energy generation such as solar, wind, geothermal, or hydropower and may use bat-
tery storage systems (Figure 13.1). A summary of the categories of technologies used
in smart microgrids is provided by the Galvin Electricity Initiative [12]:

Residential
• energy effciency improvements that help consumers use less electricity and
reduce electricity costs
• smart meters that enable bi-directional exchange of information (pricing,
usage data, demand) and electricity
• programmable smart appliances and devices that energize when the price
of electricity matches the end-user’s desired price point
• user-friendly energy control systems that allow customers to interface with
the smart microgrid to automatically control electricity usage [12]

Commercial
• advanced lighting technology with digitally programmable controls that are
responsive to the cost of power, building occupancy, and locations of use
• heating and air conditioning control systems that continuously and auto-
matically adjust building ventilation based on occupancy, air quality, elec-
tricity costs, or other factors
• nascent electricity generation technologies that provide electricity to indi-
vidual buildings and are capable of conditionally supplying power to the
host grid [12]

Electricity Distribution
• redundant design confgurations that have secondary power sources when
inclement weather conditions (high winds, storms, ice, etc.) interrupt power
• smart switches, relays, and sensors that replace less effcient equipment to
allow the smart microgrid to manage and distribute electricity more eff-
ciently and reliably
• accessible and protected infrastructure within structures (e.g., hardened or
installed underground)
• DDC systems that continuously scan the data environment, identify and
anticipate potential instabilities, and initiate corrective actions prior to dis-
ruption in electrical service [12]

EXAMPLES OF SMART MICROGRIDS

A defning component of smart microgrids is the digital control system that enables
the data environment to be periodically polled, makes intelligent decisions based on
208 Fundamentals of Microgrids

FIGURE 13.1 Grid-connected solar PV project near Amman, Jordon. (Courtesy of

Mohammad Shehadeh, Philadelphia Solar.)

the information that is gathered, records a history of actions taken, and calculates the
value of the results. The controls provide adjustment and fne-tuning when appropri-
ate. While this process mimics human decision-making there are far more variables
and conditions involved to be quickly managed by individuals. Smart microgrids are
supported by their controller and defned as the resources—generation, storage, and
loads—within boundaries that are directly managed by the controller and its capa-
bilities [13]. The controller “manages the resources within the microgrid’s boundar-
ies, at the point of interconnection with the utility, interacting with the utility during
normal operations” while defning “the microgrid’s operational relationship with the
distribution utility” [13]. It can be challenging to fnd microgrid controllers that fully
utilize all customer-based resources [14]. DER controllers vary based on the types of
generation. Renewable energy systems often require a custom controller that must be
individually programmed based on the types of generation used by the microgrid. A
solution is to construct a project-specifc microgrid visualizer to enable monitoring
of all operations [14]. There are many examples of smart microgrids under develop-
ment or deployed.

PROJECTS UNDER DEVELOPMENT

Smart microgrids are revolutionizing our vision of supplying electricity to localities,
energizing community involvement, and changing the way we view infrastructure
for cities in the future. There are numerous examples of smart microgrids under
development. The focus here is on models for future projects, their goals, and the
keys to their success.
Smart Microgrids 209

Jayant Kumar discussed the importance of developing smart microgrids in appli-

cations for sea ports and their facilities [15]. A new microgrid system has been sug-
gested for Philadelphia Navy Yard Alstom [15]. The goals were to improve grid
resilience, provide demand response, reduce emissions, and improve system eff-
ciencies. At the level of the controller, the objectives were to provide islanding man-
agement, resynchronization and reconnection management, frequency and voltage
management, microgrid protection, portfolio optimization, dispatch management,
system simulation capabilities, and grid resiliency [15]. This is indeed a challeng-
ing menu of capabilities for a microgrid control system. The microgrid topology
proposed was even more complex. It included the use of multiple microgrids with
more than one utility interconnection. For example, one microgrid was based on
power generated by a combine heat and power (CHP) plant combined with solar PV.
Another was based on natural gas generation combined with solar PV, fuel cells,
and energy storage. Its smart features included a microgrid controller system with
feld inputs and programming for islanding, voltage synchronization, and frequency
management capabilities [15]. Unmanned and automated control hardware systems
were provided for the substations.
Successful microgrid deployment involves modeling and analysis. Gerry et  al.
adopted an approach based on mathematical modeling for each component of a
microgrid’s distributed energy resources that includes generation (solar PV array,
wind energy, hydropower and biogas-fueled generators) with battery backup [1,16].
They used HOMER (a software optimization tool) to determine the economic fea-
sibility of DERs and ensure reliable power supply for load demand at minimal cost
[1,7]. Mariam et al. performed a technical and economic analysis of micro generation
for the development of community-based microgrid systems [1,16]. They performed
this analysis for wind power-supplied micro generation systems for communities that
lacked renewable energy feed-in-tariff policies [1,17].

PROJECTS DEPLOYED
An example of an operational smart microgrid is provided by the experience of rural
Les Anglais, Haiti which uses a mesh network of wireless smart meters deployed at
52 buildings [18]. This microgrid is wireless and its architecture includes a cloud-
based monitoring and control service plus a local embedded gateway infrastructure
[18]. Each end-user’s smart meter has a wireless radio that enables remote monitor-
ing and control of the electrical services [18]. The smart meters communicate over a
scalable multi-hop network back to a central gateway that manages system loads [18].
The gateway also provides an interface for an on-site operator and a cellular modem
connection to a cloud-based backend that manages and stores billing and usage data
[18]. The cloud enables occupants in each home to pre-pay for electricity at a par-
ticular peak power limit using a text messaging service [18]. The system activates
each meter within seconds and locally enforces power limits with provisioning for
theft detection [18].
Types of electrochemical storage used in smart grids are basically lead-acid,
sodium-sulfur (NaS) batteries, and in some cases lithium-ion (LI) batteries [19].
Redox fow batteries also have potential as a microgrid storage solution because
210 Fundamentals of Microgrids

of their independent ratio of power and energy and cost-effciency [19]. Panasonic
Group (Sanyo) has deployed a smart microgrid with a large-scale storage battery
system using LI batteries [19]. The system was installed at the Kasai factory in Japan
in October 2010. The system charges the batteries with overnight electricity and
surplus solar electricity and discharges it during the day [19]. The electricity energy
storage (EES) system has more than 1,000 LI battery boxes, each box consisting of
over 31 million cell batteries [19]. With the battery management system, the whole
EES can be used as if it were just one battery. The capacity of the EES is approxi-
mately 1,500 kWh; the solar PV system can distribute 174,060 kW of DC power
[19]. The system can reduce power by 15% during peak periods using the energy
management controls.
Fort Bragg in North Carolina has developed a microgrid with smart components
that is anchored by a renewable biogas plant and a 5 MW solar system [20]. With
about 62 MW of backup generation at the base, the multi-phase project involved
installing control systems to incrementally create a smart microgrid and integrating
it with the post’s distribution network, information technology, and communications
infrastructure [12]. The $3.4 million project was among the frst to link multiple
backup power sources into a network using advanced controls and sophisticated
management software [20]. Fort Bragg ultimately integrated a variety of distrib-
uted generation technologies to work in conjunction with the military base’s util-
ity infrastructure [12]. Since Fort Bragg owns its own electric distribution network
the project enabled managers to monitor electrical generation from a central energy
management location [12].

USE OF RENEWABLE ENERGY TECHNOLOGIES

For the development of smart microgrids, a strategic plan is important to match
the proposed renewable power generation of the microgrid to that of the electric-
ity demand of the consumers being served. This involves policy, technology, and
organizational analysis. Microgrids can be a solution to the integration of different
renewable energy systems.

SUSTAINABLE SMART MICROGRIDS

A sustainable smart microgrid might consist of wind and/or solar, battery (energy
storage), and thermal generation with a dynamically moderate load [9]. It is chal-
lenging to design an optimum smart microgrid with RE given storage costs, emis-
sions considerations, and reliability issues [9]. Oversizing of resources, e.g., wind
farm, solar farm, storage, and backup thermal, increases capital cost which is often
unaffordable [9]. Undersizing microgrid resources creates system unreliability.
Optimizing smart microgrid energy generation to achieve proper sizing of active
resources to reduce costs while attaining a goal of zero net energy and emissions
for the system is a multi-objective optimization problem with a large number of
constraints [9].
Smart microgrids are characterized by the use of multiple sources of energy and
extensive use of DDC systems with remote operation and monitoring capabilities.
Smart Microgrids 211

Black & Veatch is headquartered in Overland Park, Kansas. The company con-
structed a microgrid to power its Innovation Pavilion which was commissioned in
2015 [21]. Their microgrid uses renewable energy, natural gas, and battery storage.
It features three types of rooftop solar photovoltaic (PV) panel arrays—monocrys-
talline, polycrystalline, and micro AC inverter-based polycrystalline—that provide
50 kilowatts (kW) of electricity [21]. It also includes a 100 kW lithium-ion battery
energy storage system (BESS) and a geothermal feld with 15 wells drilled 500 feet
(152 m) deep that serve heat pumps for heating and cooling systems [21]. Monitoring
is achieved via a cloud-based analytics platform that collects system data and moni-
tors each component of the system in real time [21]. Most operations of the microgrid
can be accessed and monitored by using a smart phone.
Integrating renewable energy with diverse technologies creates a larger system
that provides a range of benefts, including improved resiliency and generation fex-
ibility [22]. Co-location of generation systems near loads reduces transmission and
distribution costs leading to more sustainable electrical generation infrastructure.
Microgrid generation can be deployed by using MW-scale individual technologies
that are compatible and complementary using linkages to the existing distribution
systems (see Figure 13.2).

MANAGING MULTIPLE RENEWABLE MICROGRIDS

Smart microgrids require management. Management of multiple microgrids from a
central location has the potential to reduce some operating costs. This can be accom-
plished with central microgrid digital control systems, advanced algorithms, arti-
fcial intelligence, and minimal human intervention. Predictive intelligence can be
incorporated into the software and provide anticipated, self-adjusting responses to
recurring events. Human intervention would be required only when unprogrammed
responses to anomalies were to occur.
In such a scenario, more sophisticated communication and remote monitoring
systems are required. The cost for these capabilities and microgrid management can
be lessened when multiple smart microgrids are remotely monitored and controlled
from a single central location. With multiple microgrids, each will likely have a dif-
ferent set of feld objectives and different approaches to optimization. Maximizing
interoperability requires linked communications among the microgrids when gener-
ating electricity [23]. The confguration hopefully reduces costs by reducing the time
required to have technicians in the feld. The system must demonstrate real-time or
near-real-time control capabilities that incorporate optimization [23].
An example is the Model City Mannheim (Germany) project which included
1,000 households and multiple DERs. This study simulated a multiple renewable
microgrid confguration from 2008 to 2013 and assessed the possibility of linking
energy producers and consumers more closely using state-of-the-art information and
communications technologies [24]. The goal was to connect electricity consumers
either manually or automatically during low-price periods based on hour-to-hour
variances in electricity prices to enable end-user savings [24]. The study proved
consumer purchasing decisions changed in response to signals. Consumers shifted
their electricity consumption to periods in which large quantities of energy from
212 Fundamentals of Microgrids

FIGURE 13.2 Integrating renewables in smart grids (J. Bauer, NREL [22]).

renewable sources were fed into the net and in which electricity supply volumes
were high [24]. Overall electricity consumption remained low and electricity was
relatively inexpensive during certain periods of the day. Consumers took advantage
of the low-cost periods and programmed controllable household appliances to oper-
ate automatically [24].

POLICY CONCERNS
The development of smart microgrids in the U.S. faces multiple unresolved hurdles.
Many have been identifed for years but remain unresolved. This is primarily due to
the lack of statutory regulation by state governments. In many parts of the U.S., it
is the lobbying by incumbent industries and lack of enabling regulation that are the
greatest factors hindering microgrid development.
Problems identifed through microgrid case studies and interviews include estab-
lishing best practices for engaging customers, cybersecurity methods and protocols,
interoperability standards, and microgrid communications and control systems [4].
Sandia National Laboratories has identifed key developmental concerns including
best practices for policies to: 1) implement dynamic pricing; 2) refne interconnec-
tion policies; 3) adjust retail rate designs and refne rates for partial-requirements
service; 4) establish utility DER investment policies; 5) develop retail market partici-
pation rules; 6) provide utilities with appropriate regulatory incentives; 7) coordinate
microgrid policies with other policies intended to promote DG, electric vehicles,
and other distributed resources; and 8) achieve consistent regulatory policies across
multiple utility service territories, including multiple-state, regional, and conceiv-
ably national policies [4].
Many smart grid development issues can be overcome with the implementation
of improved policies supported by programs to incentivize microgrid research
Smart Microgrids 213

and local demonstration projects. Enabling legislation needs to be locally oriented

and customized.

CONCLUSIONS
To satisfy customer needs and minimize investment in infrastructure, microgrids
will need to become smarter and more reliable, and fnd ways to manage intermittent
generation [3]. Smart microgrids are a subset of microgrids that use more sophisti-
cated and robust technologies. Unlike central electric grids that must provide a pool of
accessible power that is continuously available, smart microgrids offer an alternative as
they use technologies that can better manage loads. The ability of smart microgrids to
deliver electricity to loads on a targeted, as-needed basis is important to their success.
The microgrid paradigm heavily relies on successfully providing this capability [3].
Smart microgrids are a form of advanced microgrids as they balance supply with
demand in real time, dispatching resources that are capable of improving reliabil-
ity. They accomplish this by optimizing energy profles and effciencies, enhanc-
ing island performance and maximizing the economic benefts associated with grid
interconnectivity [4]. Advanced remote microgrids often operate in very isolated
locations and often in harsh environments. The technologies they use must be hard-
ened to mitigate environmental threats.
There are a number of key technologies that facilitate the development of smart
microgrids. Sensor systems acquire information from the data environment and
compile data that is of diagnostic interest. Electrical usage data from advanced
metering infrastructure can be communicated directly to microgrid central controls.
Intelligent electronic devices receive data from the sensors and power equipment and
issue actionable control commands.
Smart microgrids employ advanced technologies and software to improve electri-
cal system reliability and resilience. Another beneft of smart grids is their ability
to lower the cost of electricity and services. They provide services that are improve-
ments over traditional grid, offer more local control over services, increase local
employment, and future-proof electrical supply systems.
Smart microgrids will also access and incorporate information about individual
buildings, accessing their internal control systems, analyzing electrical energy data,
matching supply availability with internal loads, and taking appropriate actions to
reduce energy (and perhaps water) consumption within programmed limitations.
They can be customized based on the complexity of the microgrid deployed and
the internal capabilities of the building control systems. Internal access to build-
ing energy management systems enables microgrid operations to perform multi-tier
custom diagnostics, and make selective decisions to schedule load shedding and
level demand in real time. They are capable of using algorithms at multiple levels
to provide engineering analysis and system updates. Reporting capabilities support-
ing energy managers will be available to the point of suggesting improvements to
energy-consuming systems and modifcations to buildings and other loads to opti-
mize operations and system effciencies (see Figure 13.3).
Deploying smart microgrids can be challenging. Some can be overcome with
expanded use of digital control technologies. Policy challenges present another set
214 Fundamentals of Microgrids

FIGURE 13.3 Schematic of microgrid software and control integration with energy man-
agement systems.

of issues. For example, in the U.S. there is a lack of statutory regulation by state gov-
ernments. The need for enabling programs and resistance from incumbent industries
are concerns. Regardless, smart microgrids are becoming more widely accepted as
solutions to providing electrical services. There are many real-world examples of
smart microgrid projects either under development or already deployed. Many are
characterized by the use of mathematical modeling for components of microgrid
DERs and the use of advanced software.

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3. Holdmann, G. and Asmus, P. (2019, September). What is a microgrid today? Distributed
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 14 Scoping the Business
Case for Microgrids

INTRODUCTION
There are a number of approaches to developing business models for microgrid proj-
ects. Many are similar to the ways that energy effciency and alternative energy
projects have been developed in the past. Drivers for microgrid projects include pro-
vision of electricity, reducing electricity and service costs, providing local devel-
opment, accessing the benefts of renewables, and mitigating greenhouse gases. To
develop a business model, there is a need to identify and quantify the value of the
services microgrids provide. Goals of the business model include defning a project
that is able to provide a positive cash fow and one that can be fnanced. This is con-
founded by the unique characteristics of each individual microgrid.
Despite the valuable outcomes that microgrids offer, there are diffculties in
fnancing their development. The problem is not a lack of funding availability but
often a lack of commercially available fnancing that is fenced for microgrid deploy-
ment [1]. Traditional fnancing approaches often fail to properly credit the annuity
value of avoided future costs when future expenses, such as the costs of energy, can
be widely volatile. Carbon taxation is used in some countries to mitigate such volatil-
ity but provides mixed results.
Additional hurdles include the diffculties in obtaining access to funds from local
fnancial institutions. This can be caused by disconnects in lending practices as they
apply to energy effciency and carbon reduction improvement projects [1]. There may
be structured restrictions on capital, collateral requirements, ownership provisions,
and market conditions. This became increasingly evident in 2009, when lending was
disrupted by a severe recession which impacted fnancial markets worldwide. There
are ways to overcome such hurdles by using creative fnancial approaches. These
include programs such as the use of carbon offsets and credits, funding demon-
stration projects, the use of performance contracting, and creative rule structures
for measurement and verifcation (M&V) of savings. From 2009 to the beginning
of 2020 the expanding world economy had ample investment capital available.
However, economic conditions turned strongly recessionary in early 2020 due to the
coronavirus (COVID-19) pandemic.

BUSINESS CASE FOR RENEWABLE ENERGY-BASED MICROGRIDS

Microgrid business models include single-user, multi-user, distribution company, or
utility company ownership. Microgrids can operate using a single technology, multi-
ple technologies, or hybrid and integrated technologies. Some include power storage
systems and others do not. For microgrid development, project costs include capital

217
218 Fundamentals of Microgrids

costs, costs of maintenance, cost of operations, and other fxed and variable costs.
The business case for microgrids must as a minimum address microgrid design,
costs, project fnancing, creating a value proposition, and defning sustainable rev-
enue streams. For microgrids with renewable generation, this means quantifying the
value of the electricity (kWh), the value of demand (KW) projected, plus the values
of any other ancillary other services to be delivered. These values vary over time and
from site to site, confounding the process of lifecycle costing.
Costs and pricing structures fuctuate creating business risk. The cost of deliver-
ing renewable energy (RE) is continuing to decline. As costs decline, their use in
microgrid confgurations is likely to increase. Recent studies indicate that the costs
of building and operating renewable-based energy systems have dropped below the
operating costs of utility-scale coal and oil-fred electrical generation [2]. While this
is promising, the deployment of renewables on their own is often unable to meet
the needs of most developed countries. One of the best business case scenarios for
microgrids is to use diversifed and complementary conventional and alternative
energy resources to meet the energy needs for the foreseeable future [2]. This is actu-
ally the trend that is occurring in practice. It is related to public policy approaches
that support incremental improvements over a period of time and applies to commu-
nity and military microgrid development.
The economics of each microgrid deployment is unique and has specifc chal-
lenges and functional objectives [3]. The business case is typically justifed using the
economic value of the key project drivers. According to GTM Research, economic
drivers that determine the market penetration of renewables include: 1) installation
costs for renewables and energy storage; 2) fuel and power costs (and security of sup-
ply); 3) costs associated with outages; 4) deferral opportunities for transmission and
distribution; and 5) project lifetime and cost of capital [3]. The costs of deploying
systems to generated electricity are sensitive to capital costs, fuel costs, and subsi-
dies. All must be considered in a lifecycle cost analysis to access the levelized cost
of the energy generated. Using data from available research is one way to begin
developing the business case for microgrids with minimal effort (see Figure 14.1).
Subsidies may be available to support project development. Energy resources
and delivery systems are the most government-subsidized markets in the world. The
greatest portion of these subsidies are directed toward fossil fuel development. These
include discounted exploration rights, low-cost access to land, subsidized leases,
direct funding, cost over-run support, environmental subsidies, government paid
insurance support, and substantial tariffs on competing fuels. Subsidies are vari-
able over time. They often increase the risks associated with developing lifecycle
cost estimates as potential investors are uncertain as to how long subsidies will be
available. For example, contracts for greenhouse gas (GHG) emission avoidance may
have a term of only two years, making it diffcult to help support projects that are
fnanced over ten-year terms or longer.
When fossil fuels are used, carbon capture and sequestration (CCS) is worthy of
consideration. It is a process that remains at the demonstration stage of the innova-
tion process because of its high costs. However, international agencies (e.g., the IEA)
are calling for further funding to support research and development or pilot project
initiatives. The great expense of CCS implies that countries with many large point
Scoping the Business Case for Microgrids 219

FIGURE 14.1 2017 levelized cost of energy for various electricity generation technologies
(Source: NREL [44]).

source emitters (e.g., power plants and other industries) in close proximity to verifed
carbon storage sites are the most likely candidates for cost-effective CCS programs.
Key fndings in a recent study by Lazard determined that alternative energy
sources are becoming more competitive and are now at or below the marginal cost
of certain conventional generation technologies [2]. Their study found that

“Global LCOE values for alternative energy technologies continue to decline, refect-
ing, among other things: 1) downward pressure on fnancing costs as a result of contin-
uously evolving, and growing pools of capital being allocated to alternative energy; 2)
declining capital expenditures per project resulting from decreased equipment costs; 3)
increased competition among industry participants as markets evolve policies towards
auctions and tenders for the procurement of alternative energy capacity (and away from
standard offer programs, feed-in-tariffs, etc.); and 4) improving competencies in asset
management and operation and maintenance execution [2].

Solar PV and onshore wind power are approaching the levelized cost of electricity
when compared to conventional coal-fred combined cycle plants (see Table 14.1).
Geothermal plants are capable of generating baseload electricity and already favor-
ably compete with coal.

CREATIVE APPROACHES TO PROJECT FINANCING

Much of the early fnancing for microgrid development in the U.S. was provided by
government agencies. Today, a private fnancing market is emerging through large
companies, local banks, and utilities. Microgrid fnancing is often provided for all
project components, such as power and energy generation systems, and any associ-
ated energy effciency retrofts, distribution systems, central control systems, and
 220

TABLE 14.1
Unsubsidized Levelized Cost of Electricity (LCOE) for Resources Entering Service in 2020 Using 2017$s/MWh (Source: EIA [5])
Capacity Levelized Levelized fxed Levelized variable Levelized Total system
Plant type factor (%) capital cost O&M cost O&M cost transmission cost costs LCOE

Renewables
Wind (onshore) 41 43.1 13.4 0.0 2.5 59.0
Wind (offshore) 45 115.8 19.9 0.0 2.3 138.0
Solar PV 29 51.2 8.7 0.0 3.3 63.2
Solar thermal 25 128.4 32.6 0.0 4.1 165.1
Hydroelectric 64 48.2 9.8 1.8 1.9 61.7
Biomass 86 39.2 15.4 39.6 1.1 95.3
Geothermal 90 30.1 13.2 0.0 1.3 44.6

Fossil fuels with present technologies

Coal using 30% CCS 85 84.0 9.4 35.6 1.1 130.1
Conventional combined cycle 87 12.6 1.5 34.9 1.1 50.1
Advanced combined cycle 87 14.4 1.3 32.2 1.1 49.0
Advanced combined cycle with CCS 87 26.9 4.4 42.5 1.1 74.9
Conventional combustion turbine 30 37.2 6.7 51.6 3.2 98.7
Advanced combustion turbine 30 23.6 2.6 55.7 3.2 85.1
Advanced nuclear 90 69.3 12.9 9.3 1.1 92.6

Source: USEIA, International Energy Statistics, as of August 8, 2018.

Fundamentals of Microgrids
Scoping the Business Case for Microgrids 221

connections [6]. Developers of microgrid projects can improve project bankability if

they include both electricity and thermal energy as part of a project [6].
Hybrid systems complicate the fnancing of microgrid projects. This is due
to their perceived novelty, the lack of comparative development, diffculties in
predicting the costs for development, and variable pricing for their products.
Regardless, reductions in costs and improvements in capabilities of renewable
energy generation systems, energy storage, along with advances in technology
and communications, enable economic justifcation of hybrid applications that
previously would have required special support or incentives [7]. The integration
of RE technologies can reduce operating expenses when compared to fossil fuel-
fred generation, while optimizing system reliability, effciency, and fexibility
[7]. Since 2000, diesel fuel prices have mostly trended upward while wind power
prices trended slightly downward and solar PV prices have fallen dramatically
(projections place the average price of wind energy at US$0.09/kWh in 2020, and
the price of solar energy only slightly higher) [7]. In other regions of the world,
solar PV can be supplied at less than $.03/kWh. Downward trends in prices and
reduced volatility give RE a long-term price advantage over conventional diesel-
generated electricity.

CAP AND TRADE PROGRAMS

The report “The Economics of Climate Change” explains how cap-and-trade sys-
tems control the overall quantity of GHG and CO2 emissions by establishing binding
emissions commitments [8]. These systems regulate contaminates from generation
sources by establishing limits on the allowable levels of emissions and by requiring
reductions in contaminate levels over a period of time.
Using cap-and-trade systems, an emission maximum is established for the pool of
participants and each participant in the pool. Within this specifed emission quantity
ceiling, entities covered by the plan (e.g., individuals, organizations, industries, or
countries) are then free to choose how best, and where, to deliver emission reduc-
tions (Figure 14.2). The largest example of a regulated cap-and-trade scheme for
GHG and CO2 emissions is the EU’s Emissions Trading Scheme.
There are a number of examples of regulated and voluntary national and regional
emissions trading schemes, including the former Chicago Climate Exchange (CCX)
and the U.S. Regional Greenhouse Gas Initiative (RGGI). The Chicago Climate
Exchange provided an example of a voluntary exchange. Now inactive, it allowed
participants (e.g., companies who had accepted voluntary commitments to reduce
emissions) to purchase carbon fnancial instruments (CFIs). Projects eligible for
CFIs included reforestation, afforestation, methane mitigation, renewable energy
generation, and offsets in the agricultural and biomass sectors. Offsets were cre-
ated through the use of conservation tillage and grass planting. Eligible projects
were enrolled through an intermediary registered with the CCX, which served as
an administrative and trading representative on behalf of the multiple individual
participants. The intermediary body was called an offset aggregator. The frst sale
of an exchange of verifed CO2 offsets generated from agricultural soil sequestration
in the U.S. occurred in April 2005 [9].
222 Fundamentals of Microgrids

By June 2006, approximately 140,640 hectares (350,000 acres) of conservation

tillage and grass plantings had been enrolled in the U.S. states of Kansas, Nebraska,
Iowa, and Missouri [11]. The measures to enhance natural soil fertility and carbon
sequestration potential also decrease the use of human-made fertilizers, reduce
deforestation, improve water quality, reduce power consumption, and lessen fuel
requirements for tillage [12]. While it seems counterintuitive, green space on land
used for microgrids might be eligible in addition to offsets from renewables.
An example of a regulated regional U.S. cap-and-trade system that applies carbon
offsets is the Regional Greenhouse Gas Initiative, an initiative developed by states in
the Northeast and Mid-Atlantic regions. The basic objective of the RGGI is to reduce
GHG emissions from the electrical power production sector while maintaining eco-
nomic competitiveness and effciency across the regional power market. The frame-
work of the RGGI follows the model of earlier successful cap-and-trade systems,
such as those used to reduce acid rain-producing sulfur dioxide (SO2) emissions.
Every regulated cap-and-trade program includes the following basic components:

• a decision about who is being regulated

• mandated emissions reduction levels
• provision for the distribution or allocation of permits or allowances that
power generators require
• a structure for the trading mechanisms

The RGGI agreement regulates medium and large electrical power plants. Nearly
75% of the allowances in each participating state are distributed among the genera-
tors, while the balance is set aside for various public benefts. The agreement also
allows the generators who reduce CO2 and other GHG emissions further than required
to bank those allowances for the future or sell them to other generators. Moreover,
generators who have not met their reduction goals must purchase allowances on the

FIGURE 14.2 How cap-and-trade programs work (Source: adapted from [10]).
Scoping the Business Case for Microgrids 223

market or obtain a limited amount of reductions through offsets. Carbon offsets are
CFIs that represent emission reductions that are typically achieved outside of the
power production sector. These offsets are fnancial tools that provide incentives for
emitters of CO2 to reduce their emissions. Offsets are typically derived from emis-
sion reductions through mitigation efforts such as energy conservation, alternative
energy projects, reforestation, or landfll methane recapture. The RGGI capped CO2
emissions from electrical power plants at 2005 levels between 2009 and 2014. After
2015, the cap decreased, so that by 2019, the states collectively reduced their emis-
sions to at least 10% below 2005 levels [13].

RENEWABLE ENERGY CERTIFICATES

Green certifcates, also called green tags, renewable energy credits (RECs), green
certifcates, or tradable renewable certifcates (TRCs), are tradable, non-tangible
energy commodities that in the U.S. represent proof that one megawatt hour (MWh)
of electricity was generated from an eligible RE resource and was fed into the shared
system of power lines which transport and distribute electricity [14]. The REC cer-
tifes that the RE generator has supplied the electricity and it has been fed into the
host grid. Most are sold as independent devices separate from the actual electricity
delivered. These certifcates can be sold, traded, or bartered, and the owner of the
REC can claim to have purchased the renewably sourced electricity [14]. RECs may
be purchased by utility companies to meet the requirements of a renewable portfolio
standard (RPS) or voluntarily purchased by individuals of companies. The certif-
cation process usually requires third-party verifcation by an independent auditor.
Green tags are also used as offset mechanisms to mitigate the amount of CO2 gener-
ated on one’s behalf by purchasing them to offset carbon emissions [15].

GLOBAL ENVIRONMENTAL FACILITY AND CLEAN DEVELOPMENT MECHANISM

To ultimately reduce the global cost of stabilizing GHG in the atmosphere, invest-
ments in fast-growing economies must incorporate energy effciency and low-carbon
technology [11]. These technologies include those that microgrids deploy to produce
renewable electricity. With the exception of military microgrid development, private
sector resources for microgrids far outweigh the total funds available from govern-
ments and multi-lateral institutions. Middle-income countries, where the bulk of
future GHG emissions growth is concentrated, generally have access to capital from
the private sector. Public sector resources are also an important lever to channel
fows of domestic and international private sector investment into carbon reduction
technologies.
Successful and effective fnancial solutions to supply renewable energy and reduce
carbon emissions include programs advanced by the Global Environmental Facility
(GEF) and the Clean Development Mechanism (CDM). The GEF was established to help
tackle pressing environmental problems. It has provided close to $20 billion in grants
and mobilized an additional $107 billion in co-fnancing for more than 4,700 projects
in 170 countries [16]. The GEF has a history of fnancing energy effciency and renew-
able energy projects especially in developing countries. Many of the most proftable
224 Fundamentals of Microgrids

projects to generate carbon credits under Kyoto’s CDM, such as methane gas projects,
were exhausted after a furry by Western fnancial houses to secure them. The CDM
provides an important channel for private sector participation in fnancing low-carbon
investments in developing nations. The two primary requirements of CDM projects is
that they contribute both to the reduction of emissions according to a baseline or prede-
termined scenario, and to sustainable development according to priorities and strategies
defned by the host country [17]. While many lucrative projects refect activity to reduce
emissions of the most potent greenhouse gases, there is concern that some long-term
solutions needed to fght climate change are not being fnanced. The collective impact of
these programs is small relative to the challenge of reducing CO2 and GHG emissions.
The World Bank has recently suggested that the GEF could play an enhanced
role in encouraging technology transfer and lowering the cost of the low-carbon
technologies that are relevant to the priorities of developing countries. To continue
to expand over the next decade, the GEF would require at least a two-fold increase
in current fnancing to ensure sustained market penetration of energy effciency and
RE technologies. Financing a strategic global program to support the reduction in
costs of pre-commercial, lower GHG emitting technologies such as carbon capture
and sequestration (CCS), solar thermal, or fuel cells would be much greater, requir-
ing more than a ten-fold increase.
Carbon offset credits are tradable credits earned for investing in projects to reduce
greenhouse gas emissions. In CDM terms, these credits are called certifed emissions
reductions (CERs) and are generated in developing countries. One CER represents
an emission reduction on one metric ton of CO2. Such credits are valuable to govern-
ments and companies in developed nations because the Kyoto Protocol allows them to
use these credits to offset their own GHG emissions and help them meet a portion of
their domestic reduction targets [18]. Buying credits, or paying for them to be gener-
ated, can in some cases be less expensive than reducing emissions at home. In 2005,
374 million tCO2e, mainly of CERs, were transacted at a value of US$2.7 billion,
refecting an increase of more than three times the previous year’s volumes from
project-based transactions [19]. While over $1.5 billion annually were generated by
the end of 2012, the prices for CERs dropped from $20 per metric ton in August 2008
to $5 per metric ton by September 2012, when the targets under Kyoto expired [20].
The CDM program has been criticized for rules which create opportunities for
investments in easy projects at the expense of more expensive projects to implement
renewable energy. Many want more RE projects to be implemented in developing
countries to encourage sustainable economic development in less wealthy regions of
the world. For example, one of the largest CDM transactions (300 million euros) was
for a hydrofuorocarbon (HFC) destruction project in China at Zhejiang Juhua chem-
ical plant generating 4.8 tCO2-equivalent reductions annually [21]. After opportuni-
ties for HFC destruction were mostly exhausted, many newer CDM projects have
since focused on mitigation and switching from fossil fuels to RE.

BUILD-TRANSFER AGREEMENTS
Build-transfer agreements are those in which a utility contracts with a third-party
project developer to design, oversee development, and construct a project. These
Scoping the Business Case for Microgrids 225

can be used to develop distributed electrical generation infrastructure. When the

project is nearing completion or perhaps complete, ownership of the project is trans-
ferred to the utility. A build-transfer agreement is a hybrid form of procurement
contract which has components similar to both acquisition agreements and construc-
tion contracts [22]. The developer’s role is to secure the needed land rights, permits,
interconnection rights, and project contracts [22]. The developer then develops the
project for the utility with ownership transferred to the utility before the project is
commissioned and begins commercial operation [22]. In the U.S., the host utility
often accepts ownership of the project before it is placed in service to reduce federal
tax exposure. After initial startup, the project may be operated and maintained by
the utility or a third party [22].

PEER-TO-PEER TRADING
Implementing new business models for developers of renewable energy projects has
potential to disrupt the markets for delivering electricity. There are opportunities
which would make microgrids the preferred way to deliver power in the future if
interconnections are secure and load-balancing strategies are successful. Among
those available for community-based microgrids is peer-to-peer (P2P) energy trad-
ing. This model allows for the direct transfer of electricity with immediate payment
by the consumer. To obtain the best electrical rates, customers might forward their
meter data to several potential electrical suppliers with a goal of reducing costs by
obtaining bids for the energy used. By compiling numerous successful bids, energy
suppliers could create bankable projects. However, there are misconceptions as to
how P2P trading can be used to support developers in their efforts to obtain fnancing
for microgrid development. It is often interpreted as the marketing of environmental
attributes such as green tags, green certifcates, or RECs which is inaccurate [23].
For microgrids, it is actually a direct pathway for the transfer of electrical energy
from a distributed energy source to the consumer plus a means to reduce the soft
costs associated with microgrid development.
The business model for P2P often involves eliminating the transfer agents and
their fees. Blockchain technologies can be used for this purpose. They can improve
and expedite accounting for the transfers. Using a blockchain-based marker each dis-
tributed energy resource can be assigned a digital identity linking each owner of the
corresponding credits [23]. Each customer would have a digital signature enabling
them to order energy upon demand and have digital metering systems. The block-
chain would manage the accounting for these transfers. The blockchain networks
could also be used deliver new services and products. These would include monetiz-
ing data streams, better integrating and managing demand-side resources, and help-
ing to launch services to fnance and own energy infrastructure [23].

WAYS TO COMBINE PROJECT FINANCING AND DELIVERY

Governments in the U.S., particularly local and state ones, have been tasked with
fnding ways to implement sustainable development policies and programs. With
scarce funding, inadequate resources, and limited technical skills, this has often
226 Fundamentals of Microgrids

proved challenging. Examples of ways to overcome such inertia include using pub-
lic–private partnerships and energy savings performance contracts. Both of these
tools have been used successfully to develop microgrids.

PUBLIC–PRIVATE PARTNERSHIPS
Sustainability agendas can be successfully achieved by using public–private partner-
ships (PPPs). In the past, public–private partnerships have often focused on issues such
as environmental concerns, local development, patterns of energy use, water, tourism,
and education [24]. All can be linked to local sustainability. With a rich history of using
PPPs, many governments are skilled at using this model successfully. Today, community
microgrids are being developed using PPPs. Such partnerships enhance local microgrid
development of fostering cooperation among the stakeholders. The San Diego Gas and
Electric (Borrego Springs) microgrid in California is one such example.
A substantial body of literature is available concerning public–private partner-
ships. Most focus on diverse development projects. The literature considers sources
of risk capital for governments, public incentives, the relationships between govern-
ments and the private sector, the types of partnerships, the results and assessments
of PPPs, and ways they can be improved [24].
There are four primary sources of risk capital: 1) the private, for-proft sector; 2)
governments; 3) employee savings and beneft funds; and 4) the private, non-proft
sector [25]. Each source of funds has its benefts and costs. For-proft enterprises
consider the advantages based on management effciency, acceptable rates of return
on capital, net margins, and the ability to provide adequate incentives to skilled
workers as critical to their success. Alternatively, governments tend to “avoid risks,
invest insuffciently and avoid cost reduction measures” [25]. According to Clarke
and Gayle, the idea of public entrepreneurial activities “seems an oxymoron: the risk-
taking business actors who spot new opportunities for making profts and challenge
the status quo” operate in an environment controlled by “risk-averse politicians seen
as dominating local government” [26]. In public–private partnerships, the potential
partners often seek much different sets of goals, which creates ample opportunities
for friction and conficts of interest.
To attract capital, public incentives and inducements are often used. Schneider
suggests that, “as sources of competition, special districts, county agencies and pri-
vate frms can all increase their effciency and responsiveness in the provision of
public services” [27]. He also concludes that “increasing local government effciency
allows more services to be delivered per tax dollar” expended; however, attempts “to
increase local government effciency have encountered diffculties, chiefy because
we cannot monitor and improve something we cannot measure” [27]. Energy savings
provides an example since calculating project savings over a period of time involves
measuring the absence of expenditures. Such diffculties are an example of the issues
that hamper the ability of governments to implement effciency opportunities. How
can effciency opportunities be encouraged? One approach is to implement monitor-
ing schemes with an appropriate M&V regimen.
A product or public good can be provided by either the public sector, the pri-
vate sector, or by a partnership between both. The provision of electricity offers
Scoping the Business Case for Microgrids 227

an example. There are various types of public–private partnerships differentiated

by the ways they are structured. The types of possible relationships between gov-
ernmental entities and the private sector to provide services include competition,
co-production, provision, for-proft government-owned activities (quasi-governmen-
tal organizations) using private subcontractors, independent government-owned/
contractor-operated (GOCO), and government-regulated for-proft corporations [24].
There are also instances of more than one governmental entity (local and federal)
being in partnership with multiple private sector players to deliver a project or public
good.
Competitive postures include services or products that can be provided by either
the public sector or the private sector when competing for the same market. This
occurs in the provision of education or housing. Universities may be public, private,
or a combination of the two. The U.S. Postal Service is a quasi-governmental, for-
proft (theoretically) service competing directly with for-proft companies for some
delivery services in overlapping markets. Convention centers are another example of
facilities owned and operated as a public good. The Atlantic City Convention Center
is New Jersey’s largest conference center. The facility completed a microgrid project
which when initially completed included the largest roof-mounted, grid-connected
PV array in the U.S. (see Figure 14.3). Performed in partnership with Pepco Energy
Services, the project generates about a quarter of the electricity required by the facil-
ity and saves an average of $220,000 annually over its project life.
There are numerous examples of public–private relationships. Regulated public
utilities with their geographically designated and protected service territories are
a form of government regulated, for-proft corporations [24]. Public entities such
as municipal utilities might provide electrical power to one market while a private
regulated utility provides power to another. Co-production of goods is exemplifed
by GOCO facilities, particularly military munitions, infrastructure, and hardware.
In non-competitive arrangements, services may be co-produced by means of PPPs.
Public–private research and development activities are another example of a more
cooperative posture [24]. The non-competitive arena includes redevelopment. “The
common interest of both government and developers in maximizing the potential
returns on a site allows fourishing PPPs. Most of these arrangements involve joint
public–private participation in major commercial projects” [25]. While commercial
developers beneft from the relaxation of regulations, inducements to invest, and
infrastructure enhancements, the governmental entities involved beneft from the
investment in the community, increased local employment, an increased property
tax base, and the prestige associated with the projects themselves. Local offcials
have become more entrepreneurial, partnering to build public parking garages and
selling or leasing facilities to retailers [28].
Increased public–private cooperation is one result of these often complex partner-
ships. While there are many benefts to PPPs, diffculties do arise. Locally initiated
PPP arrangements are non-standardized, diverse in nature, and may require enabling
legislation and/or administrative regulations to effect. A driver from the local gov-
ernment perspective is that in-house technical skills are not always available in
the public sector or are too costly to procure. This causes make-versus-buy deci-
sions to be unlikely since the governmental entity lacks the needed project support
228 Fundamentals of Microgrids

FIGURE 14.3 Rooftop solar array at the Atlantic City Convention Center.

capabilities. In such cases, there is cause to seek technical skills from private sector
companies capable of supplying the expertise required. This creates opportunities
for microgrid developers with a history of successful projects. Other drivers from
a local government’s perspective are that development projects create high-paying
employment during their construction and a non-public partner may be able to expe-
dite project completion. The sooner projects can be completed, the sooner economic
benefts can become available.
An important concern of the public sector is fnancial default by a private sector
partner. Corporate entities have a greater tendency to be short-lived compared to
governments. What happens when the for-proft entity defaults on its obligations or
fles bankruptcy? How is the governmental entity contractually protected from such
defaults? Contract clarity and third-party insurance are often the solution.
Despite diffculties and discordant agendas, there are those in both the govern-
mental and private sectors who advocate strongly in favor of public–private partner-
ships. Key components leading to successful PPPs have been suggested. Blakely
believes that they can create “bridges of trust based on similar objectives” and for
those seeking successful partnerships, he offers the following formula [28]:

• a positive civic culture that encourages citizen participation and long-term

employment in the community
• a realistic and accepted community vision that considers the community’s
strengths, weaknesses, and potential
Scoping the Business Case for Microgrids 229

• effective civic organizations that can blend member self-interest with

broader community interests
• a network of groups and individuals that encourages communication and
fosters mediation of differences among competing interests
• the means and desire to encourage civic entrepreneurship (risk-taking)
• continuity of policy, including the ability to adapt to changes and reduce
uncertainty for businesses [28]

ENERGY SAVINGS PERFORMANCE CONTRACTS

Energy service companies (ESCOs) have been in existence for over a century. They
are companies that are normally associated with identifying and implementing cost-
effective energy effciency upgrades to facilities. Energy savings performance con-
tracts (ESPC) are a means of implementing and fnancing energy effciency upgrades
by partnering with an ESCO that guarantees savings that result from upgrading
building systems. In an ESPC, the ESCO assumes some or all of the fnancial risk of
the investment by guaranteeing that the host organization (e.g., a university, school
district, governmental entity, industrial concern, hospital) will realize the anticipated
savings over the contract term. This model has been successfully used for military
and community microgrid development.
Energy savings performance contracts are actually a type of fnancial mechanism
used to implement a project. These projects traditionally begin with an energy and/
or water reduction assessment to consider the types of improvements that would
reduce or eliminate recurring utility costs in existing facilities. Working on the cus-
tomer side of the electric meter, the assessors provide a list of opportunities, identi-
fying the scale and scope of the various improvements available to reduce operating
costs. Facility owners use the preliminary assessment to estimate the energy savings
and fnancial impacts of potential investments in effciency and alternative energy
improvements. Those improvements selected are packaged to provide economic jus-
tifcation for project implementation by the ESCO. In some cases, the ESCO will
also assume the risk of fnancing the improvements themselves.
ESPCs rely on subsidizing projects with utility savings and other cost avoidance,
using M&V procedures to document savings, and the provision of a third-party
guarantee of savings if needed. ESPCs provide an important mechanism for many
cash-strapped organizations to upgrade building systems and equipment. From
the building owner’s perspective, future recurring utility costs are reduced by the
improved effciencies of the newer or upgraded equipment. In the case of microgrids,
the value of the electricity generated, electric demand costs avoided, and other ser-
vices provide quantifable benefts. The guaranteed reductions in future utility costs
are used to fnance the improvements. Any shortfalls in projected savings during the
contract term are covered by the savings guarantee.
The energy services provider pays for the implementation of the project and man-
ages the M&V process [29]. ESPC projects are structured follows:

1. An ESCO is selected.
2. An agreement is signed to proceed with the planning phase on the project.
230 Fundamentals of Microgrids

3. An investment-grade audit is performed.

4. The owner approves the measures to be implemented.
5. An ESPC is entered into by the owner and the ESCO and fnancing is
secured for the upgrades.
6. A turnkey project is implemented under the oversight of the ESCO.
7. Operations and maintenance procedures are established to manage the eff-
ciency of the facilities.
8. Measurement and verifcation plans are developed with procedures in
accordance with established engineering protocols. Baseline measure-
ments obtained during the energy assessment phase are used for savings
comparisons.
9. Payments are made to the ESCO and the fnancier.
10. Annual reconciliations are performed to determine actual savings. If sav-
ings are not realized, the ESCO is responsible for paying the owner the
difference between the guaranteed savings and the actual documented
savings [30].

Large investments in ESPC projects are occurring. The U.S. federal government has
entered into over 400 performance contracts worth about $1.9 billion dollars (using
private sector investment—$3.5 billion including fnancing), to guarantee energy
savings of $5.2 billion through reductions in utility costs [31]. The net beneft to the
government from these projects has totaled over $1.7 billion dollars [31]. Local gov-
ernments, such as the cities of Baltimore, Maryland and Bloomington, Indiana, have
successfully used this process. The City of Covington, Kentucky used an ESPC pro-
gram to qualify a guaranteed savings of $2.25 million over project life [32]. Using
the ESPC model, the U.S. Marine Corps Logistics Base in Albany, Georgia devel-
oped a 15.6 MW capacity microgrid project at a cost of $4.2 million in 2018 [33]. It
includes 8.5 MW of biogas electric generation, a 4.1 MW landfll gas component,
plus six diesel generators with a capacity of 3 MW [33].
The ESPC investment model can be used to implement carbon reduction improve-
ments in facilities and processes. ESPC projects that improve the effciencies of using
carbon-based fuels or use substitute forms of energy (such as solar or wind energy
projects) provide carbon mitigation potential. Software tools that analyze and assess
the savings from these projects are capable of simultaneously calculating the carbon
emission offsets from these projects. The documentation generated from the analysis
can be used to calculate the value of carbon offsets available from cap-and-trade
regimes in local currencies. The market value of the offsets generated also provides
yet another revenue stream for fnancing microgrid projects. In the U.S., tax credits
are available for certain types of carbon capture and sequestration projects.

CHALLENGES TO MICROGRID DEVELOPMENT

The business case for microgrids tends to improve as the costs of distributed genera-
tion and energy storage decline. Regardless, policy and political pressures inhibit the
deployment of microgrids [34]. A fundamental issue is the frailty of the microgrid
business model itself. Many microgrid development projects are custom one-off
Scoping the Business Case for Microgrids 231

opportunities that often defy scalability. There is also the fundamental development
issue that most microgrids start small and grow incrementally. For example, an ini-
tial project scope to generate electricity using solar PV and a fuel cell might later
add battery storage.

POLICIES IN FLUX
As the expansion of microgrid infrastructure occurs over time, the policies that apply
to their development are evolving. This means that standards and regulations that
apply at the beginning of a microgrid development may change when the microgrid
is expanded at a future date. The economic benefts associated with a microgrid can
also change over time. For example, the customers of a remote microgrid might at a
future date be offered lower cost electricity by a central grid extension which causes
microgrid assets to become stranded. This is a worst-case scenario that tempers
investment in microgrids due to their associated business risk.

DEVELOPMENT AND SCALABILITY ISSUES

The need for custom project design and delivery creates problems for the devel-
opment and fnancing of microgrids. Robyn Beavers, vice president at Lennar
Technology and Investments, once stated that there is no “truly scalable platform
where a microgrid is a cost-effective energy infrastructure alternative… there is a
technology and it works, but there is not a front-end business model or the back-
end fnancing” [35]. Partnerships with the host utility can overcome this problem.
Utility ownership rates of microgrids approached 18% in 2016. However, regulatory
approvals are challenging and there is debate as to whether or not the costs should be
absorbed by the utility’s entire customer base or just the microgrid’s interconnected
customers [35].
Larger microgrids such as those that connect multiple centers and cross public
rights-of-way face multiple policy barriers that often require time to resolve and add
to development costs. These have been categorized by Gimley and Farrel [34] as:

• Microgrids are undefined in most state laws, leaving legal uncertainty about
whether they will be classified and regulated as utilities.
• Microgrids may run afoul of state laws prohibiting the sale of electricity by
non-utility entities.
• Microgrids may have particularly challenging interconnection issues that
are not addressed by single generator interconnection rules.
• Microgrid central controller systems have typically been individualized,
inhibiting easy replication and increasing cost.
• Microgrids may have few revenue streams if there aren’t markets for ser-
vices such as voltage control and frequency regulation.
• Due to the various microgrid ownership models (the utility, a public entity,
a private company, or a partnership combining these entities), it is some-
times unclear how benefits should be shared and costs allocated.
232 Fundamentals of Microgrids

CONTROLLER TECHNOLOGIES
The business case for a microgrid is bracketed by the functional capabilities of the
controller. Many consider the concept of the microgrid as being enabled by the
controller and defned as the resources—generation, storage, and loads—within
boundaries that are directly managed by the controller and its capabilities [36]. The
controller “manages the resources within the microgrid’s boundaries, at the point
of interconnection with the utility, interacting with the utility during normal opera-
tions” while defning “the microgrid’s operational relationship with the distribution
utility” [36].
It can be a problem fnding controllers to fully utilize the customer-based resources
[34]. A solution is to construct a project-specifc microgrid visualizer to enable the
utility to monitor all operations [34]. This can be costly to implement. When success-
ful, microgrid systems integrate software and control systems, such as smart meters,
to manage the grid operation in an effcient and reliable manner [37].

ELECTRICITY PRICING
Utility pricing and billing structures may vary based on a set of defned param-
eters and circumstances under which microgrid resources are called upon and could
refect incentive-based performance mechanisms based on the quality of the services
provided [38]. These include variable demand-response pricing models, responsibil-
ity for operations and maintenance, peak demand charge avoidance, and fuctuations
in fuel costs that are a function of microgrid system confguration [38].
There are innovative approaches to pricing electricity generated by microgrids
that optimize energy scheduling with renewable energy systems by using smart tar-
iffng approaches [39]. Integrating RE generation within microgrids becomes a more
viable option in locations with increasing electricity rates or volatile fuel prices [3].
A novel approach to electrical supply and pricing is the clean peak standard (CPS)
which is being considered in several U.S. states. Similar to a renewable portfolio
standard (RPS) which typically identifes a percentage of electricity which must be
provided to the grid by the host utility, the CPS provides a pricing premium for
electricity generated by renewable energy [40]. This premium would apply during
periods of peak electrical load when prices for electricity or greenhouse gas emis-
sions are higher due to demand changes [40]. The pricing program qualifes the
electricity supplied and defnes when the rate structure applies. CPS programs can
incentivize hybrid systems that use renewables, energy storage, or demand reduction
strategies, and provide opportunities for additional revenue for microgrid owners
[40]. Presently, there is no template for developing specifc tariff programs and rate
structures for microgrids that enable the distribution operator to recover costs and
allow a retail supply of microgrid-based generation and storage services [41].
The pricing of externalities associated with greenhouse gases is rare in the utility indus-
try. There are markets for carbon emissions. U.S.-regulated markets include California’s
AB32 and the Regional Greenhouse Initiative which serves ten New England states.
In many markets, the lack of externality pricing allows the market to ignore the full
costs of producing grid-supplied electricity [41]. This hidden subsidy is a disadvantage
Scoping the Business Case for Microgrids 233

for renewable energy-based microgrids. Microgrids can expand their building control
systems and demand response programs, which improves the value proposition when
externalities are considered [41]. To make matters more diffcult, few policies currently in
place subsidize these or other benefts of microgrid deployment. Given such limitations,
the value proposition to deploy a microgrid typically includes [33]:

• renewable energy integration

• resiliency
• utility cost savings and demand charge abatement
• reliability
• power quality improvement
• reduction in carbon footprint
• provision of energy and capacity services
• provision of ancillary services
• linkage to virtual power plants
• future transactive energy revenue
• non-electricity services (thermal, water, etc.) [33]

COST OF GENERATION SYSTEMS, INTEGRATION, AND MAINTENANCE

Microgrids present opportunities for local small and medium size generation. Perhaps
the greatest barrier to microgrid deployment has to do with the economics of scale
associated with their functional deployment and fxed costs. The design and analysis
of microgrids is often a custom activity which increases development costs. The goal
of plug-and-play components and system architecture has not yet been achieved,
meaning that there are likely additional design, engineering, and integration costs.
Microgrid development costs vary based on location and market segment. There
are six different levels of microgrid sophistication, starting with the simplest which
has only a backup generator to the most advanced microgrid with multiple types of
generation, electricity or thermal energy storage, sophisticated controller capabilities,
weather and generation forecasting, and the ability to coordinate multiple microgrids
[42]. Identifying the type of confguration and application of a proposed microgrid
helps to establish the potential development or expansion costs (see Table 14.2). For
example, a Level 3 confguration for a 40 MW campus application might have system
components that include a controller, CHP, solar PV, and energy storage. It is a common
confguration for most microgrids except for those associated for military applications.
While the costs for microgrids vary, engineers fnd it helpful to consider the aver-
age costs of previous projects based on application, scope, and capacity. A study
of 26 microgrid projects provided an average installed cost of roughly $3.1 million
per MW [33]. For example, the Eagle Picher microgrid in Joplin, Missouri includes
20 kW of solar PV, 10 kW of wind power, plus a battery storage system. With a total
capacity of 1.03 MW total costs were $2.6 million [33]. Costs for microgrid develop-
ment tends to be higher in North America than elsewhere in the world. This is due to
the higher costs of land, labor, and technical skills compared to other regions of the
world. An analysis of total microgrid costs per MW commissioned by the National
Renewable Energy Laboratory (NREL) shows that the community microgrid market
 234

TABLE 14.2
Microgrid Levels of Confguration and Common Applications [43]
Types of microgrid
confgurations Characteristics Utility Campus Commercial Industrial Military

Potential microgrid
Level 1 Stand-alone generator Yes
Level 2 Multiple distributed generation units Yes Yes

Coordinated microgrid
Level 3 Controller, thermal assets. renewables Yes Yes Yes Yes
and energy storage
Level 4 Level 3 assets + controller, load Yes Yes Yes Yes Yes
management
Level 5 Level 4 assets + controller, forcasting: Yes Yes Yes Yes Yes
economic dispatch
Level 6 Coordination and control of multiple Yes
microgrids
Fundamentals of Microgrids
Scoping the Business Case for Microgrids 235

has the lowest mean installed cost at $2.1 million/MW, followed by the utility and
campus markets, which have mean costs of $2.6 million/MW and $3.3 million/MW,
respectively (see Table 14.3) [43]. Finally, the commercial market has the highest
average cost, over $4 million/MW [3].
Energy storage systems represent an added feature which augments project costs.
They may require an independent cost/beneft analysis to be economically justifable.
The technological and commercial maturity of energy storage types and components
vary widely [44]. Some systems, such as lead-acid batteries and sodium-sulfur bat-
teries, are proven technologies with many years of maturity while others, such as
fow batteries and emerging lithium-ion batteries, are newer and have a more limited
operational maturity [44]. While capital cost is important, a lifecycle cost analysis and
or a comparison of cost per delivered kWh over the project life is an equally important
business case evaluation metric [44]. Table 14.4 provides information on storage sys-
tem capacities, effciencies, and costs. Pumped hydropower and CAES offer the low-
est storage costs, largest capacities, and greatest longevity for microgrid applications.
The system integration process (including microgrid electrical, control, and secu-
rity subsystems assembly, implementation, and operations) has been identifed as a
key integration-related challenge to the point of being cited as potentially cost-pro-
hibitive [45]. In some cases, costs for system integration can be as much as one-third
of the total project costs [45].
The cost of system operation and maintenance (O&M) must not be overlooked.
Components of O&M costs can be categorized as either variable or fxed. For fossil
fuel-fred electrical generation systems, the largest share of variable cost is due to
the volatility of fuel costs. Since renewable energy systems do not usually require
fuel (exceptions include biomass), they have much lower long-term variable costs.
Comparative variable and fxed operations and maintenance costs are shown in
Figure 14.4. O&M costs for most of the microgrid-related technologies are manage-
able. However, landfll gas generation projects have by far the highest O&M costs.

CASH FLOW ANALYSIS FOR A MICROGRID PROJECT

From a business perspective, the ultimate goal is to develop a robust case to sup-
port development of the microgrid and qualify the project for long-term fnancing.
To be marketable, the proposal needs to assign value and quantify project benefts
(cash infows) and costs (cash outfows) including project fnancing. If a 5 MW utility

TABLE 14.3
Market Segment Microgrid Costs in Million $/MW [44]
Market segment Interquartile range Mean
Campus/institutional $4.94 to $2.47 $3.34
Commercial/industrial $5.35 to $3.40 $4.08
Community $3.34 to $1.43 $2.12
Utility $3.22 to $12.32 $2.55
 236

TABLE 14.4
Energy Storage System Cost (Source: EPRI, Adapted From [45])
Application Storage
technology Capacity (MWh) Power (MW) Duration (hours) % Effciency (total cycles) Total cost ($/kW) Cost ($/kwh)
Bulk energy storage w/RE integation
1,680–5,300 280–530 6–10 80–82 (>13,000) 1,500–4,300 420–430
Pumped hydropower
(microgrid scale)
Pumped hydropower 5,400–14,000 900–1,400 6–10 80–82 (>13,000) 1,500–2,700 250–270
(utility scale)
CAES (underground) 1,080–2,700 135.0 8–20 varies (>13,000) 1,000–1,250 60–125
Sodium-sulfur 300 50 6 75 (4,500) 3,100–3,300 520–550
Advanced lead-acid 200–250 20–50 4–5 85–90 (2,200–4,500) 1,700–4,900 425–950
Vanadium redox 250 50 5 65–75 (>10,000) 3,100–3,700 620–740
Zinc-bromide redox 250 50 5 60 (>10,000) 1,450–1,750 290–350
Fe/Cr redox 250 50 5 75 (>10,000) 1,800–1,900 360–380

ISO fst frequency regulation w/RE integration

Flywheels 5 20 0.25 85–87 (>100,000) 1,950–2,200 7,800–8,800
Lithium-ion 0.25–25 1–100 0.25–1 87–92 (>100,000) 1,085–1,550 4,340–6,200
Advanced lead-acid 0.25–50 1–100 0.25–1 75–90 (>100,000) 2,000–4,600 2,770–3,800

Storage for utility T&G grid support

CAES (above ground) 250 50 5 varies (>10,000) 1,950–2,150 390–430
Sodium-sulfur 7.2 1.0 7.2 75 (4,500) 3,200–4,000 455–555
Vanadium redox 4–40 1–10 4.0 65–75 (>10,000) 3,000–3,310 750–830
Lithium-bn 4–24 1–10 2–4 90–94 (4,500) 1,800–4,100 900–1,700
Fundamentals of Microgrids
Scoping the Business Case for Microgrids 237

FIGURE 14.4 Operating and maintenance cost of electrical generating technologies

(Source: Energy Information Administration [46]).

microgrid was being constructed at a cost of $2.55 million per MW (from Table 14.3),
the total cost can be estimated at about $12.75 million. The value of electric demand
(KW) and electricity generated (kWh) plus the operations and maintenance savings
(avoided cost) would need to be estimated. Avoided costs might include the reduced
costs of fuel for a diesel generator. Subsidies for the project might include renewable
energy credits and possibly some type of loan subsidy. In addition to fnancing costs,
other costs might include miscellaneous expenses and fees for services (e.g., load
management or supplemental energy storage).
Assuming a 15-year fnancing term, a loan interest rate of 3.25%, and a down
payment of $2.5 million, a preliminary cash fow analysis for the frst ten years of
the project might take the form shown in Table 14.5. The cash fow varies each year
but is positive indicating that it is likely to be proftable for the developer. The cash
fow begins to increase substantially after the frst fve years even though the loan
subsidies are exhausted. Note that incremental utility rate increases and service costs
are factored into the cash fow analysis. Over the term of the project, total cumulative
TABLE 14.5
238

Sample Microgrid Cash Flow Analysis.

Microgrid Project Year 15 1 2 3 4 5 6 7 8 9 10

Year Testing 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Annual KW Energy Savings $200,000 $650,000 $682,500 $716,625 $752,456 $790,079 $829,583 $871,062 $914,615 $960,346 $1,008,363
Annual kWh Savings $100,000 $400,000 $412,000 $424,360 $437,091 $450,204 $463,710 $477,621 $491,950 $506,708 $521,909
Annual O&M Savings $0 $75,000 $77,250 $79,568 $81,955 $84,413 $86,946 $89,554 $92,241 $95,008 $97,858
Renewable Energy Credits $0 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000 $50,000

Yearly Cash Infows $300,000 $1,175,000 $1,221,750 $1,270,553 $1,321,502 $1,374,696 $1,430,238 $1,488,237 $1,548,805 $1,612,062 $1,678,131
Annual Payment $0 $868,805 $868,805 $868,805 $868,805 $868,805 $868,805 $868,805 $868,805 $868,805 $868,805
Loan Subsidy $0 ($100,000) ($100,000) ($50,000) ($50,000) $0 $0 $0 $0 $0 $0
Miscellaneous Expenses $0 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000 $25,000
Service Fees $0 $20,000 $20,400 $20,808 $21,224 $21,649 $22,082 $22,523 $22,974 $23,433 $23,902

Yearly Cash Outfows $0 $813,805 $814,205 $864,613 $865,030 $915,454 $915,887 $916,329 $916,779 $917,239 $917,707

Net Cash Flow for Year $300,000 $361,195 $407,545 $405,939 $456,472 $459,242 $514,351 $571,908 $632,026 $694,823 $760,423

Cumulative Cash Infows $300,000 $1,475,000 $2,696,750 $3,967,303 $5,288,804 $6,663,500 $8,093,738 $9,581,975 $11,130,780 $12,742,842 $14,420,973
Cumulative Cash Outfows $0 $813,805 $1,628,011 $2,492,624 $3,357,654 $4,273,108 $5,188,995 $6,105,323 $7,022,103 $7,939,341 $8,857,048
Cumulative Net Cash Infows $300,000 $661,195 $1,068,739 $1,474,678 $1,931,150 $2,390,392 $2,904,743 $3,476,652 $4,108,678 $4,803,501 $5,563,924

Total Project Cost $12,750,000

Downpayment $2,500,000
Financed Investment Cost $10,250,000
Rate of Financing 3.25%
Financing Term (Years) 15
Annual Utility Rate Increase 5.00%
Annual O&M Savings Increase 3.00%
Annual Service Cost Increase 2.00%
Total Net Cash Flow (Life of Project) $5,563,924
Fundamentals of Microgrids
Scoping the Business Case for Microgrids 239

cash infows exceed cash outfows including the initial down payment. This example
microgrid fnancial analysis provides a strong cash fow and indicates that the project
developers have a proposal that would appeal to investors. However, it takes just over
fve years for the initial down payment to be recaptured. Depending on the confgu-
ration of the microgrid and the type of equipment used, the life of the equipment
might exceed the fnancial term of the project. At that point in time (in the example
after 15 years) fnancing costs are eliminated and the net cash fow of the project
increases. Note that this example analysis does not capture any savings for reduced
downtime due to outages.
Once a lifecycle cost analysis is performed, the microgrid might have a nega-
tive projected cash fow. In such instances, it is diffcult to obtain fnancing for the
project. Increasing the down payment on the project is an option if the project devel-
oper is willing to assume greater risk and has additional funds available to invest.
Negative cash fow can also be overcome by meeting additional customer needs,
reducing operating costs, offering additional supplementary services, obtaining sub-
sidies, or accessing incentives.
These are the sort of fndings that are common for microgrids that use renewables.
After the costs of development are amortized and the costs for fnancing are paid, there is
no continuing cost for fuel and no risk associated with fuel pricing variability. Therefore,
the costs for the electricity generated by the microgrid tend to decline considerably.

SUMMARY
Microgrids have the ability to eliminate waste, increase power effciency, provide
power to critical facilities in the event of a blackout, provide service and support
to the bulk power grid, offer price response to lower wholesale power prices for
customers, lower emissions, and serve as a catalyst for economic development [39].
Not all benefts of a microgrid system are fnancial. Facilities that require uninter-
ruptable power systems typically rely on emergency backup generators that may not
perform consistently due to infrequent use [39]. In such cases microgrids can provide
substantial fnancial benefts if the risks can be quantifed.
There is vast potential for fnancial incentives to target emissions and procure
the consumer-driven changes necessary for most mitigation strategies. Other types
of fnancial support that may assist municipal microgrid developers include energy
bonds such as qualifed energy conservation bonds (QECBs), taxable bonds, and tax-
exempt bonds plus any applicable tax credits [6].
Identifying quantifable benefts is an important part of the lifecycle analysis.
The potential fnancial benefts include: 1) enhancing grid resilience and stability; 2)
improving energy security; 3) matching power quality to end-user requirements; 4)
providing ancillary services to the grid; 5) lowering carbon footprints by incorpo-
rating renewables; and 6) enabling market participation of DER and energy storage
[36]. Whether such incentives are created by the market or supported by govern-
ments, they can be remarkably effective tools in the fght to forestall and avoid global
climate change. In particular, this chapter illustrates the capacity of the private sector
to promote carbon reduction strategies through investment and participation in fscal
endeavors, such as new technologies, CDM mechanisms, ESCO/ESPC programs,
240 Fundamentals of Microgrids

and nascent carbon markets. Energy savings performance contracts are a means of
implementing and fnancing energy effciency upgrades. ESPC projects are subsi-
dized with utility savings and other cost avoidance. An energy service company
guarantees savings that result from the facility upgrades. ESPC projects that improve
the effciency of the use of carbon-based fuels or use substitute forms of energy pro-
vide carbon mitigation potential.
Microgrids represent an integral part of GHG reduction strategies; they contrib-
ute to mitigation efforts by using renewable energy and managing energy fows. Cap-
and-trade systems attach a monetary value to carbon emissions and create a quantity
ceiling for plan emissions. Thus, the generators who reduce GHG emissions fur-
ther than required can sell the remaining allowance. Likewise, carbon offsets—the
promotion or maintenance of biological processes or natural features that sequester
carbon—can also be translated into a monetary value.
Altogether, the potential for fnancial solutions to eliminate the threat of global
climate change, stall the growth of GHG emissions, protect the environment, save
money through energy-effciency measures, and encourage the development of new
industry is evident. Sequestration techniques are in the process of being developed
and revised for widespread use in the U.S. CCS remains at the demonstration stage
of the innovation process because of its high costs. The expense of CCS implies
that countries with many large point source emitters (e.g., power plants and other
industries) in close proximity to storage sites are the most likely candidates for cost-
effective CCS programs. The fnancial restraints and possible risks involved in CCS
procedures signify the need for government investment and regulation in developing
technologies. This suggests the need for joint, concerted efforts among proponents in
developed nations, where the appropriate technology, infrastructure, and geographic
features make CCS a possibility. Evidence indicates that if carbon prices reached
$75 to $185 per ton by 2020, then they would deliver substantial emission reductions
by mid-century.
To assess the business case for microgrids, the scale and level of the proposed
microgrid and its services must be identifed. Microgrid development costs are
known to vary by the location of the microgrid, the market segment, and other
factors. In addition to the costs of generation and distribution assets, costs will
likely include storage technologies. Goals of the business model include defn-
ing a project that offers a positive cash fow and can be fnanced. To establish a
business case for a potential microgrid, the costs and benefts of the project must
be estimated. This requires identifying the value proposition. For a lifecycle cost
analysis, the operation and maintenance costs of the facilities must also be esti-
mated. Projects with a sustainable positive cash fow have a greater likelihood of
being fnanced.
Knowledge about the possible impact of fscal decisions should encourage every
stakeholder to act responsibly in their investment decisions and fnancial pursuits.
People need to become more aware of how fnances impact anthropogenic carbon
emissions. This chapter offers a sense of empowerment and a dose of accountability
in its underlying message that justifying a business case for microgrid development
is an important part of the project development process.
Scoping the Business Case for Microgrids 241

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2018-022/CEC-500-2018-022.pdf, accessed 23 January 2020.
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utilities-look-to-new-hybrid-models-for-microgrid/435992, accessed 23 January 20.
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acteristics of new generating technologies. Annual Energy Outlook 2018.
 15 It’s Back to the Future
with Microgrids
Microgrids are not a new technological solution for generating and delivering elec-
tricity. Historical models for today’s microgrids are found in several of the oldest
electrical generation systems. The focus of microgrids is how electricity delivery
systems can be scaled and confgured to meet specifc local requirements. When we
think about the future of microgrids we consider the wide variety of ways there are
to generate electricity. Microgrids in the past often used combinations of fossil fuels
and renewable energy (RE). The same is true today.

IT’S ALL ABOUT PROVIDING ELECTRICITY

Electrical generation is driven by customer desires. What customers want is electric-
ity that is inexpensive, reliable, resilient, and readily available. What they don’t need
is electricity that when generated creates unmanageable wastes and causes unreason-
able environmental issues. Electrical generation has a history of creating unforeseen
environmental problems. It is well known that fossil fuels (coal, oil, and natural gas)
when used to generate electricity create pollution in our atmosphere, in bodies of
water, and on the land. When combusted, they also cause greenhouse gas (GHG)
emissions. Large central atomic power plants have unresolved issues with nuclear
wastes which have little potential to be adapted for reuse. In fact, wastes are typi-
cally stored on-site and the costs for storage over thousands of years is unknown.
Not all environmental pollution is manageable and it often has unforeseen impacts.
These Rankin cycle generation systems also consume vast amounts of fresh water.
Therefore, our need for electricity is tempered by the way electricity is produced and
the associated externalities of the generation processes.
Fossil fuel-fred generation solutions are not only environmentally problematic
but also ineffcient. Too much energy is lost as waste heat and during transmis-
sion. Combined heat and power (CHP) systems beneft from improved effciencies.
However, to be economically feasible plants must be co-located with facilities that
have need for the heat being generated. When this is possible, both the costs for
transmission infrastructure and the energy losses are reduced.
The opportunities to generate electricity have expanded. There are renewable
energy technologies including hydropower, solar power, wind power, biomass and
biofuels, and geothermal energy which offer solutions for electrical generation.
Smaller and scalable package RE systems are available that no longer require central
stations. Battery storage systems allow us to store electricity for use at a later time.
These systems can be used in combination to overcome problems with intermit-
tencies. While all electrical generation systems have their own identifable exter-
nalities, RE generation typically creates much less atmospheric and water pollution.

245
246 Fundamentals of Microgrids

Some renewables including hydropower, biomass, and geothermal energy sources

are capable of producing baseload electrical power. Others including solar and wind
power are viewed as being locally intermittent resources.

BRIGHT FUTURE FOR MICROGRIDS

Microgrids are a back-to-the-future solution and they offer great potential to pro-
vide electricity locally. In a world that has over a billion people without electrical
power, they offer hope for a brighter tomorrow, one with the benefts of electrifca-
tion. Supplying this growing demand for power solely with fossil fuel generation
will exacerbate many problems that we are trying to resolve. The hope is found in
renewable energy and energy storage systems. In combination, they appear to be
among the best ways to provide power without negative externalities, unanticipated
problems, and weighty subsidies.
The operation of microgrids offers potential advantages for customers and utili-
ties that include improving energy effciency, minimizing total energy consumption,
reducing environmental impacts, improving supply reliability, plus providing net-
work operational benefts such as loss reduction, congestion relief, voltage control,
security of supply, and more cost-effcient electricity infrastructure replacement [1].
Many believe that local owners of microgrids are likely to make more balanced
choices, such as between investments in effciency and supply technologies [1].
Microgrid operators have the ability to coordinate the electrical generation assets
and present them to the utility grid at a scale that is consistent with grid operations,
thereby avoiding new investments for integrating decentralized energy resources [1].
This is due to the wide variability of potential microgrid confgurations and compo-
nents which can be operated from a central control system (see Figure 15.1).
There is a bright future for microgrids. The recent drop in the costs for renewable
generation and storage technologies and the forecasts for continued declines offer
hope for expanded markets. As costs for these generation systems continue to decline
and their effciencies improve, the markets for their applications broaden. Today, the
lifecycle costs for land-based wind power, hydropower, geothermal, and some types
of solar are competitive with coal.

CREATING SMART MICROGRIDS

The energy market in the U.S. is becoming more diversifed as environmental regu-
lations increasingly impact the central grids and consumers produce more electric-
ity autonomously [3]. Future microgrids will require incremental improvements and
upgrades to meet the reliability demands of their customers. Many people are pro-
ducing their own renewable power and forming their own community grids [3]. For
example, the state of California is the frst to require that by 2020, all new residences
must be constructed with either installed solar panels or a shared solar power system
serving a group of homes.
Smart grid, based on the Energy Independence and Security Act of 2007, refers
to the evolution of the electric grid toward a “modernization of the electricity deliv-
ery system so it monitors, protects and automatically optimizes the operation of
It’s Back to the Future with Microgrids 247

FIGURE 15.1 Topology of the microgrids of tomorrow. (Source: adapted from [2].)

its interconnected elements—from the central and distributed generator through

the high-voltage network and distribution system, to industrial users and build-
ing automation systems, to energy storage installations and to end-use consumers
and their thermostats, electric vehicles, appliances and other household devices”
[4]. According Eger et al., “A smart microgrid generates, distributes and balances
the fow of electricity to consumers, but does so locally. It aggregates and controls
largely autonomously its own supply- and demand-side resources in low-voltage
and even medium-voltage distribution grids” [5]. It is an electricity network based
on digital technology that is used to supply electricity to consumers using two-way
communications [6]. Smart grid devices transmit information that enables ordinary
users, operators, and automated devices to quickly respond to changes in smart grid
conditions [6].
Microgrids have been proposed as a novel distribution network architecture
within the smart grid concept, capable of exploiting the benefts from integrating
large numbers of small-scale distributed energy resources into low-voltage electric-
ity distribution systems [1]. Smart grids will provide the consumer portals, tech-
nologies, data standards, and protocols that will enable the two-way communication
of electronic messages between consumer-owned networks and intelligent equip-
ment [4]. They provide multiple pathways to the development and implementation of
diverse energy-related services (see Figure 15.2) [4]. Leveraging the ability to com-
municate with consumer-owned energy management systems and intelligent energy
consuming equipment not only adds value but also allows for the decentralization of
marketable services [4].
Microgrid applications operate using a consolidated control and energy manage-
ment system with smart metering capabilities [7]. Advanced sensor technologies and
data from metering systems analyze power fow data to identify opportunities and
248 Fundamentals of Microgrids

FIGURE 15.2 Diagram of smart grid electrical supply network with clusters of distributed
energy resources. (Source: adapted from [8].)

optimize energy use while accounting for peak demand [7]. These smart technolo-
gies log and communicate asset performance in real time to improve decision-mak-
ing processes and prevent costly unplanned maintenance events [7]. At the highest
level, the smart grid confguration has the following components [1]:

• improved operation of the legacy high-voltage grid (e.g., by using synchro

phasers)
• enhanced grid-customer interaction (e.g., by using smart metering and real-
time pricing)
• new distributed entities that did not exist previously (e.g., microgrids and
active distribution networks) [1]

The capabilities of the smart grid include more effcient operation, load manage-
ment, demand response support, consistent reliability, premium quality power, the
ability to self-repair systems, and consumer participation in grid operations [6]. The
smart grid offers economic benefts by reducing costs and optimizing the benefts
of energy services. As utility grids become more intelligent, microgrids can add
value by providing services such as load leveling, reliability support, and demand
response. The central grid structures of the future can be supported by clusters of
distributed energy resources.

DEVELOPMENT OF DISTRIBUTED ENERGY RESOURCES

Driven by the need to supply electricity to remote regions, developing countries
are taking the lead in DER development. Much of the development in remote loca-
tions is confgured as microgrids. With increased electricity demand and lower
It’s Back to the Future with Microgrids 249

technology costs, developing nations are now dominating the global transition
to clean power. This reverses past trends when the world’s wealthiest countries
accounted for the bulk of renewable energy investment and deployment activity [9].
Consider the following trends identifed in a recent report by Bloomberg NEF: 1) the
majority of the world’s new zero-carbon power capacity in 2017 (114 GW includ-
ing hydropower and nuclear) was built in developing countries compared to 63 GW
added in wealthier countries; 2) renewables accounted for the majority of newly
added power-generating capacity (186 GW); 3) clean energy new-build deployment
additions are growing fastest in developing nations, increasing 20.4% annually; 4)
roughly 35 emerging markets have held reverse auctions for clean power-delivery
contracts with the estimated levelized cost of electricity for wind and solar sub-
stantially below $50/MWh in many developing nations (e.g., in Mexico $21/MWh
for solar PV, in India $41/MWh for wind power); and 5) as of the end of 2017, 54
developing countries had invested in at least one utility-scale wind farm and 76
had received fnancing for solar projects [9]. The majority of the funding for these
projects was from local sources.

EMERGING ELECTRICAL GENERATION TECHNOLOGIES

There is a wide assortment of new electrical generation technologies that are becom-
ing available. Many of these emerging technologies are just now being tested and
deployed. All have a local or regional focus and offer various levels of economic fea-
sibility. These technologies will be deployed to a greater extent as their costs decline
and their feasibility becomes more proven. Many provide opportunities to generate
electricity for microgrids. A sample of these technologies are discussed.

WAVE ENERGY SYSTEMS

The uneven heating of the Earth’s surface drives the world’s winds creating surface
stress in bodies of water and causing waves to form. Wave energy is a form of hydro-
power whose kinetic energy is from surface waves or pressure fuctuations below
the surface. Wave energy is sometimes classifed as a type of ocean energy, yet wave
energy can also be harnessed using waves in large lakes (e.g., Lake Superior in North
America or the Caspian Sea in Asia). Systems can use offshore, near shore, or shore-
line devices. The electrical energy generated is then harnessed at the coastline or
transferred to shore by undersea electrical cables. The world’s frst commercial wave
farm using systems that ride on the waves opened in 2008 at the Aguçadora Wave
Park in Portugal. Others are located off of the coasts of Oregon, Scotland, and Spain.
Wave energy can be harnessed by foat or buoy systems that use the rise and fall
of ocean swells to drive hydraulic pumps which stroke an electrical generator or
dielectric elastomer generator to make electricity [10]. The most common catego-
ries of wave energy systems include terminators, attenuators, point absorbers, and
overtopping devices [11]. There are also devices called capture chambers. These
devices enlist shore-based oscillating water columns to use the in-and-out wave
motion to enter a column [10]. They direct air through a constricted space to turn
a turbine, flling the column with water as the wave rises and emptying it as the
250 Fundamentals of Microgrids

wave recedes [10]. In the process, air inside the column is compressed and warms,
creating energy the way a piston does (see Figures 15.3a and 15.3b) [10]. Attenuator
wave energy converters foat on the ocean’s surface or may be partially submerged
[11]. As they “ride” on the waves, the wave passes the attenuator allowing energy
to be harvested [11].
Another way to harness wave energy is to bend or focus the waves into a narrow,
tapered channel, concentrating the waves and increasing their power and size. The
waves can then be channeled into an elevated catch basin or used directly to spin
turbines. Gravity causes water to exit the basin and electricity is generated using
hydropower technologies.

FIGURE 15.3 (a) Cross section of oscillating water column wave capture chamber system
showing waves advancing (Source: graphic based on [12]); (b) cross section of oscillating
water column wave capture chamber system showing waves receding (Source: graphic based
on [12]).
It’s Back to the Future with Microgrids 251

Other ways to capture wave energy are being studied. Some of these devices
under development are placed underwater, or anchored to the ocean foor, while oth-
ers ride on top of the waves. Wing wave systems work with the concept that water
particles orbiting under a shallow water wave follow elliptical paths [11]. As depth
increases, the horizontal movement of the water particles’ rotation remains the same
while the vertical movement decreases. This causes the motion of the water near the
ocean foor to oscillate horizontally. The wing waves capture this horizontal motion
to move the wings of the system, ultimately pumping a working fuid to a generator
via a hydraulic ram [11].

TIDAL POWER
Ocean mechanical energy is driven by tides which move due to the gravitational pull
of the moon and the sun [13]. Despite being tiny in size compared to the sun, due to
the moon’s proximity to the Earth its gravitational force is 2.2 times stronger than
that of the sun [14]. The tides follow the track of the moon during its orbit around the
Earth, creating diurnal and ebb cycles on the ocean surfaces [15]. The predictability
of tides, the vastness of tidal resources, and the development of complementary tur-
bine and component technologies have led to increasing interest in exploiting tidal
currents as an energy resource [15].
Electrical power can be generated using the tidal waters of bays, estuaries, or riv-
ers. Unlike wind power resources which are unpredictable and solar energy which
is unavailable when the sun is not shining, the movement of tidal water is both
predictable and continuous. A tidal barrage is similar to a hydroelectric dam (see
Figure 15.4). It is used to convert tidal energy into electricity by forcing the water

FIGURE 15.4 Cross section of a barrage retaining water in tidal basin [16].
252 Fundamentals of Microgrids

through turbines, activating a generator [13]. They are among the oldest technologies
used to generate hydropower.
A barrage system creates pressure head which is used to drive a turbine in a man-
ner similar to a low-head hydroelectric dam. A sluice directs the water into a basin
[16]. As the ocean level drops, gravity causes the water to fow back out into the ocean
[16]. Barrage tidal power typically requires a difference between the high and low
tides of 16 feet (4.9 m); there are about 40 regions in the world that have such condi-
tions [15]. A beneft is that barrage systems can be designed to generate electricity
when water is fowing both into and out of the basin or lagoon. The frst major plant
of this type in the world (240 MW) was constructed in 1966 at La Rance, France and
produces 30 GWh annually [15]. Others can be found in the Bay of Fundy in Canada,
Rance River in France, Sihwa Lake in Korea, and Kislaya Guba in Russia.

STIRLING-DISH ENGINE
A Stirling engine is a machine that can be used to provide either power or refrigera-
tion. It operates on a closed cycle and uses a working fuid that is cyclically com-
pressed and expanded at different temperatures. It is a closed-cycle regenerative heat
engine with a permanently gaseous working fuid. Closed-cycle refers to a thermo-
dynamic system in which the working fuid is permanently contained within the sys-
tem, and regenerative describes the use of a specifc type of internal heat exchanger
and thermal store, known as the regenerator [17]. The use of the regenerator differ-
entiates a Stirling engine from other closed-cycle hot air engines [17].
The Stirling engine when combined with a solar concentrator system more effec-
tively applies existing proven technologies. This confguration uses solar concentrators
to provide the heat that drives the Stirling engine [18]. Like other solar technologies,
specifc effciencies are low and a substantial collection of solar energy is required.
Despite having moving components, the key advantage of this system is its simplicity.
Dish-engine is the oldest of the solar technologies, dating back to the 1800s
when solar-powered, Stirling-based systems were frst demonstrated [18]. Modern
technologies that use these engines began developing in the late 1970s but were not
scalable. Since the 1990s, prototype demonstrations have attempted to fne-tune the
technology, with the goal of developing 5 kW to 10 kW units for distributed power
and 25 kW systems for utility-scale applications. In 2005, two major California utili-
ties signed power purchase agreements totaling over 800 MW; these became the frst
commercially operational dish-engine power plants [18].
Dish-engine technology uses a parabolic dish refector to concentrate direct radia-
tion onto a receiver connected to a power conversion unit. Because of their small
focal region, dish-engine systems track the sun on two axes—azimuth-elevation and
polar [18]. The concentrators are typically confgured to approximate an ideal shape
by using multiple spherically shaped mirrors supported by a structural truss. Due to
a short focal length and the need to focus solar rays directly at the receiver, dish-type
systems require support structures that prevent vibration caused by variable wind
conditions [18]. A receiver transfers solar energy to a high-pressure working gas,
sometimes helium but usually hydrogen. Stirling engines convert heat to mechani-
cal power in the same manner as conventional engines [18]. Power is produced by
It’s Back to the Future with Microgrids 253

the expansion and contraction of the solar-heated working gas which drives a set of
pistons and a crankshaft [18].
Dish-engines are attractive because of their high effciency, modular design, and
comparatively fexible siting requirements compared to other solar thermal technolo-
gies that require large expanses of fat land area [18]. When combined with solar
technologies, constraints on wide-scale deployment include the cost of the truss
assemblies that use steel and aluminum, the availability and cost of specialized dish-
shaped mirrors, and the cost to maintain the engine [18]. However, other workable
renewable energy applications might involve combining geothermal resources to
provide the heat needed for the process. Geothermal or hot spring locations have
naturally occurring temperature differentials. Placing the hot chamber of the Stirling
engine inside a hot spring would be a means of gathering the heat necessary to keep
the engine running, as long as a cooling system is maintained [19]. Geothermal heat
does not require any specifc location for utilization, since at certain depths the Earth
maintains a constant temperature [19]. Geothermal Stirling engines could be used
in areas without easy access to the grid, and function as either heat pumps or as
generators [19].
A design-build project was launched to create a microgrid at Tooele Army Depot.
The microgrid plan involved incorporating the existing generation sources at the
depot: a Stirling engine-based solar array, two wind turbines, and a diesel generator
[20]. The renewable resources were sized to have the capacity to power the entire
24,000 acre (9,712 hectare) installation; diesel generation was used for periods of
low renewable power availability during grid outages [20]. To integrate the genera-
tion sources and control power distribution, a microprocessor-based system of relays,
communications switches, and frewalls was used; it was among the frst to be based
fully on traditional SCADA systems [20].

ELECTRICITY GENERATED USING HYDROGEN

Hydrogen can be used to generate electricity for microgrids. While it is the most
abundant element in the universe, the key problem is that most hydrogen used today
is derived from fossil fuels such as methane (CH4), propane (C3H8), and butane
(C4H10). As an alternative, hydrogen can be manufactured using renewable energy
and stored. According to NREL, “…electrolysis is a process that uses electricity
produced from renewables to split water into hydrogen and oxygen. The hydrogen
can function as an energy storage medium, effectively storing RE until a fuel cell or
engine converts it back to electricity” [21].
One promising methodology is to use any available excess electricity to produce
hydrogen via electrolysis. This hydrogen could be used for vehicles as a mobility
fuel (e.g., those using proton exchange membrane fuel cells) or to generate electric-
ity, especially to improve capacities, provide load leveling, or meet peak demand
requirements [21]. The frst large hydrogen-fueled plant in the U.S. is planned to
replace the 840 MW coal-fred Intermountain Power Plant near Delta, Utah. It will
be a model for future similar grid-connected plants. The electricity generated by
the plant is to be transmitted to Los Angeles; the project is driven by the need to
reduce GHG emissions [22]. The plan for the plant is to install turbines capable of
254 Fundamentals of Microgrids

combusting a mixture of 30% hydrogen and 70% natural gas incrementally increas-
ing the hydrogen ratio to 100% by 2045 [22].
Mitsubishi Hitachi Power Systems has announced a project in the Netherlands to
convert a 440 MW natural gas combined-cycle gas turbine (CCGT) plant to 100%
hydrogen combustion spearheading a new industry to make hydrogen fuel common
across Europe and in the U.S. [23]. An important environmental beneft is that a
CCGT plant using natural gas produces about 65% less CO2 than an equivalently
sized retiring coal-fred power plant [23]. When paired with a 50% gas and 50%
renewable sources, the CO2 reduction increases to 85% [23].
The vision for microgrids involves local generation of electricity using renewable
energy resources. Excess power, perhaps generated by from wind and solar power,
would be directed to an electrolysis facility and use fresh water to create hydrogen
(H2) and oxygen (O2). The hydrogen would be piped to storage and used for electri-
cal generation. Alternatively, H2 could also be recombined with captured CO2 (per-
haps from a combined-cycle natural gas plant) to produce a synthetic natural gas for
power plants or transportation applications [21]. Renewable hydrogen has a future
in electrical generation as costs are projected to decline from $2.30–$6.80 per kg to
$1.40–$2.90 per kg by 2030; however, only 253 MW of renewable H2 projects have
been deployed over the last two decades [22].

SMALL-SCALE NUCLEAR REACTORS

Uranium is a fossil fuel. It is often classifed as a clean energy source when used
for nuclear power processes that generate electricity. This is because GHGs are
not emitted when electricity is generated. When we think of nuclear plants we
focus on utility-scale generation facilities. There are other options that are often
overlooked.
Small nuclear reactors have potential to power microgrids in the future. Advanced
small modular reactors (SMRs) are currently being developed in the U.S. which can
be used for power generation, process heat, desalination, or specifc industrial appli-
cations [24]. They vary in output from a few to hundreds of megawatts and use light
water coolants or non-light water coolants such as a gas, liquid metal, or molten
salt [24]. They can be installed in multiples and sized to match the electrical load
requirements of a university campus, small town, or military base.
SMRs offer advantages that include their small size (1/100 that of a traditional
reactor), variable output capabilities, reduced capital investment, ability to be sited
in locations not possible for larger nuclear plants, and the ability to incrementally add
power [24]. Unlike large nuclear plants, SMRs can be constructed within the ten-
mile (16-km) radius of their service areas. SMRs can operate either independently
or be connected to an electric grid, allowing them to power a campus or small com-
munity in the event of grid failure [25]. SMRs can store over two years’ of their fuel
requirements on-site, allowing them to maintain power after extreme weather events
or other threats to the electric grid [25].
The next generation of small reactors might use thorium as fuel and molten salt
as a heat sink to provide electricity with no nuclear waste [26]. Integrated smart grid
capabilities both in distribution and consumption can ensure that nuclear microgrids
It’s Back to the Future with Microgrids 255

would manage the ebb and fow of demand and production far more effciently than
today’s power generation infrastructure [26].
While fusion reactor demonstration projects are likely decades away, smaller
nuclear reactors are more likely to be available sooner. Integral Molten Salt Reactor
(IMSR) technology is a small-scale and modular technology that is being explored
by a company located in Ottawa, Canada. IMSR uses molten salt as both the fuel and
the coolant and operates on a variety of nuclear fuels including spent nuclear waste
[27]. IMSRs can work in combination with RE facilities such as solar and wind
plants to produce continuous utility-grade, fossil fuel-free energy with no carbon
footprint [27]. IMSR plants can also operate under ambient pressures making them
much safer than conventional nuclear plants. They are not subject to the potential
of radioactive gas explosions and there is no risk of meltdown upon failure [27]. An
example is the NuScale SMR. This technology uses a natural circulation light water
reactor with the reactor core and helical coil steam generators located in a common
reactor vessel in a cylindrical steel containment (see Figure 15.5) [28]. The reactor
vessel containment module is submerged in water in the reactor pool, which is also
the reactor’s heat sink and located below grade [28]. The reactor building is designed

FIGURE 15.5 Design of small nuclear reactor. (Source: NRC.gov/NuScale [28].)

256 Fundamentals of Microgrids

for 12 SMRs. Each SMR has a rated thermal output of 160 MW and electrical output
of 50 MW each, yielding a total capacity of 600 MW for all twelve SMRs [28].
While there are regulatory issues, permitting, and construction delays that are
associated with large nuclear reactors, these hurdles might be overcome with smaller
versions of nuclear technology. Package nuclear energy systems though expensive
are only a fraction of the cost of large-scale nuclear plants. There are unresolved
environmental concerns with SMR deployments, yet they are more manageable.
However, regulatory structures are not in place to enable wider application of pack-
age nuclear systems. In most U.S. states enabling legislation is not in place and sev-
eral outlaw the use of nuclear power regardless of the technology used.
The availability and comparatively lower cost of natural gas and renewable gen-
eration such as wind power and hydropower make nuclear plants the less competi-
tive option. Renewable generation technologies are proven, regulatory legislation is
usually in place, and the time required for development is less. They remain the
more cost-effective solutions to providing electricity with clean energy resources.
Regardless, the frst micro-nuclear fssion fast-reactor (rated at 1.5 MW) in the U.S.
might be operational between 2022 and 2025. If completed as proposed for Idaho
Falls, Idaho, it will provide power equivalent to that required by about 1,000 homes,
use recycled nuclear waste for fuel, and operate for about 20 years without being
refueled.

PLASMA-ARC GASIFICATION
Plasma gasifcation is a waste-to-energy (WTE) process. It is an emerging technol-
ogy which processes landfll waste to extract commodity recyclables and convert
carbon-based materials into fuels [29]. It provides a means of producing renewable
fuels while achieving near zero-waste byproducts. Plasma-arc processing has been
used in the past to treat hazardous waste, such as incinerator ash and chemical weap-
ons, and convert them into non-hazardous slag [29]. There are plasma gasifcation
plants operating in Canada, Japan, India, and elsewhere.
Plasma gasifcation is an extreme thermal process using plasma that converts organic
matter into a synthesis gas (syngas) which is primarily composed of hydrogen and car-
bon monoxide [30]. The process has been compared to passing municipal waste materi-
als through a lightning bolt. A plasma torch powered by an electric arc is used to ionize
gas and catalyze organic matter into syngas [30]. The heat from the plasma arc (over
8,000°C), and the intense ultraviolet light of the plasma, result in the complete cracking
of tar substances and the breakdown of char materials, creating a synthetic gas [31].
This process uses most feedstocks, often municipal solid waste, in an initial gas-
ifcation process, followed by clean-up, heat recovery to produce steam, and then
generation of electricity. The clean synthetic gas exiting the plasma converter is then
cooled and conditioned by scrubbers before being used directly by reciprocating gas
engines or gas turbines to generate renewable energy [31]. Residual heat is recovered
from the process to be used in CHP applications within the process [31]. Waste
byproducts include vitreous slag and metals.
The electricity generated by plasma-arc systems is greater than that needed by the
process so the excess power can be exported. Other benefts of the process include
It’s Back to the Future with Microgrids 257

low environmental emissions and no generation of methane gas. The process does
not discriminate in type of feedstock, and the ability to generate a synthetic gas.
Since over 99% of the feedstock is used in the process, the economics of these plants
are most favorable when there are high costs and tipping fees associated with munic-
ipal landflls.

DEVELOPING APPLICATIONS FOR MICROGRIDS

Recent technological applications will impact the development of microgrids. This
section provides a sample of emerging non-generation technologies, artifcial intel-
ligence, and wireless energy transmission that will impact the microgrids of the
future. While cost reduction for microgrid development has in the past focused on
the hardware and technologies associated with generation, transmission, and storage
devices, the future will focus to a greater extent on reducing the costs associated with
microgrid management and operations.

ARTIFICIAL INTELLIGENCE
One of the key features of microgrids is the fact that most require custom design
which creates the need for specialized engineering expertise. This design process
can be selective and cumbersome. Another feature of microgrids is their tendency
to grow and develop iteratively over a period of time. Microgrids tend to establish
themselves on a small scale and grow as additional generation or storage assets are
incrementally added to the system. While some generation technologies are adapt-
able others are not. Variable loads must be managed. There is a developing market
for microgrid control systems that can identify irregularities, consider the various
ways to respond to events, and take corrective actions in real time.
Artifcial intelligence (AI) and machine learning that can assist in resolving these
issues and applications for microgrids are on the horizon [32]. Introspective Systems
and Israel-based Brightmerge are incorporating software into a custom microgrid
software platform that determines microgrid feasibility, and creates optimal design
specifcations for operational controls [32]. The feasibility study engine performs
an algorithmic process that improves the speed and results of evaluating microgrid
projects while the design optimization engine considers all the assets and variables
associated with a specifc microgrid project to confgure an optimal mix of assets
[32]. A pilot project is underway for a solar-plus-storage microgrid on Maine’s Isle
au Haut that will apply a form of this software [32].
AI can take advantage of data proliferation to provide predictive analytics and
real-time insights into asset operations [33]. Already some energy providers are using
AI to enhance clean energy resources as the lowest-cost energy option, increase their
reliability and output, speed deployment, and provide improved services to their cus-
tomers [33]. Through improved data analysis, AI applications are reducing the per-
ceived risks to investors associated with clean energy, helping investors obtain greater
returns on their clean energy investments, and expediting their deployment [33].
The variability of weather conditions causes wind and solar resources to be
labeled as intermittent energy sources. Virtual power plants whose control centers
258 Fundamentals of Microgrids

use AI might begin to solve this problem. StatkrafIt, a company headquartered in

Norway, uses a cloud-based AI platform to connect more than 1,500 wind, solar,
and hydropower plants across Europe with electricity generation and electrical stor-
age facilities [34]. This large virtual power plant located in Germany has a capacity
greater than 12,000 MW [34]. Weather data, power generation forecasts, electricity
production data, and market prices for energy are continuously fed into the VPP’s
data center, enabling Statkraft to match demand with supply in real time [34].

WIRELESS ENERGY TRANSMISSION

Wireless power transmission (also called inductive power transfer, or WiTricity)
technologies are not a new phenomenon. In 1890, this technology was demonstrated
by Nikola Telsa. It involves transmission of electricity to adjacent devices through
the air and works based on the principles of magnetic induction transmission using
an oscillating magnetic feld. There are three main systems used for wireless elec-
tricity transmission: solar cells, microwaves, and resonance [35]. In an electrical
device, microwaves are used to transmit electromagnetic radiation from a source to
a receiver [35].
Wireless energy transmission (WPT) is commonly used to charge batteries.
Similar to cell phone battery charging, some use magnetic induction charging
techniques, which require that a mobile device be in direct contact with a charging
device. Others use resonance charging, which allows a mobile device to be placed
near the power source without the need to be in direct contact for charging [36].
Magnetic induction charging typically uses a transmitter coil and a receiver coil.
Alternating current in the transmitter coil generates a magnetic feld, which induces
a voltage in the receiver coil [36]. Resonance charging is based on the same trans-
mitter/receiver coil technology as magnetic induction, but it transmits the power at
a greater distance [36].
Laser technology can be used to transfer power in the form of light energy, and
the power converts to electric energy at the end of the receiver [35]. It receives power
using different sources such as the sun, an electricity generator, or a high-intensity-
focused light [35]. The size and shape of the laser beam are formed by optics. The
transmitted laser light is received by the PV cells and converts the light into electri-
cal signals [35].
Microwave power transmission (MPT) involves combining transmitting and
receiving technologies. Basically, the MPT antenna array emits the power to
the receiving antenna array. The transmitting array would be co-located at or
near the source of generation. In the transmission section, the microwave power
source generates microwave power controlled by the electronic control circuits
[35]. The waveguide circulator protects the microwave sourced from the refect-
ing power which connects through a co-ax waveguide adaptor [35]. According to
the signal propagation direction, the reducing signals separate by the directional
coupler [35].
WPT can be used to transmit power generated by satellites (e.g., a solar PV
station) perhaps in low geosynchronous orbit to receiving stations on the Earth’s
It’s Back to the Future with Microgrids 259

surface. These receiving stations in the future might power microgrids in remote
locations. Other targets could be mobile platforms used to supply power in locations
where there has been a major weather event that causes a local power outage.

CONCLUSION
The future of microgrids will be framed by the adoption of improved and more
widely applied renewable energy resources. For the U.S., this means improving
the fexibility of the nation’s electrical grids to enable the capabilities of diverse
renewables to be maximized. To become more fexible, it must have the ability to
accept new electrical generation technologies and ride smoothly through changes in
demand and supply [21]. Microgrids are a back to the future solution. To be success-
ful, they must be capable of incorporating the capabilities of microgrids to supply
excess power to the grid. With a more fexible electric system, more than 80% of
total U.S. electricity generation could be supplied by renewables by 2050 [21]. Smart
microgrids are the key to providing electricity more economically. There are a num-
ber of emerging technologies which may be used to generate electricity for future
microgrids. They include wave energy systems, tidal power, the Stirling-dish engine,
hydrogen, small-scale nuclear reactors, and plasma-arc generation.
One question that lingers on the horizon is whether or not the regulation of
microgrids can evolve at a pace that prevents customers from defecting en masse
from the grid creating a fnancial disaster for primary electric utility companies and
causing equity and macroeconomic problems [32]. The inclusion of electric vehicles,
demand response, and net meeting are game-changers [37]. Tomorrow’s microgrids
will likely use artifcial intelligence, wireless electricity transmission, and other
technologies.

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Index
A C
Active balancing, 79 Cap-and-trade programs, 221–223
Africa, access to electricity, 157–158 examples, 222–223
Air pollution, 85, 89 how they work, 221
sources and types, 31 Capture chamber, 249–251
Alternative energy, 56, 219 Carbon, 18–20
Amersfoort, Holland, 43 capture, 218–219
Amman, Jordan, 208 dioxide emissions, 20–23, 136
Anchor load model, 164 fnancial instruments, 221
Andasol solar power station, 120 footprint, 22, 205
Anti-islanding, 71, 87 global emissions, 22–23
Antiqua, 98 low carbon economy, 28–29
Applications layer, 204 management, 24–25
Artifcial intelligence, 257–258 offsets, 223–224
Asheville, North Carolina, 49 taxation, 217
Asset coordination, 83 United States, 23
Atlantic City projects, 228 Certifcation Scheme, 176
convention center, 228 Chicago Climate Exchange, 221
wastewater plant, 130–131 Cincinnati Zoo, 49
Atmospheric temperatures, 31 Clean Coalition, 153
Clean Development Mechanism, 223–224
Clean energy, 56
B Clean Power Plan impact, 58
Bankymoon, 194 Climate Change Adaption Roadmap, 145
Barrage, 251 Climate disasters, 9–10
Battery management system, 79–81 Coal plants, 27–28, 57–58, 67, 92
Biomass energy, 54, 60–61, 95 clean coal, 65
bio-fuels, 48–49 economics of, 27–28
biopower, 49 Combined cycle plants, 59, 219–220
Bitcoin, 197 Combined heat and power, 4, 39–40, 60
Black start, 192 cogeneration,39, 86
Blockchain, 189–191, 193–194, 196–198, 225 renewable, 135–136
challenges and barriers, 197–198 Communications layer, 204
NXT, 194 Controller technologies, 232
BlockCharge, 196–197 Cyber-security, 62–64, 198
Bonaire, 7
Borrego Springs, 151, 154, 226 D
Bosnia and Herzegovina, 177–178
BREEAM, 44 Developing countries, 63, 192–193
Buildings, 42–47 incentives for, 193
energy-effcient, 46 Diesel generation, 59–60
net positive energy, 45 Distributed energy resources, 3–4, 91, 98, 104,
residences, 46 109, 125, 189, 234
sustainable, 42–43 Distributed energy storage systems, 2–4
zero net energy, 44–45 Distribution system operator, 173
Build-transfer agreements, 224–225 Dynamic stochastic optimal control, 206

263
264 Index

E Energy supply, 190

emerging generation technologies, 249–256
Edison, Thomas, 37, 39 security, 192
Appleton Edison Light Company, 37 Energy trading, 194–195
Illuminating Company, 37 Environmental issues, 65
Electric power, 53–65 contaminates, 31–32
capacity defned, 94 Ethereum platform, 193–194, 197–198
distribution, 64–65, 73–75, 203–204 European Norms, 174
diesel generation, 59–60 Externalities, 232–233
emerging technologies, 249–256
generation system effciencies, 78
global access, 14 F
grids, 46–48, 53 Financing microgrid projects, 219–229
defned, 53 barriers, 197–198
national, 54 cash fow analysis, 237–239
problems with, 62–64 energy storage system costs, 236
regional, 46–48 ESPC investment model, 229–230
regulation of, 65–66 investments models, 159–160, 238
interconnections, 54 market segment costs, 235
levelized costs for generation, 220 Fort Bliss, 6
loads, 79 Fort Bragg, North Carolina, 210
outages, 64–65 Fossil fuels defned, 54
pricing, 232–233 Frequency control, 178–179
regulation, 65–66 Fuel cells, 129, 134–135
reliability, 63, 66
sector comparisons, 29
system structure, 55 G
Electric vehicles, 190 Generation systems, 91–102
charging, 49–50, 196–197 comparative costs, 103–104
energy backed currencies, 196 complementary, 128
Energy Sector Management Assistance gensets, 96
programs, 159 overnight capital costs, 104
Energy service companies, 229–230 Geothermal energy, 100–102
Energy storage systems, 79–81, 110–123, 129 binary technology, 101
applications, 108–109 fash technology, 101
battery, 116–119, 178–179 project example, 131–133
comparative capabilities, 122 Ghana
discharge durations, 122 capacity and reliability, 157–158, 166
lead-acid, 117 impact of microgrids, 167–168
lithium-ion (Li), 117–118 investment models, 160
management systems, 80 microgrid policy and regulation, 165
sodium-sulfur (NaS), 118–119 recommendations, 168–169
vanadium redox (VRB), 119 Renewable Energy Act, 158
zinc-air, 119–120 solar PV microgrids, 164
conversion losses, 123 tariffs and rates, 167
compressed air storage, 114–116 viability, 158–159
costs of different types, 236 Global Environmental Facility, 223
electrical, 116–117 Global warming, 21–24
fywheel, 116 Gordon Bubolz Nature Preserve, 135
hydrogen, 120 Gorona del Viento El Hierro, 113, 115
pumped hydro, 111–114 Grand Coulee hydro plant, 57
mechanical storage, 111–116 Grid-connected, 2
microgrid storage systems, 121, 209–210 Grid Singularity, 194
roundtrip effciency, 109, 117, 119 Grids, regional, 46–48
thermal, 120–121 Green buildings, 44
traditional uses for, 109 Greenhouse gases, 20–21
ultracapacitor, 79, 203 contracts for emission avoidance, 218
Index 265

costs of reducing, 25–26 K

Green Power North America, 132
potential of reducing, 26–27 Kentucky Coal Museum, 28
reduction strategies, 29–30 Kodiak Island, 150
Regional GHG Initiative, 232 Kyoto Protocol, 21–23, 224
regulations and policies, 66, 85
Guaranteed service levels, 176 L
Guri power plant, 57
Landfll gas, 95–97, 135
Las Vegas, Nevada, 50
H Ledgers, 191
Hoover Dam, 58 LEED, 44
Hybrid generation, 126–128 Les Anglais, Haiti, 209
advantages of, 128–129 Levelized energy cost, 220
confguration, 137 Liquid fuel storage, 60
defnition of, 126 loads, 41, 53, 71–72, 75–81, 126
diesel and renewable, 129 asymmetric, 177
examples, 137 categories of,79, 81
fnancing, 221, 225 changes in, 126
fuel cells and renewable, 134–135, 148 electric, 40, 126
natural gas and renewable, 129–130 sharing, 128
nuclear power and renewable, 133–134 Long Island, New York, 152, 154
solar and geothermal, 131–133 Louisville, Kentucky, 38, 50
solar and wind power, 130–131
Hydrocarbon Age, 18–22 M
Hydrogen power, 253–254
vehicles, 50 Machine learning, 257
Hydropower, 37 Manhattan Pearl Street Station, 37
barrage system, 251 Mannheim, Germany, 211
small systems, 94–95 Marine vessels, 41–42
large systems, 56–57 Measurement and verifcation, 217, 230
tidal power, 251–252 Metering, 202–203, 206
advanced, 206
smart, 204, 207, 209
I Microgeneration Certifcation Scheme, 176
Iceland, 47 Microgrids, 34
IEEE Standards, 44, 86–88 AC and DC, 41–42, 75–76, 126, 130
India, 25, 160, 163 advanced, 8, 202–203
Information sharing, 198 defnition, 8, 202
Information technology systems, 173 remote, 202
Inrush current, 177 architecture, 71–81, 84
Intelligent electronic devices, 205, 213 enterprise systems, 82
International Council on Large Electric Systems, benefts of deploying, 11–12, 201–202
174 business case, 217–219
International Electrotechnical campus, 148
Commission, 174 cash fow analysis, 235–239
International Energy Agency, 105, 174 central control center, 80, 83
International Energy Conservation challenges to development, 230–231
Code (IECC), 43 community, 141–142, 150–153
Inverters, 83, 88, 166, 179–180, 185 defned, 141
Island mode, 2, 4, 11, 174–175 drivers for, 141–142, 228–229
components, 76–81
confgurations, 5, 7, 9, 81–82
J community, 144–145
Johnson City, Tennessee, 96 natural gas and renewables, 12–130
Jordan solar PV plant, 208 operational,82
Jouliette, 196 with renewable energy, 93, 137
266 Index

connecting to the grid, 53–54 Mobile power plant, 179

construction aspects, 176–177 Model City Mannheim, 211–212
container, 179–182 Mojave, California, 100
costs, 158, 235 M-Pesa, 193
defnition, 2, 174 Municipal solid waste, 102–103
development costs, 231
disadvantages of, 12–13 N
distribution company, 151
examples, 147, 149, 151, 208–210 Nanogrids, 42–46, 174
features of, 202–203 Natural gas plants, 58–59, 95
fnancial benefts, 239 Netherlands, 43, 48
future of, 246 Network development, 182–184
generation costs, 233–235 Nuclear, 60–61, 254–256
government, 165–167 design of SMRs, 255
history of, 37–41 fuel assembly, 61
hydropower, 37 fusion reactors, 255
impacts, 164 internal molten salt reactor, 255
independent, 7 nuclear power and renewable, 133–134
industrial, 146–147 plants, 61
interconnected, 7, 84 power, 60–62
island, 174–175 small modular reactors, 254–256
operational aspects, 175–176 submarines, 41–42
types, 175
isolated, 7–8, 158, 197 O
levels of, 234
load types, 79, 81 Ocean thermal energy conversion, 94–95
local service, 74, 144–145, 174–175 Off-grid network, 176–177
operational characteristics, 76, 79, Offset aggregator, 221
178–179 Ohm’s law, 39
maintenance costs, 12–13, 233–234 Operation and maintenance, 233–234
managing, 211–212 advantages of microgrids, 246
marine, 41–42 Overland Park, Kansas, 211
military, 145–147
mobile, 8, 144, 179–182 P
perspectives on, 161–162
power management systems, 78–79 Paris Agreement, 23–24
power sources, 76–77 Peer-to-peer trading, 190, 194–195, 225
private, 165–167 performance contracts, 229–230
regulations and standards, 84–88 Picogrids, 174–175
renewable, 93–94, 105–106 Pinellas County Plant, 102–103
hybrid renewable generation, 128 Planning solutions, 48
smart, 175, 204–206, 213, 246–248 electrical distribution, 53–55
benefts of, 204–205 military bases, 145–147
examples, 207–211 principles, 177–178
technologies, 206–207 Plasma-arc gasifcation, 256
topology, 247 Point of common coupling, 3, 77
solar in Ghana, 164 Policies, 212–213
standards, 86–88, 176, 179 development concerns, 206
sustainable, 210–211 for large microgrids, 231
types, 6–8, 143 power, 209–211
utility distribution, 147–148, 151 bulk supplied, 53
virtual, 8, 148–150 distribution and transmission, 53, 55
Microwave power transmission, 258 layer, 204
Milligrids, 6 management systems, 71–72, 78–79
Mill towns, 40 outages, 9, 64, 204
Mini-grids, 142 traditional sources, 56
Moapa River Indian reservation, 99 Public-private partnerships, 226–229
Index 267

Pumped storage installations, 114 T

PURPA, 85–86
Tariffs, 167, 190
Q Tehachapi Pass, 101
Three Gorges Dam, 57
Quality issues, 11–12, 174–176, 185 Tidal power, 251–252
Tradable renewable certifcates, 223
R Transactional models, 189–190
TransActive Grid, 194
Regional Greenhouse Gas Initiative, 222
Transportation systems, 48–49
Reliability, 166
hydrogen vehicles, 50
Renewable energy, 54
railways, 38, 48
biomass, 95
certifcates, 223
credits, 223 U
defned, 54
Uninterruptable power supply, 239
EU Directive, 192
United Nations World Food Program, 193
municipal goals, 142–143
United States
power generation, 91–101
carbon dioxide emissions, 20–24
solar, 97–100
Clean Air Act, 30–32, 85
zones, 193
Energy Regulatory Commission, 66
Resiliency, 6, 8, 11, 14
municipal renewable goals, 142–143
NAOA, 10
S primary energy consumption, 92
Saint Thomas Island, 47 PURPA, 85–86
Sandia National Laboratories, 81, 212 standards, 31–32
Santa Rita Jail, 135, 149 statutory regulations, 212–213
Security issues, 113, 146, 190 University of Bridgeport, 134
Sensor systems, 205–206 University of California San Diego, 135
Smart contract, 191 University of the Sunshine Coast, 121
Smart Energy Power Alliance, 202
Smart grids, 203, 246–248 V
deployed projects, 209–210
diagram of, 175, 248 Virtual power plants, 148–150
integrating renewables, 210–211 Vodafone, 193
technologies, 206–207 Voltage fuctuations, 175
Smart meters, 248
Smart plug, 196 W
Software decision support, 182–183
HOMER, 209 Waste-to-energy, 102–103
schematic for EMS integration, 214 Wave energy systems, 249–251
worksheets, 182–183 capture chamber system, 250
SolarCoin, 195 Weather events, 9–11
Solar energy, 97–100 Wind power, 100–101
high-temperature collectors, 97–98 Wireless energy transmission, 258–259
photovoltaics, 98–100, 211
utility scale, 100, 208 Y
rooftop collectors, 43, 46–47
thermal, 97–98 Yangtze River, 57
Solid waste treatment, 102–103
Southern Exhibition, 38–39 Z
Stabilization triangle, 30
Stand-alone power, 2–3 Zero-carbon, 249
Stillwater plant, 131–132 Zero-emissions, 56
Stirling-dish engine, 252–253 Zero net energy, 44–45, 210
Subjective evaluation method, 164 Zhejiang Juhua chemical plant, 224