Powering Growth: How EPCs Can Unleash the Potential of Modern Microgrids
The energy sector is currently undergoing a disruptive transformation as distributed energy systems challenge traditional centralized power grids. These distributed systems, like a modern microgrid, offer more opportunities for cost savings, greater resilience, lower carbon emissions, and increased energy independence.
The benefits have piqued the interest of an increasing number of Commercial and Industrial (C&I) energy management teams who are now seeking ways to leverage the transformative technology of microgrids. This sector now leads in microgrid adoption, particularly in energy-intensive manufacturing operations.
Engineering, Procurement, and Construction (EPC) firms are uniquely positioned to meet this growing market demand. But to deliver project success, EPCs must understand how to truly unleash the full potential of a modern microgrid. Without the right technologies and solutions in place, EPCs might not be able to optimize system performance to achieve the objectives of their C&I clients.
Through careful system design, EPCs can take advantage of the growing opportunities offered by modern microgrids to power sustainable growth for their firms, C&I clients, and communities.
Why EPCs Can’t Afford to Ignore the Rise of Microgrids
First, it’s essential to view the current microgrid market and how it’s trending.
With an outdated electrical grid, transmission interconnection queues extending for years, and a growing urgency to identify cost-saving opportunities while achieving ambitious ESG goals, all signs indicate the need for a paradigm shift in the energy landscape. And the market is responding accordingly.
The US microgrid market topped 10GW in the third quarter of 2022, with more than 7GW in operation and the rest in the pipeline, according to the latest analysis from Wood Mackenzie. Compared to 2017 levels, the market jumped 47% in solar and storage capacity by the end of 2022. Although the C&I microgrid market took time to develop due to the lack of a clear value proposition on project ROI, this sector now drives the majority of microgrid project developments.
What’s caused this sudden surge in interest in microgrids, particularly amongst C&I energy management teams, ESG directors, CSOs, and facility managers?
A few factors have contributed, such as the growing demand for solar and storage to meet ESG goals and the declining levelized cost of electricity (LCOE) for renewable energy sources like solar and advances in energy storage technologies. This shift led to an increase in microgrids deploying more multi-distributed energy resources (DERs), which are used in cases where solar and storage alone are insufficient to mitigate long-duration outages.
FERC 2022 and New Tariffs
Another contributing factor to the expanding market is the recently adopted Federal Energy Regulatory Commission Order Number 2222 (FERC 2222). The order requires regional transmission organizations to allow DERs access to wholesale markets, providing a critical framework for ensuring responsibly managed microgrids from a financial and environmental standpoint. FERC 2222 represents a significant step in opening the wholesale electricity market for integrating more DERs — a major incentive for C&I energy management teams.
Additionally, new microgrid tariffs and rate structures introduced in several states clarify compensation and rates for microgrid services. C&I energy management teams in these markets will be especially receptive to financial opportunities, such as exporting excess energy to the grid.
This maturing landscape means that EPC firms wishing to remain competitive during this disruptive transition and beyond cannot afford to ignore the opportunities microgrids offer.
While these are a few factors contributing to expanding the market, they’re merely laying the foundation and putting up the guideposts to provide more structure and clarity. For EPCs to deliver to their C&I clients the benefits of lower LCOE of renewable energy and access to wholesale markets, they must ensure they use the proper microgrid control and optimization system.
The Modern Microgrid: A Singular Solution for C&I Energy Goals
Perhaps more so than any other factor, the development of the modern microgrid, with a decentralized control and optimization system using software and algorithms, has provided the most evident value proposition for C&I companies. The modern microgrid overcomes the limitations of legacy microgrids and has emerged as a transformative force, revolutionizing how we generate, distribute, and consume electricity. This paradigm shift has paved the way for EPCs to unlock the full potential of a microgrid and cost-effectively deliver energy cost savings, strengthen resilience, and reliably integrate renewable energy sources.
So what’s the difference between a modern microgrid and a legacy one?
Legacy microgrids rely on centralized control systems, like Programmable Logic Controllers (PLC). But PLCs were transferred from traditional power stations for use in basic microgrids with one or two assets. They were not designed to handle the complexity of a multi-asset distributed energy network. Lacking flexibility, scalability, communication, and optimization, PLCs severely limit the range of potential benefits a microgrid can provide. The rise of multi-DER systems and the formalization of wholesale energy market access has significantly increased the complexity of these systems, which overwhelms the relatively basic functionality of centralized control systems. These limitations have consequently led to an abundance of “pilot projects” unable to scale beyond niche applications and requiring high costs for grid integration.
But a decentralized controller with software and algorithms can embed intelligence into each asset to simplify the complex. For example, based on local information and a few variables shared within the system, the distributed algorithm tackles the scalability problem by allowing each DER to decide between two states over its horizon: on or off. Unlike with a PLC, the complexity does not increase significantly with the number of DERs because the algorithm automatically adds more decision-makers.
This singular solution means EPCs can help C&I clients address a wide range of their most urgent energy objectives, such as
- Mitigating energy price volatility by unlocking energy cost savings and leveraging multiple new value streams
- Achieving ESG goals by optimizing renewable energy and reducing carbon emissions
- Addressing the threat of outages by strengthening resilience
- Overcoming a lack of standardization by using a modular, plug-and-play design to ensure reliability
- Managing increasingly complex energy systems with more flexibility and rapid scalability
- Avoiding interconnection queue woes through demand-side electrification
The Heila EDGE Microgrid Control and Optimization Platform
The decentralized Heila EDGE microgrid control and optimization platform uses sophisticated software and innovative algorithms that allow EPCs to build modern microgrids.
With a technology-agnostic and architecture-agnostic approach, the Heila EDGE creates a standardized and modular network that EPCs can easily and quickly assemble, significantly reducing design and deployment costs. Additionally, a modular design lets EPC firms create portfolios of similar-sized assets that are manageable and more attractive to financiers.
EPCs deploying modern microgrids using the Heila EDGE control and optimization platform can empower their C&I customers to efficiently and cost-effectively:
- Meet local objectives by balancing economic, environmental, and resiliency goals
- Obtain accurate predictive energy costs by using the same algorithms to assess energy needs and conduct microgrid feasibility analysis that’s used for system controls for more accurate consumption, generation, and performance forecasts
- Optimize fleet coordination by converting grid requests for ancillary services and market incentives, such as demand response or net metering, to price-based objectives at local sites to create a coordinated fleet that looks and behaves like a single entity
- Continuously improve operations and technology by collecting and processing local and remote data and delivering actionable insights based on this information
- Future-proof the system by seamlessly scaling and adapting as needs change and new value streams emerge
Meeting the C&I sector’s surging demand for resilient energy infrastructure, energy cost savings, and renewable energy sources will require EPCs to diversify their offerings if they want to tap into this expanding market. But to truly unleash the full potential of distributed energy, gain a competitive edge, and position themselves as leaders in this energy transition, EPCs must consider the promising opportunities presented by modern microgrids.
Want to help your customers create a winning business proposition for microgrids? Download our Top 5 Business Cases for a Microgrid eBook here.
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