Distributed Generation Provides Substantial Benefits for Businesses

Over the years, I have attended dozens of conferences that focused on the electricity grid, and it has been fascinating to watch these discussions evolve into conversations about the future of microgrids, distributed generation, adaptability and resiliency. While general awareness of microgrids has grown – especially after incidents like Hurricane Sandy – many businesses are unaware of the role microgrids and distributed generation can play in their overall energy management strategy.

Recently, I presented at Infocast’s 17th Annual Transmission Summit on the ‘Emergence of Microgrids – Implications for Transmission’ panel. There was strong interest from the audience to learn more about how microgrids function as an energy system and the challenges of implementing a microgrid infrastructure. Specifically, we focused on the role microgrids can play to enhance resiliency during natural disasters and power outages.

Microgrids and distributed generation are gaining attention because they readily adapt to changing environments and protect energy flow through stored or re-distributed energy supply. Microgrids are localized energy systems that can sustain energy independence separate of the grid by connecting and disconnecting from the grid when necessary. For this reason, microgrids are key to energy resiliency and reliability during natural disasters because of their ability to disconnect from the grid and continue delivering power to avoid outages.

Another major advantage is that microgrids and distributed generation can provide a means of cost stability in an energy market that continues to fluctuate. For example, implementing on-site renewable energy generation or fuel cells through a power purchase agreement can provide greater price certainty through long-term, fixed power costs.

While it may be necessary for a military installation, university, or hospital with a large campus to operate a microgrid, it may not be essential or even financially feasible for all businesses. However, companies can still implement their own distributed energy supply – no matter how small – that works within the existing grid to increase energy resiliency and stability. Businesses of all sizes and industries seek long-term reliability in energy prices and supply, and customizable solutions exist to address each of these concerns as part of a comprehensive energy management strategy.

One way is by combining heat and power supply through a process called cogeneration. Combined heat and power generation facilities provide efficient solutions for on-site power and heat loads with a reduced risk of grid disruption and enhanced power reliability. Natural gas operated generators can be run intermittently for standby uses or used in case of an emergency when traditional sources of power are down. Battery storage is another option to achieve an uninterruptible short-term power supply.

As businesses consider an energy management strategy, distributed generation is an attractive option for mitigating energy price volatility while ensuring reliability. Businesses can implement distributed generation infrastructure through existing contracting models such as long term power or gas purchase agreements. Government entities can leverage public-private partnership structures along with various supply and demand side management contracts as vehicles to facilitate microgrid development.