How Can I Install A Microgrid for My Business?

There’s a lot of talk about microgrids lately, and they’re being touted as the answer to our global energy crisis.

Microgrids, or shared networks of locally distributed energy generation that can operate independent of the traditional grid, have been around for decades. However, new technology has made them more advanced and better able to store energy from a variety of sources.

Unlike a one-way connection of a power plant that produces energy and sends it, microgrids are two-way connections that allow us to contribute something back. We can even reap the rewards of contributing more energy than we use.

But in many ways, the laws are still catching up to the technology.

You may be wondering whether microgrids are a viable option for your business and what practical steps you need to take to if you’re interested in installing a microgrid.

This blog will go beyond the questions about why you should install a microgrid and address the more practical matters of implementation.

How Are Microgrids Regulated?

Regulation depends on several factors, including the size and purpose of the microgrid. Microgrids can be exempt from most federal and state regulations if they meet certain standards from the Federal Energy Regulatory Commission.

Exempt microgrids, known as FERC-jurisdictional qualifying facilities, are able to opt out of certain regulations that govern rate setting, construction and operation.

While electric utilities are required to buy energy from qualifying facilities at competitive rates, microgrids that meet the requirements for exemption may sell all their power directly to a local utility or on-site customer. That puts them under the state’s jurisdiction rather than federal oversight. Once they begin to sell to a third party, they’re subject to FERC oversight.

What Will it Cost to Invest in Microgrids?

The cost of investing in a microgrid again depends on the size, scope and purpose of the project. On one end of the spectrum, we have states spending millions of dollars to provide more reliable power to their communities on a large scale. Connecticut, for instance, is building nine microgrids to provide more reliable power to critical infrastructures, such as police stations, naval bases and hospitals. Taxpayers are footing the $18 million bill.

One the other side, some residents and small business owners have been building do-it-yourself microgrids for years.

In many cases, they can take advantage of tax incentives for renewable energy or energy efficiency programs related to their microgrid. The U.S. Department of Energy has recently added new incentives for renewable energy and local distribution in seven states. For information on all state and federal incentives, visit the department’s Database of State Initiatives for Renewables & Efficiency.

Working with a renewable energy installer in your area can also help you to finance the project.

What’s the Return on Investment?

Like any other project, you need to weigh the costs and savings before you determine whether a microgrid is a good option for your company.

First, be sure you’re taking all costs into consideration. That includes the price of fuel, equipment and construction. You should also consider the efficiency of your building and whether you need upgrades—such as better insulation or smart heating and cooling systems—to reduce the amount of energy you’ll actually use.

Consider the population of your area and how many potential users you’ll have. Microgrids tend to have the best payoff in markets where electricity prices are high and the operator can offer a more cost-effective alternative to a large population that’s concentrated in one area.

You’ll also see the biggest benefit if you can sell your excess power back to the grid through net metering, which is now offered [but confirm this is true] in most states.

Keep in mind that utility regulation varies from one state to the next, so the return on the power you generate depends on the grid operator.

Constellation has invested in more than $1 billion in distributed energy assets since 2010 and offers a variety of integrated energy solutions that support microgrids, including battery storage, fuel cells, cogeneration (which provides power from excess heat) and backup generation.

These technologies can be used as part of a microgrid strategy. Fuel cells, for instance, convert fuel into electricity through an electro-chemical process that is clean, quiet and easy to use on-site. Batteries allow excess energy from renewable sources to be stored and used later so customers can use it to generate extra revenue. And backup generation gives you peace of mind that you’ll always have access to a reliable supply of electricity, even in the event of an outage.

Constellation allows backup generation solutions to be bundled into electric supply contracts so no upfront capital is required. To learn more about what our integrated energy solutions can do for your business, get in touch with us today.