What Are Microgrids, and How Reliable Are They?

The way your business receives electricity may never be the same again. In the early days, before the development of a massive grid, all electricity was locally distributed power.

Now we’re moving back to the old model in many ways, using the smarter technology of the future.

Welcome to the age of the microgrid.

What is a Microgrid?

A microgrid is a source of localized power generation that can operate without the traditional grid. While it’s generally connected to the grid, it’s not dependent upon it. That means it can easily switch to operating on its own when there’s a storm or power outage. Sounds like a generator, right?

Unlike a generator, however, a microgrid can seamlessly make the transition to using its own energy without any interruption, and it can operate that way indefinitely. A microgrid can be powered by generators, batteries or renewable energy sources.

A switch that separates it from the traditional grid can be flipped on automatically or manually when there’s a problem with the main grid.

Why Are Microgrids Important to the Future?

New smart grid technology and renewable energy development means power is being generated from multiple sources, driving the demand for a place to store and distribute it locally.

That’s where microgrids come in. Because we can now manage our energy demand digitally, we can juggle power that comes from a variety of sources, including solar, wind and natural gas. The need for microgrids will continue to grow as we aim to rely more on renewable energy sources, disrupting the current grid. In fact, approximately 18 percent of total electric generation capacity came from renewable sources in 2016, according to the most recent report from the Federal Energy Regulatory Commission’s Office of Energy Projects.

How Are Microgrids Supporting Renewable Energy?

Microgrids may sound like a trend of the future, but they’re being put to practical use right now to help facilities better manage their energy costs and maintain a reliable stream of power.

At UC San Diego, a microgrid generates 92 percent of the electricity used on campus, saving more than $8 million each year. It receives its power from a variety of sources, including a fuel cell, solar panels and a gas-fired combined heat and power system.

For the U.S. military, microgrids offer reliable and secure sources of power even in the most remote, unstable locations. The military has led the nation in deploying this technology, with microgrids operating at more than 40 military bases. Microgrids that are mobile and flexible are particularly important in places such as Afghanistan, where the U.S. Department of Defense currently moves about 50 million gallons of fuel each month to power about 15,000 generators.

What’s Next for Microgrids?

So far, the development of microgrids has largely been led by organizations with the ability to engineer their own. Many of the large-scale projects have been funded by the government, rather than the private sector. And they’ve been primarily powered by fossil fuels.

That’s changing as the development of new technology makes it easier to power them with solar, batteries and other renewable sources. The market value of the microgrid infrastructure, now estimated at about $133 million, is expected to rise to $671 million by 2017 and $3 billion by 2018, according to a report from Green Tech Media Research.

We should expect microgrids to continue rising to prominence in the years ahead. It will take some time and continued research efforts, but in the end, that innovation will benefit all of us. Having a more reliable source of energy to weather the unknowns and the ability to store energy from a variety of sources, rather than relying so heavily on coal and gas, is a tremendous value to individuals, businesses and the environment.

As an Exelon company, Constellation is committed to supporting distributed energy generation. We have invested in more than $1 billion in distributed energy assets since 2010 and offer 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.