1.2. BGE's Public Purpose Microgrid Pilot Proposal_Murach_EPRI/SNL Microgrid
Adaptive Energy_Future of Electic Utility
1. Distributed Energy, The Electric Utility
Industry, And The Democratization Of
Electricity Generation
By
Paul Evans : pevans@adaptiveenergy.co : 931-952-8289
2. • Definitions
• Distributed Energy: (“DE”). Distributed Energy is energy generated or stored by a variety of small,
energy generating, energy storage, grid-connected devices. Together, these devices are referred to as
Distributed Energy Systems. Conventional power stations such as coal-fired, gas and nuclear powered
plants, and hydroelectric dams are centralized and often require electricity for generated power to b
transmitted over long distances. Distributed Energy Systems typically are decentralized, modular and
utilize more flexible technologies, they typically use renewable energy sources, along with traditional
diesel and NG generators and are located close to the load they serve. Local generation for local load.
• Renewable Energy: Energy from a source that is not depleted when used, such as Solar, Tidal, Wind,
Biomass or Municipal Solid Waste.
• Dr. Martinot, Sr. Energy Specialist, The World Bank and his team recently compiled their Renewables
Global Futures report from two years of research the report observes that "The history of energy
scenarios is full of projections for renewable energy that proved too low by a factor of 10, or were
achieved a decade earlier than expected.“
Renewable Energy
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4. Impact(s) On Electric Utility Industry
• Recent technological and economic changes are expected to challenge and
transform the electric utility industry. These transformations arise in part to:
• An enhanced focus on DE technologies, falling costs of DE, government
programs to incentivize selected technologies; the declining price of natural gas;
rising electricity prices and uncertain economic conditions in certain areas of
the country.
• Increasing customer, regulatory, and political interest in Demand-Side
Management (DSM)
Paul Evans : pevans@adaptiveenergy.co : 931-952-8289 4
5. Impact(s) On Electric Utility Industry
• The financial risks created by transformative challenges result in
the potential for a squeeze on profitability and, thus, credit
metrics.
• Taken together, these factors are potential changers to the U.S.
electric utility industry, and are likely to dramatically impact the
availability of capital to fund future investment, investors,
employees and customers.
Paul Evans : pevans@adaptiveenergy.co : 931-952-8289 5
6. Impact(s) On Electric Utility Industry
• Without fundamental changes to regulatory rules and electric
utility investment recovery programs, one can speculate as to the
adverse impact of these new challenges on electric utilities, and
their access to capital, as well as the resulting impact on
customers from a price and service perspective.
• To the extent that increased risk & investment is incurred, capital
deployment and recovery mechanisms for the electric utility
industry need to be adapted accordingly.
Paul Evans : pevans@adaptiveenergy.co : 931-952-8289 6
7. Is The Electric Utility Industry A Natural Monopoly?
• A type of monopoly that exists as a result of the high start-up costs in a particular
industry. This tends to be the case in industries where fixed costs predominate,
creating economies of scale where the largest supplier has an overwhelming cost
advantage over competitors; as is traditionally the case in water and electricity
services.”
• However, it is economically sensible to have certain Natural Monopolies,
governments often regulate those in operation, ensuring that consumers get a fair
deal. The electricity business has consisted of “Natural Monopolies”
• But this is no longer the case. Technological Advance has rendered the Electric Utility
Industry “Natural Monopoly” obsolete.
Paul Evans : pevans@adaptiveenergy.co : 931-952-8289 7
8. Blessing Of Transformative, Interesting Times
• We live in privileged times. Telecommunications revolution; breakup of AT&T, mobile
communications; the Internet, -all stimulated new competition, product and service
packaging, and branding - now it is Electricity Utility Transformation.
• The electricity grid already intersects with the telecommunications and information
infrastructure through smart grids, meters, and telephone applications.
• Where a grid does not exist, or services are at the peripheral edge of the grid such as in
rural communities, emerging economies in S.E. Asia, India or Africa, the periphery is the
center - through Distributed Energy Systems.
• To characterize this new center, we consider how widely it will spread its generated
power. If it encompasses neighborhoods, we have community grids; for thousands of
households, we have Microgrids.
Paul Evans : pevans@adaptiveenergy.co : 931-952-8289 8
9. Electric Utility Transformation
• The head of America’s second-largest energy provider hopes to make the
foundation of the Electric Utility Business model obsolete. David Crane,
president and CEO of NRG Energy, said “customers will switch from buying
power to generating their own in the form of Microgrids. There will come a day,
when the grid is at best an antiquated system to a completely different way of
buying electricity,”
• “Just think how shockingly stupid it is to build a 21st-century electric system
based on a system of 130 million wooden poles,” “Stop trying to rearrange the
deck chairs on the Titanic, and start talking about;
“What’s A Better Business Model”
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10. What is A Microgrid?
• Microgrid: A group of interconnected loads and distributed energy
generation with clearly defined electrical boundaries that acts as a single
controllable entity with respect to the grid and can connect and disconnect
from the grid to enable it to operate in both grid-connected or island mode.
Paul Evans : pevans@adaptiveenergy.co : 931-952-8289 10
11. What is A Microgrid?
• Consider a 100,000 Deadweight tonnage container ship, a sizeable
floating microgrid. Its propulsion requires ~ 70 MW engine powered
by burning heavy fuel oil. It has power systems for cargo
refrigeration; air-conditioning; critical communications systems; and
other loads much like any community, likely another ~15 MW.
• Ships do not emphasize renewable energy generation, yet like any
microgrid, they have batteries, diesel generators, and waste heat
recovery systems, optimized for cost savings and reliability.”
Paul Evans : pevans@adaptiveenergy.co : 931-952-8289 11
12. What is A Microgrid?
The promise of increased power independence and
security for municipalities, communities, corporate
and university campuses, hospitals and medical
care facilities will drive demand for Microgrids in
the U.S. Military, medical and other customers are
already moving ahead to establish secure,
independent power production and distribution
networks on their respective campuses.
The promise of increased power independence and
security for municipalities, communities, corporate
and university campuses, hospitals and medical
care facilities will drive demand for Microgrids in
the U.S. Military, medical and other customers are
already moving ahead to establish secure,
independent power production and distribution
networks on their respective campuses.
Reliability, Resiliency and Quality:
Numerous examples of Microgrids and co-generation
capabilities keeping the “lights on” during Hurricanes
Katrina and Sandy exhibit the usefulness of Microgrids.
NYU lights remained on during Hurricane Sandy; as did
Co-Op City housing (55,000 residents); Long Island
South Oaks Hospital, Danbury Hospital, College of New
Jersey, Stony Brook Univ., Princeton University, Bergen
County Utilities – all operated throughout Sandy.
Paul Evans : pevans@adaptiveenergy.co : 931-952-8289 12
13. Microgrid
Benefits of Microgrids:
• Efficiency: Less distribution system loss. Local generation for
local use
• Resiliency: Able to disconnect and/or repair itself much faster
than Macrogrid
• Security: Enhanced cyber and physical security.
• Renewable: Enhanced integration of renewable, smart grid, and
storage technologies
Paul Evans : pevans@adaptiveenergy.co : 931-952-8289 13
14. • From 2014 Utility Dive Survey
Why Should Municipalities, Corp’s., Univ’s, LPC’s, Get Involved with Microgrids?
Paul Evans : pevans@adaptiveenergy.co : 931-952-8289 14
15. • From 2014 Utility Dive Survey
Why Should Municipalities, Corp’s., Univ’s, LPC’s, Get Involved with Microgrids?
Paul Evans : pevans@adaptiveenergy.co : 931-952-8289 15
16. • From 2014 Utility Dive Survey
Why Should Municipalities, Corp’s., Univ’s, LPC’s, Get Involved with Microgrids?
Paul Evans : pevans@adaptiveenergy.co : 931-952-8289 16
17. • Thierry Godart, president of Schneider Electric.
“Utilities are serious about microgrids and are taking a lead in their development. The most
electro-intensive and electro-sensitive utility customers are pursuing microgrids. So utilities
are increasingly forced to decide “am I part of the game or just a bystander suffering from the
effect?” He sees utilities taking a lead market role by forming subsidiaries that will build
microgrids and eventually operate them on behalf of their large customers. At the same time,
Godart noted that the more traditional side of the utility business, the regulated distributed
grid — will have to adapt to the changes microgrids will bring and learn to take advantage of
their benefits. Microgrids, like other forms of distributed energy, are viewed as
transformative to the status quo of central power plants and transmission lines.”
• The transformation taking place in the electricity system is enormous, inevitable and in
progress. The solution offers a way for utilities to remain profitable; ------ change the desired
outcomes of the electricity system to include efficiency, flexibility, and clean power and pay
utilities based on their ability to attain these targets.
And, Get In The Way Of The Money”
What Becomes The Role Of The Local Power Company?
Paul Evans : pevans@adaptiveenergy.co : 931-952-8289 17
18. • Frost & Sullivan's analysis of the emerging global microgrid
market estimates that there will be a sharp rise in installations
from 2015 to 2020.
• Remote community site deployments, campus environments;
(healthcare, educational, military, municipal, corporate) and
Microgrids deployed by utilities are going to be very active, as
research activities gain pace through utility and university
networks.
Emerging Economies
Paul Evans : pevans@adaptiveenergy.co : 931-952-8289 18
19. • Uptake of Renewable Energy Forecasts off by as much as a factor of 10
• DES, regulatory incentivized technologies and more all comprise a slow
inevitable break-up of the Electric Utility Natural Monopoly
• Microgrids will play a large part in providing decentralized renewable energy,
worldwide
• Local Power Company’s can be a part of the solution and potentially increase
profits. They can be a part of a new transformed industry or suffer the effects of
change in the status quo.
Take Aways
Paul Evans : pevans@adaptiveenergy.co : 931-952-8289 19
20. Thank You
Distributed Energy, The Electric Utility Industry, And
The Democratization Of Electricity Generation
By
Paul Evans : pevans@adaptiveenergy.co : 931-952-8289