Microgrids: An energy solution for small towns with big aspirations
June 12, 2018
June 12, 2018
A solution for the “chicken and egg” conundrum of smaller municipalities that lack the grid capacity to attract more industry
At Smart Energy 2018, a power conference held recently in Halifax, Nova Scotia, we delivered a joint presentation with Nova Scotia Power on the newly commissioned microgrid at the Elmsdale substation. A microgrid is a series of local energy generation assets—such as wind, solar, battery storage, and geothermal—that can be disconnected (or islanded) from the primary utility grid and then run on its own self-generated power for the community it serves.
Following our presentation at Smart Energy, Terry Thibodeau, Coordinator for Renewable Energy and Climate Change for the Municipality of Digby, approached us and wanted to know how to get one of these microgrids financed and installed in his community.
Municipalities like Digby often face a challenge when trying to attract customers that require a lot of electricity—like manufacturers—to set up shop in their communities: there is insufficient electrical capacity to serve those customers.
As “Nova Scotia’s Fundy Port of Choice,” for upcoming tidal development, Digby is positioned to attract key renewable energy business to the region, such as tidal turbine manufacturers, who see Digby as a strategic location in support of their activities. Unfortunately, the municipality lacks the electricity capacity required to host such facilities.
The construction of new lines and substations, or the reinforcement of existing lines, is both expensive and permit-intensive, which can often take several years to complete. This makes it harder to close short-term deals with potential developers and manufacturers, compared to those jurisdictions that don’t have electrical supply capacity issues.
Microgrids could be the answer.
The installation of a microgrid can defer or eliminate the need to increase substation capacities.
During our presentation at Smart Energy 2018, we noted that the installation of a microgrid could defer or eliminate the need to increase substation capacities. It also may eliminate the need to run additional transmission or distribution lines to the community.
Utilities plan their distribution and transmission supplies based on load forecasts of known (and historical) community growth. In addition, traditional transmission and distribution asset lifespans can be 40 years or more and may not be conducive to the fast-moving renewable energy sector, which needs to react quickly to government incentives and climate change programs.
Microgrids can be a way to accelerate the local delivery of power to communities that wish to reap the economic benefits of this fast-moving energy economy. There are some examples of this in the US, where a 48 MWh battery energy storage system was installed on the Island of Nantucket, Massachusetts, to defer construction of an underwater transmission line, or where a 2 MW / 8 MWh battery was installed in Arizona to defer construction of a 20-mile transmission line. The classic example, which made headlines early in 2017, was a series of battery energy storage projects in California that eliminated the need to rebuild the Aliso Canyon gas peaker plant (a peaker power plant generally only runs when there is a high demand for energy).
The reality is that recent evolution of the battery market—mainly fueled by the electric vehicle market, which requires these same battery modules—has driven down the price of grid-scale battery storage to the point where they now make commercial sense in some applications, even without government subsidies. Energy services companies have also developed creative financing strategies where the assets can be “leased” by facilities or communities, thus offloading the risk of capital deployment and performance guarantees. This is becoming known in modern day vernacular as Storage as a Service (SaaS).
So, to answer the question posed to us by the Municipality of Digby, yes, there are options available to consider for local energy delivery that do not necessarily mean building new substations and transmission and distribution lines.
We recommend talking to your local utility first, as they may already be exploring such programs. You can also reach out to a trusted consultant to help you navigate this new distributed energy market so that you can bring local energy home to your region and attract new industry to grow local economies.