Power outages are not new. Since the first U.S. electric grid went into operation nearly 140 years ago, there have been outages.
Unplanned grid-based power outages (primarily caused by weather events, animals, auto accidents or high power demand) are today recognized as major threats to business operations and profits. The U.S. Department of Energy estimates that grid outages are costing the U.S. economy $150 billion annually.
Until recently,“planned” power outages were less costly and painful than unplanned, and were usually of short duration to make relatively minor repairs. That has changed.
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What is a Public Safety Power Shutoff?
For the first time in 2019, California utilities implemented public safety power shutoffs (PSPS). PSPS is a proactive, planned grid outage based on weather forecasts. The goal is to decrease wildfire risk from equipment or downed power lines sparking during hot, dry, windy days and evenings.
With short notice, utilities announced PSPS plans for complete grid power shutoff that spanned multiple cities, counties and thousands of miles. The resulting shutoffs impacted millions and caused $1 to $2.5 billion dollars of lost revenues and productivity in Northern California communities alone.
Public good will, brand damage to utilities and economic hardship are making energy resiliency — reliable electricity access 24/7/365 and speedy recovery from planned or emergency outages — more important than ever.
For large commercial and industrial businesses, the cost of an outage can escalate into millions of dollars per hour of downtime. One in four companies say they experience a power outage at least once a month.
Is California the Only Area Impacted by Utility Planned Power Outages?
Although headlines have recently focused on planned power outages in California, grid outages are increasingly common across the United States.
On the one hand, utilities are increasingly planning power outages prior to significant weather disasters, not just wildfires. For example, the Southeast U.S. experienced extensive power outages from Hurricane Michael in 2018. Hurricanes, frigid polar vortexes and snowstorms, thunderstorms with high tornado potential, and extended heatwaves are causing more planned as well as unplanned disruptions to grid energy availability.
Can Solar Generation Avoid Grid Outage Downtime?
Changing conditions and aging infrastructure make energy resilience more critical than ever.
Tune in to our Solar Tea Time Webcast to learn more about energy resilience and surviving planned power outages.
In the event of a grid outage, a solar-only solution is not going to keep the power on, even if the sun is still shining. The solar system requires additional virtual technologies and physical, on-site equipment to operate independently (islanded) from the utility grid. Such an islanding system is called a microgrid.
What is a Microgrid?
A microgrid is a collection of local, on-site Distributed Energy Resources (DERs) that work together as a single system, enabling facilities or municipalities to function with their own mini electric power grid. DERs can include solar PV systems, battery energy storage, and/or generators.
A microgrid leverages control technology and software to intelligently manage and optimize on-site generation and energy storage resources. Microgrids can be grid-tied, grid-independent, or capable of both. Many help pay for the additional investment needed to make islanding possible by leveraging the microgrid to control loads and only pull from the grid when power is cheapest.
How Much Does a Microgrid Cost?
To illustrate the pricing breakdown between various types of microgrids, the National Renewable Energy Laboratory (NREL) recently provided an analysis that shows total microgrid costs per megawatt. Their research found that prices prior to the end of 2018 ranged between $2.1 million/MW up to $4 million/MW. To fully estimate the cost of a microgrid, it is important to first understand three of the most common types of microgrids:
At a fundamental level, a microgrid is a group of interconnected loads and DERs behind a utility meter, which can occur at a building level. For example, the Duke Energy Renewables microgrid project at Schneider Electric’s Boston One Campus is helping reduce energy costs, incorporate more sustainable energy and provides resiliency in the case of a utility power outage.
These are typically microgrids that manage very large energy loads — like a hospital, industrial park or education institution– across a close geography. The microgrid powering critical infrastructure at Blue Lake Rancheria, the century-old Native American reservation in Northern California, is an example of a campus installation. This project uses a solar PV system, Tesla battery storage and two legacy generators to provide a 1.8 MW capacity that is expected to lower greenhouse gas emissions by 200 tons and reduce energy costs by more than $200,000 annually. During the 2019 PSPS power shutoffs, the Rancheria’s microgrid was the only power available to nearly 10,000 people in Humboldt County California. The microgrid powered the casino, hotel and offices, and potentially helped save lives by powering essential medical equipment for residents.
3. Community and utility
Community and utility microgrids are often the lowest cost to implement because they involve existing segments of the regulated grid. The focus of these projects is to maintain power reliability within a designated community. For example, Montgomery County in Maryland has a microgrid that provides essential public facilities and assured power continuity, even when the utility grid is down from a storm or major outage. It’s a popular solution as the solar-powered microgrid also helps reduce the community’s carbon footprint and energy costs. This project was financed through a public-private partnership with no upfront capital costs to the community.
Montgomery County, Maryland public safety headquarters microgrid lowers utility bills, helps stabilize the grid when energy demand is high, and reduces the need for power plants.
How can I finance a microgrid?
There are multiple ways to make microgrids a reality.
Sometimes businesses prefer to own their microgrids outright, and cash and bank loans are the answer. This is known as customer-owned or capital expense. The business retains complete control over their system and benefits from the financial returns. For many businesses and communities, this is often not the right or available option.
Financing is then evaluated. Increasingly popular is Microgrid-as-a-Service (MaaS).
MaaS offers a flexible ownership structure similar to a power purchase agreement (PPA) model commonly used to finance on-site commercial solar generation projects. Under MaaS financing, capital investment is eliminated and financial risk reduced as a developer and/or financier owns and operates the equipment. Out of pocket costs are based on usage. The solution is owned by the developer, which thus has its own incentive to tap all of its expertise in design, build, operations and maintenance to assure peak operation for decades.
Additionally, several U.S. state policies and incentives may be leveraged to promote investment in solar and microgrids, including:
Energy Surety in Uncertain Times
While we can’t avoid utility power outages, microgrids can provide power continuity and resiliency. The payback goes far beyond just uptime and is crucial for businesses and communities alike to keep operations and critical services running.
About REC Solar
REC Solar, a Duke Energy Renewables Company, has helped nearly 800 commercial, public sector and utility-scale solar customers think differently about energy since its founding in 1997. REC Solar offers all expert design, engineering, financing, operations and maintenance services in-house, allowing for a simple customer experience. Getting solar, energy storage, EV fleet charging and microgrid proposals is easy with REC Solar. For more information, visit recsolar.com.