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Reining in energy emissions is top of mind for companies; so having more control of how, where and when energy is produced makes good business sense. Here, Shell Energy’s Matt Baker explains why microgrids are an increasingly popular solution.
As businesses work to bring their greenhouse gas emissions to zero, having more
control of how, where and when energy is produced is increasingly appealing.
Step forward microgrids — decentralized power installations that are designed to
run independent of the wider electricity grid. The technology has been around
for decades. But the falling cost of renewable energy systems is making
microgrids an even more attractive, low-carbon proposition.
We caught up with Matt Baker, who's on the product development team within Shell Energy in the US, to learn more about how microgrids might support your organisation now and in the future.
Matt Baker: My team has a specific focus on decarbonization solutions for
businesses in theUS. Our work is complementary to other efforts within Shell
Energy’s business, but we play an integral role in deploying solutions for
Shell’s customers at their facilities and behind the customers’ electrical meter
with their utility.
MB: A microgrid is any interconnected load or group of loads connected to a
local generation source. By design, microgrids are capable of operating
autonomously and independently from the utility grid. Sometimes microgrids
operate remotely without any grid connection, while others operate alongside the
grid, but maintain the ability to automatically disconnect in case the grid is
unavailable due to any planned or unplanned grid outage.
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MB: Microgrids have been around for quite a while now. They are employed
wherever a grid connection is infeasible or cost prohibitive. For example, there
are several maritime applications for microgrids such as submarines and offshore
The majority of businesses have access to the utility grid, but might want to
consider microgrid technology in areas where it can provide them with a more
reliable service than the utility grid. Power interruptions can be really
expensive and disruptive to businesses.
MB: The key difference is in the ability to operate independently from the
grid. This is what provides facilities greater resiliency against the loss of
power and avoids disruption to their operations.
MB: Business customers have a variety of microgrid options available to
them, depending on their goals and objectives. Increasingly, customers are
to meet their cost control and resiliency needs while positively impacting their
businesses environmental performance.
MB: In our business, Shell Energy is focused almost exclusively on renewable
microgrids, which use onsite solar generation as the primary generation source
alongside the utility grid. The solar power generated is combined with battery
energy storage, electric vehicle chargers, and sometimes a conventional back-up
Over the last few years, the cost of solar and battery energy-storage components
have dramatically declined. This has made those technologies more accessible and
cost effective for a greater number of customers. Then there is the
proliferation of highly sophisticated grid-edge control devices — such as
networked control applications or analytics services — again, at lower prices
and with greater standardization.
Both of these trends are enabling customers to have their own intelligent and
renewable private power grid within their facilities at a cost that is often on
par, or even lower, than the cost they pay for their existing utility service.
We recently signed an agreement with the City of San Diego to own and
operate renewable microgrids at eight of the City’s critical facilities —
including police stations, fire stations, and community recreation centers.
Without spending any upfront capital, the City will save more than $6 million
in reduced electricity costs over the next 25 years. During grid outages, the
microgrids will allow the City’s critical facilities to continue operations.
It’s an integrated, renewable solution that will help the City meet its goal of
eliminating half of all GHG emissions by 2035.
MB: At the most basic level, solar-powered microgrids require good
insolation to generate sufficient power to run a facility. Of course, the
climate in some locations is more favorable than in others.
Regulations also vary widely across jurisdictions, particularly in the US. Not
all utilities are friendly towards microgrids within their territories, with
many imposing onerous permitting and interconnection barriers that are less
conducive to broader adoption.
Those obstacles notwithstanding, there are many tailwinds behind microgrids
where utilities are more progressive, and customers are demanding greater
control over how they consume power.
MB: Customers should be prepared for a collaborative and detailed exchange
with their energy solutions provider, as it’s critical to set shared goals and
targets together up front and throughout the project development process.
Typically, a customer will need to provide information on their facilities —
including a year’s worth of utility bills, as well as, a site drawing for a
provider to properly evaluate their specific situation and design an appropriate
solution. Depending on the complexity of the project, the local utility
involved, and the state and local regulatory environment, project development
typically takes between 12 and 18 months.
MB: The availability of financing for onsite renewable energy projects has
been greatly expanded over the past ten years. Shell Energy and many other
providers are able to engage customers with a variety of favorable financing
options, including Power Purchase Agreements, Energy-as-a-Service Agreements,
and other frameworks that incorporate guarantees of systems performance.
Customers should not assume that they will need to make 100 percent capital
outlay for a microgrid anymore.
Published Nov 12, 2021 7am EST / 4am PST / 12pm GMT / 1pm CET
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