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Microgrids Could Be a Secret Weapon in the Corporate Race Towards Net Zero

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.

How does your work integrate with the rest of the Shell Energy business?

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.

What are microgrids and how do they work?

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.

How long have businesses been using microgrid technology?

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 platforms.

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.

Isn’t this the same as generating power onsite and storing it? What are the key differences?

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.

Explain the different types of microgrids available to business customers.

MB: Business customers have a variety of microgrid options available to them, depending on their goals and objectives. Increasingly, customers are choosing renewable microgrids to meet their cost control and resiliency needs while positively impacting their businesses environmental performance.

What’s driving the interest and investment in microgrid technology right now? What trends are you seeing in the market?

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 generator.

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.

So, can microgrids be used everywhere? Are there any parameters or limitations of the technology?

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.

What are the practicalities of implementing a microgrid? What does a customer need to do to prepare and how long does it take to deploy a microgrid?

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.

Cost is always key for business customers. How are you delivering a solution that alleviates the worry that investing in new technology like this is just too expensive?

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.