Are Microgrids The Route To The Utility Of The Future?

Forward-looking utilities are looking to microgrids for new revenue-generating streams.
Published: Mon 25 Aug 2014

Far from threatening the utility business, as the naysayers would have it, microgrids could present new business opportunities for utilities, with two recently launched initiatives pointing the way.

Building microgrids for customers

Presented in its recent rate filing New York state utility Central Hudson Gas & Electric Corporation has become possibly the first utility in the United States, if not in the world, to propose building microgrids for customers.

The proposal is one of four presented for discussion towards the New York Public Service Commission’s (PSC) ‘Reforming the Energy Vision’ (REV) plan [Engerati-Reforming New York's Energy Vision]. If accepted, it would see Central Hudson build, own and operating microgrids for customers with a total individual or aggregated load of 500 kW and above.

(The other proposals are a Community Solar Program for customers who wish to purchase solar energy but are unable or don’t wish to install solar panels; a Demand Response program for customers in targeted growth areas; and a Smart Meter Opt-in program for customers who desire the enhanced usage information and functionality of these devices.)

Microgrid program benefits

In testimony to the PSC, Central Hudson’s Senior Vice President – Customer Services, Charles A. Freni and Vice President – Business Development and Governmental Affairs, Anthony S. Campagiomi indicate that the program would be for customers who desire increased resiliency and reliability of supply. Customers may also see a reduction in energy costs.

Central Hudson proposes that customers would enter into a service agreement for a specified term, under which the cost of the facilities would be recovered, so no revenue requirement impact is anticipated. For larger customers outreach would be provided directly to local colleges, hospitals, prisons, as well as large residential or corporate campuses. For larger state institutions and public schools Central Hudson would partner with the New York Power Authority to provide funding and resources through the Authority’s Combined Heat and Power program.

Freni and Campagiomi say in their testimony the program could also permit willing customers to form a microgrid by jointly establishing an agreement for Central Hudson to install generation capacity designed to meet critical power needs during an outage. In addition to severe weather event resiliency, the microgrid installation may provide additional benefits including the integration of storage, local renewable and distributed energy resources and local demand response resources.

Outsourcing the utility workforce

Another idea being proposed comes from the CEO of San Diego-based General Microgrids, Terry Mohn, who says for the last year he has been talking to regulators and utilities about outsourcing their workforce to microgrid operations.

“Microgrid operations is going to be a huge growing field for linemen, engineers and others to use their skills,” says Mohn. “We are going to see huge growth in microgrids and their operation needs to be managed by a competent workforce and that’s going to come from the utility sector.”

These proposals are still in their early stages and subject to further discussion. And are there other ideas or initiatives for utilities to incorporate microgrids into their future business? Time will tell...