Implementing microgrids: Controlling campus, community power generation

Microgrids can lower cost and raise reliability for the owner, and for surrounding communities.

By Paul Barter, PE, ESD; and Edward T. Borer, PE, Princeton University June 8, 2015

Learning objectives

  • Understand what a microgrid is, and where it can best be implemented.
  • Know the organizations that govern microgrid design.
  • Define the criteria for best-in-class microgrids.

Microgrids are subsets of the regional electrical grid that have the ability to operate independent, or “island,” from the local utility. Microgrids normally operate in parallel with the utility, but they can operate in an isolated mode when utility service is interrupted or providing poor power quality. The design and operation of microgrids are optimized around the needs of the specific end users they serve. Because of their closer proximity to the end user’s loads, microgrids can provide more reliable and resilient power and a lower net cost of thermal and electric energy than can many utilities. They also are less subject to storm damage than long overhead utility cables. Microgrids can include conventional power generating equipment, energy storage, and renewables.

Benefits of microgrids

Microgrids carry a number of benefits. Some of the reasons organizations establish microgrids include:

  • Produce heat and power less expensively than a centralized utility company, i.e., achieve lower lifecycle costs.
  • Achieve a lower carbon footprint than when producing heating and cooling on-site, while purchasing power from offsite.
  • Minimize impact of weather emergencies on core business operations.
  • Provide higher security against intentional malicious acts.
  • Provide higher-quality power than is available from the utility. In particular, some industrial applications, computing, and research facilities need highly stable voltage, frequency, and power factor to avoid interfering with their work.
  • Avoid the need for extensive utility distribution infrastructure upgrades. 
  • Produce additional revenue by participating in transactional relationships with energy markets.
  • Improve society through job creation in communities and local power generation.

Who owns microgrids?

Microgrids are owned and operated by college and university campuses, military bases, hospitals, housing complexes, research facilities, and some municipalities and businesses. Typically, these are organizations that place a high value on energy reliability, efficiency, security, power quality, or minimized environmental impact. The design and operation of microgrids is regulated by many organizations including National Fire Protection Association (via the National Electrical Code and other standards), Federal Energy Regulatory Commission, state boards of public utilities, state departments of environmental protection, and local construction codes. Where microgrids include boilers, there are additional codes that apply, such as the ASME Boiler and Pressure Vessel Code and state operator licensing programs.

Why the power grid needs microgrids

The regional electrical grids within the U.S. are complex networks of power generation and distribution systems that include many aging power plants, transmission lines, and substations—some dating back as far as the 1880s. The grid was not originally designed to meet today’s growing demands or survive regional weather-related emergencies. Most were built near the sources of fuel and water they consume, not the communities they serve. In fact, in 2013 the American Society of Civil Engineers rated the country’s power system with a D+. Our national electric production efficiency, from fuel input through power delivery to the customer, is less than 50%. Therefore, more than half the fuel that utilities purchase goes to waste as lost heat. Because most central utility plants are located far from customers, they are not designed to take advantage of the heat that is generated (and wasted) as a byproduct of generating power.

Alternatively, microgrids built to include combined heat and power (CHP) systems usually operate at least at 66% efficiency and often closer to 80%. This dramatic difference is the chief source of cost reduction. Additional benefits include the ability to operate core business assets during utility failures, take advantage of local and/or renewable energy sources, and increase power system reliability and resilience.

CHP sites are fairly common. There are more than 4,200 CHP sites installed already in the U.S, according to the Dept. of Energy CHP Installation Database, maintained by ICF International. The U.S. Environmental Protection Agency website lists many benefits of CHP. The EPA Catalog of CHP technologies also lists the quantity of CHP sites in place, and the most common forms of power generation and heat recovery. They include reciprocating engines, gas turbines, boiler and steam turbines, microturbines, fuel cells, and other forms of CHP.

The community case for microgrids

The presence of a microgrid benefits a community beyond the microgrid’s boundaries. When microgrids operate in parallel (synchronized) with the utility grid, they help stabilize local voltage, frequency, and power quality. These benefits don’t stop at the electric meter. They also extend to the community. Similarly, microgrids that are economically dispatched can sell power to the surrounding grid at times when they can operate less expensively than the utility, i.e., they reduce net cost for all power consumers.

Microgrids exist in the communities they serve, thus they are more likely to be sources of local employment than a utility power station 100 miles or so away. Microgrids can take advantage of specialized local fuel supplies—such as landfill gas or urban wood waste—that may be too expensive to transport to a distant power plant. In this way, they can turn something that might otherwise be seen as a waste into a useful resource.

The security case for microgrids

Microgrids tend to be smaller and scattered throughout a region, instead of large and centralized. They can take advantage of local labor and fuel supplies. The failure of one microgrid rarely has a broad regional impact. But having one microgrid remain operational during a regional emergency can offer a point of refuge and safety to first-responders or people displaced from the region.

During Hurricane Sandy, many CHP microgrid systems continued to operate even while the surrounding towns were dark. For example, Co-Op City in the Bronx, a borough of NYC; Princeton University (see “Case study: Microgrid at Princeton University”); New York University; and Nassau cogeneration facility (which supports a hospital) maintained core business operations and were able to be places of refuge for the surrounding communities.

Why not microgrids?

Establishing a microgrid usually involves executing a series of highly technical projects that require coordinating multiple contractors, design engineers, utilities, and local and state permitting authorities, as well as satisfying some federal requirements. Establishing a microgrid with CHP usually involves the coordinated efforts of many departments internal to an organization, such as risk management, legal, planning, human resources, engineering, contracts, purchasing, operations, information technology, maintenance, and public relations. If self-financed, there are often high capital costs associated with establishing a microgrid that take years to pay back.

There are many reasons why an organization that could benefit from a microgrid won’t install one. Typically, businesses will see a large entry price and don’t have confidence that the lifecycle cost will be lower than other alternatives. They often don’t realize that the major costs associated with establishing a microgrid can be financed to smooth out cash flow. Businesses that cannot make lifecycle cost decisions with a time horizon of a decade or more, or that cannot manage complex, high-cost, multiyear projects, are often unable to establish microgrids.

Additionally, businesses that do not need highly reliable energy or high-quality power may not benefit from building a microgrid. In some cases, it may be less expensive to shut down a business briefly than to pay for high reliability and resilience. This decision should, of course, be made with thought and intentionality.

Economic dispatch systems and microgrids

The best microgrids take full advantage of high-speed digital technology. They use economic dispatch systems to collect data from within the microgrid and from external sources, such as weather forecasts and the prices of fuel and electricity from real-time power markets. The dispatch system recommends the optimum combination of assets from within and outside the microgrid that should be used to deliver energy most economically.

Smaller systems can be designed for fully automatic dispatch. Larger and more complex microgrids usually have trained personnel involved in overseeing safe operations—often 24/7. Although very small, simple microgrids can sometimes be operated without computerized economic dispatch. These do not tend to result in the most economic operations.

Microgrid energy sources

For reliability, microgrids almost always include one or more gas turbines, reciprocating engines, or steam turbines that can produce a controlled amount of power. The energy source for these is usually natural gas, while some also burn diesel fuel or biomass.

After a microgrid is established, it is common to supplement the main generator with renewable energy sources, such as wind, solar thermal, or photovoltaic power generation. Some microgrids incorporate batteries, flywheel energy storage, fuel cells, or microturbines. As the costs for these newer technologies continue to decline, they are becoming increasingly important assets within microgrid operation.

Moving forward

Microgrids can be challenging for an organization to implement due to their complexity and the many internal and external stakeholders who must be involved. There is no one-size-fits-all microgrid because each is designed and optimized around a specific organization’s needs and priorities. However, their widespread implementation has the potential to provide higher power quality, reliability, and resilience to the organizations they serve.

Microgrids can lower cost and raise reliability for the owner, and for surrounding communities. Distributed microgrids can be used to enhance national power security. When CHP is a component of the microgrid, there can be significant lifecycle cost savings coupled with reduced environmental footprint.

About the authors

Paul Barter is senior vice president, global, and high-performance buildings group leader at Environmental Systems Design. He is a patented inventor and innovation specialist with 27 years of experience in the critical infrastructure and construction industries. His main focus is on project-delivery and growth in high-performance buildings, central plants, microgrids, resilient distributed power, CHP, and high-rise designs.

Ted Borer is the energy plant manager at Princeton University. He has more than 30 years of experience in the power industry and holds leadership roles in the International District Energy Association and New Jersey Higher Education Partnership for Sustainability. He is a founding co-chair of the Microgrid Resources Coalition.