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Power resilience and reliability: Exploring distributed energy systems

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Michelle Isenhouer Hanlin | Senior Project Lead, Smart & Distributed Energy, Reading | 25 October 2021

How do organizations adopt reliable power, reduce costs and drive emissions down? Distributed energy. Find out what distributed energy options are available to your business and how to select the right fit.

Distributed energy resources (DERs). Resilient systems. Microgrids. They may sound like industry buzzwords but they’re critical distributed energy options for reducing costs and driving down emissions.

However, we don’t always use them in the right context, which makes it difficult to understand their value.

To determine the best distributed energy investment option, companies must understand the value of each option, consider their motivations, determine their critical loads, understand the power market and be clear on their carbon targets.

If the investment still doesn’t make sense, it needs to consider the market drivers that need to change. For example, trends in rates and carbon taxes.

Supporting peak shaving and lower demand charges with DERs

DERs typically consist of onsite power generation and energy storage as an option. They can use energy sources such as renewables, fossil fuels or a mix of both. Increasingly, DERs are starting to integrate smart technology, but they don’t need it to operate.

Commercial and industrial players invest in DERs for the economic and environmental potential. In areas where peak power or demand prices are high, it makes sense to invest in renewable energy generation through DERs to support peak shaving or lower the demand charges.

And as more companies move along their energy transition journey, they’re increasing investment in DERs or larger systems to decrease their Scope one or two emissions.

Switching from the main grid to onsite power with resilient systems

Resilient systems are DERs that rely on smart technology to regulate critical loads. This is especially the case if the main power grid fails, putting buildings and assets at risk of downtime.

When this happens, they use smart technology to switch from the main grid to onsite power generation. This provides uninterrupted power while switching off non-critical loads such as inactive offices.

Investing in a resilient facility is beneficial when the cost of operational downtime is greater than self-generation. This means upfront capital investment is worthwhile if a business can’t afford downtime.

Remaining operational during grid outages with microgrids

The US Department of Energy defines microgrids as, ‘a group of interconnected loads and DERs with clearly defined electrical boundaries that act as a single controllable entity with respect to the grid’.

This means that two or more facilities can remain operational in isolation of the main grid during outages. They typically rely on an automated microgrid controller that bases its actions on grid or economic performance.

An organization that owns several facilities on a campus can keep them running during outages by interconnecting them to a centrally controlled system of DERs. It can also integrate district energy, which includes heating and cooling.

DERs and microgrids are not without their challenges

There are financial barriers beyond the initial capital outlays with DERs and resilient power systems. These can include upgrading legacy equipment and infrastructure, utility tariff standby charges and regulatory challenges such as net metering.

Organizations can overcome these challenges by selecting a well thought-out design and an appropriate business model. However, this is only possible when the benefits of this type of insurance for power outages can be quantified.

There are also several aspects that need to be considered from a technical perspective. For example, a system needs a source of baseload power to operate independently. This could be in the form of energy storage or generators powered by gas, diesel or even hydrogen.

Traditional generators using diesel or natural gas are the most cost-effective options, but will likely hurt carbon neutrality goals. Whereas cleaner alternatives are still capital intensive. For example, battery storage costs might be more affordable compared to the past decade, but they’re still not as competitively priced as fossil fuels.

So, should you invest?

Organizations that invest in DERs such as solar photovoltaic systems and geothermal heat pumps typically reap the rewards in less than five years.

Investing in resilient systems depend on both the current cost of power and the ability to quantify the resilient aspects of the system – an organization’s ‘insurance’ against downtime losses. For systems with essential operations and uptime, this is easier to quantify. However, other systems may be more nuanced.

Because distributed energy is so modular, understanding these nuances will help a business make better investment decisions. This includes if it’s trying to lower operational costs and environmental impact, something DERs can help solve on their own. But a business might also want the assurance of a resilient system, especially if the costs of downtime is far greater than investing in smart solutions. And if it owns more than one facility in a complex, it might be wise to upgrade to a microgrid to help power the entire campus.

Ultimately, the business’ objectives and needs will determine the route it should take.