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UTILITY OF THE FUTURE


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IEEE VOL. 2, NO. 1 MARCH 2014 ISSN 2325-5987

WWW.IEEE-PES.ORG/
___________

MAGAZINE

F E AT U R E S

12 Why Microgrids 54 Advanced LVDC Electrical

HANDS COURTESY OF STOCK.XCHNG/MICHELINI.


Are Moving into Power Architectures and
the Mainstream Microgrids

BACKGROUND COURTESY OF WIKIMEDIA


Improving the efficiency A step toward a new generation
of the larger power grid. of power distribution networks.

COMMONS/ELECTRIC SHEEP.
20 Microgrids: A Value-
Based Paradigm
66 Adaptive Protection
System for Microgrids
The need for the redefinition Protection practices of a
of microgrids. functional microgrid system.
Community power and fleet microgrids.
Page 40
30 Emerging Models for
Microgrid Finance
81 Smart Houses
in the Smart Grid
Driven by the need to deliver Developing an interactive
value to end users. network. MISSION STATEMENT: IEEE Electrification
Magazine is dedicated to disseminating infor-
mation on all matters related to microgrids
onboard electric vehicles, ships, trains, planes,
40 Community Power and
Fleet Microgrids
and off-grid applications. Microgrids refer to an
electric network in a car, a ship, a plane or an
electric train, which has a limited number of
Meeting climate goals, sources and multiple loads. Off-grid applica-
enhancing system resilience, tions include small scale electricity supply in
and stimulating local areas away from high voltage power networks.
Feature articles focus on advanced concepts,
economic development. technologies, and practices associated with all
aspects of electrification in the transportation
and off-grid sectors from a technical perspec-
tive in synergy with nontechnical areas such as
business, environmental, and social concerns.
IEEE Electrification Magazine (ISSN 2325-5987)
(IEMECM) is published quarterly by the Institute of
Electrical and Electronics Engineers, Inc.
Headquarters: 3 Park Avenue, 17th Floor, New York, NY
D E PA R T M E N T S & C O L U M N S 10016-5997 USA. Responsibility for the contents
rests upon the authors and not upon the IEEE, the
Society, or its members. IEEE Operations Center (for
orders, subscriptions, address changes): 445 Hoes
2 ABOUT THIS ISSUE 4
Lane, Piscataway, NJ 08854 USA. Telephone: +1 732
981 0060, +1 800 678 4333. Individual copies: IEEE
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104 VIEWPOINT Reduced Load
DG Supports
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No DG
republication permission, write Copyrights and
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2014 by the Institute of Electrical and Electronics
The value of a microgrid. Page 104 Engineers, Inc. All rights reserved. Periodicals postage
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_____
Digital Object Identifier 10.1109/MELE.2013.2297772

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ABOUT THIS ISSUE

EDITORIAL BOARD

Is the Microgrid Saifur Rahman


Editor-in-Chief
Virginia Tech
Mohammad
Shahidehpour
Editor, Off-Grid

Buzz Real? Virginia, USA


srahman@vt.edu
_________

Iqbal Husain
Illinois Institute
of Technology
Chicago, USA
ms@iit.edu
______
Editor, Electric Vehicles
By Mohammad Shahidehpour North Carolina State Steve Pullins
University Coeditor, Off-Grid
and Steven Pullins North Carolina, USA Horizon Energy Group
ihusain2@ncsu.edu
__________ Tennessee, USA
spullins@horizonenergy
____________
Eduard Muljadi group.com
Coeditor, Electric Vehicles
NREL: Wind Research IEEE PERIODICALS
Colorado, USA M AG A Z I N E S
eduard.muljadi@nrel.gov
_____________ D E PA R T M E N T
KNOW WHAT YOU ARE THINKINGANOTHER SERIES 445 Hoes Lane,
I of articles on the benefits and challenges of microgrids
in the electric industry. We in the microgrid business see
Herb Ginn
Editor, Electric Ships
Piscataway, NJ 08854
USA
Universitiy of
a lot of chatter and positioning in this emerging marketplace. Are South Carolina Craig Causer
microgrids real? Can microgrids be financially viable? Will South Carolina, USA Managing Editor
ginnhl@cec.sc.edu
__________
microgrids upset the 70-year-old electric monopoly business Janet Dudar
Senior Art Director
model? Will microgrids harm grid reliability? Such questions must Robert Cuzner
Gail A. Schnitzer
be fun to debate since so many in the industry are engaged in the Coeditor, Electric Ships
Assistant Art Director
DRS Power and Control
banter. Lets step back and look at a few trends in the industry that Theresa L. Smith
Technologies
suggest change is happening. Wisconsin, USA Production Coordinator
The U.S. Department of Energy Information Administration (EIA) RobertMCuzner@drs.
___________ Felicia Spagnoli
com
__ Advertising Production
tracks a lot of electric industry data. One of the trends over the last
Manager
eight years is that U.S. electricity consumption is flat. Some industry Eduardo Pilo de la
Peter M. Tuohy
leaders say that it is related to the recession, but the eight-year flat Fuente
Production Director
Editor, Electric Trains
period extends to before and after the recession. The EIA trend in Dawn Melley
EPRail Research
central-station fleet capacity factor has been declining steadily for and Consulting Editorial Director
the past 15 years. As of the 2012 data, the central-station fleet Spain Fran Zappulla
eduardo.pilo@eprail.com
_____________ Staff Director,
capacity factor is now 42.5%. The EIA trend in demand-side man-
Publishing Operations
agement is increasing steadily. The actual peak load reduction is Jose Conrado Martine
29 GW, which is double the 2002 reduction, with energy savings at Coeditor, Electric Trains A DV E R T I S I N G
Directcion de Estrategia SALES
138 GWh, nearly triple that of 2002. The EIA trend in commercial sec-
y Desarrollo Parker Marshall
tor generation in New England Spain James G. Elliott Co. Inc.
and the middle Atlantic states jcmartinez@adif.es
__________ 626 Wilshire Blvd.
The loss of electricity increased by 27% in just one year Ste 500
Bulent Sarlioglu Los Angeles, CA 90017
to the elevator in a tall (2012 versus 2011). Editor, Electric Planes Tel: +1 213 596 7209
building can isolate Navigant Research reports University of Fax: +1 213 624 0997
Wisconsin-Madison p.marshall@
that, as of the second quarter of ______
some residents from Madison, USA jamesgelliott.com
2013, there are 219 operational, bulent@engr.wisc.edu
____________
food and medical under construction, or planned
assistance. Christine Ross
microgrid projects in the United
Coeditor, Electric Planes
States. Industry analyst SBI Ener- Rolls-Royce Corp
gy reports that the worldwide Indiana, USA
Christine.AH.Ross@
__________
microgrid market was 2.4 GW in 2010 and projects that it will be
rolls-royce.com
5.7 GW by 2020. At a macroview, consumption is flat, the central-
station fleet is less competitive (decreasing capacity factor),

Digital Object Identifier 10.1109/MELE.2014.2301272 Digital Object Identifier 10.1109/MELE.2013.2297773


Date of publication: 18 March 2014

2 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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demand-side management is grow- in a tall building can isolate some reduced. Thermal efficiencies for cen-
ing, commercial sector generation is residents from food and medical tral-station generation range from 33
growing, and analysts are projecting assistance. In interviews with The to 60%, while small CHP thermal effi-
double-digit annual growth rates for Brevoort residents, the continued ciencies used in microgrids are com-
microgrids. This suggests two things: building services were often men- monly above 80%. My experience with
1) the traditional approach to provid- tioned as necessities to sustain life. microgrids to date regarding emission
ing electric services is being chal- Are microgrids economical? Some reductions is that it is highly depen-
lenged from within and 2) consumers microgrids operating today are eco- dent upon the consumers objectives.
are actively seeking alternatives for nomical, and some are focused on
their electric services. reliability improvements without eco- In This Issue
Having established that the indus- nomic considerations. However, as In this issue, you will find interesting
try is changing, do microgrids fit into the industry matures, technology articles about various aspects of the
this new electric service for a digital costs will decrease, new business maturing of microgrids as an electric
economy? Do microgrids measure up models will emerge, and designs service tool. The seven articles and one
to the consumers objectives of reli- will be refined. This will create column included in this special issue
ability, resiliency, cost savings, and more economical mi- are outlined as follows.
emissions reduction? crogrids in the near Some microgrids The Technology
Are microgrids reliable? Lessons future. Our experi- Leaders column by
operating today
from the cadre of microgrids operat- ence in designing 22 John McDonald states
ing today, as well as the lessons from microgrids to date is are economical, and that many stakehold-
highly automated distribution net- that microgrids be- some are focused ers are optimistic that
works around the world, suggest that tween 2 and 40 MW on reliability the fundamental
microgrid reliability is on the order of are more economical strengths of the tech-
improvements
99.99999.9999% uptime (commonly than being a 100% nology and its myriad
referred to as 5-nines and 6-nines customer of the grid, without economic applications will pre-
reliability). This is compared to the and this is without considerations. vail over what appear
U.S. grid at 3-nines and the European monetizing the reli- to be surmountable
grid at 4-nines reliability. In compari- ability and resiliency hurdles for microgrids.
son, data centers design for 7-nines benefits. Many of the microgrids in But to move beyond the hype, the tech-
or greater reliability. Properly de- the northeast that continued to oper- nologys drivers and opportunities
signed microgrids improve reliability ate through Sandy and its aftermath should be spelled out alongside
for their customers. were built for cost-saving reasons. The an honest review of the barriers to
Are microgrids resilient? The les- microgrids received resiliency as an implementation. McDonald defines
sons from Superstorm Sandy in 2012 additional benefit. Microgrids are not microgrids in general terms and de-
in the northeastern United States universally economical compared to scribes some typical use cases. He
demonstrated that microgrids are the grid as an electric service, but then describes the recent efforts by the
resilient to major events that chal- there are many regions with above- state of Minnesota to explore mi-
lenge the grid. All of the known average electricity rates, demand crogrid drivers, opportunities, hurdles,
microgrids in Maryland, New Jersey, charges, and fixed infrastructure and next steps. The discussion is rele-
New York, and Connecticut operated charges that create the economic en- vant to not only Minnesotas interest
through the storm and its aftermath. vironment for microgrids to flourish. in microgrids but to other states, utili-
Some became safe havens for dis- As microgrids mature as a technolo- ties, and microgrid sponsors.
placed citizens as the region strug- gy/business solution, the cost of im- The first article is by Asmus, who
gled to recover from Sandy. Our plementation and operation will points out that microgrids are moving
favorite example is The Brevoort in decrease, making more regions eco- into the mainstream. He states that
Manhattan. The Brevoort is a 20-story nomically viable with time. the future development of the U.S.
private residence with 700 residents, Do microgrids reduce emissions? grid will require the safe and econom-
but that number increased to 1,500 Some do when the consumers objec- ical operation of the high-voltage
for several days. It is important to tives include environmental goals. meshed transmission grid since it is a
note that a grid outage is not merely When microgrids include renewables, US$800-billion asset that is fully
an inconvenience to some. Some of emissions are reduced. Also, when amortized. Yet, the fundamental
the residents in The Brevoort are microgrids include high thermal effi- architecture of todays electricity grid,
retired and physically challenged. ciency combined heat and power which is based on the idea of a top-
The loss of electricity to the elevator (CHP) resources, emissions are down radial transmission system

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 3

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ABOUT THIS ISSUE

predicated on unidirectional energy impact of the whole electricity supply hydropower resources or were located
flows from large centralized power system, and deliver enhanced levels of in rural areas that for-profit utility
plants, is increasingly becoming obso- reliability and security of supply at the companies did not want to serve
lete. The economies of scale that once local level. because of the high cost of infrastruc-
favored such monopoly models no The third article by Burr et al. dis- ture relative to demand. The article
longer hold, as markets now favor dis- cusses the emerging models for looks at potentials for a new para-
tributed and decentralized devices microgrid finance. The authors point digm of community power compa-
whose energy services are more cus- out that an understanding of both nies that remain locally controlled
tomized and based on local availabili- the costs and sources of economic and focused on serving community
ty and timing. value that microgrids can provide is energy needs. Such operations avail
The second article by Ravindra et al. critical to their financing success. themselves of the latest distributed
presents microgrids Historical projects energy resources, enabling distribu-
as a value-based par- offered emergency tion technologies and market mecha-
adigm in developing Microgrids are services and little nisms to develop a local energy
countries. The au- designed to be smart more. They were not system that is more sustainable and
thors point out that to incorporate integrated or inter- secure and that generates more tangi-
microgrids are not connected with the ble community economic benefits.
innovative products
just a stopgap solu- grid and generally The fifth article by Dragicevic et al.
tion for matching de- and services together have served only a discusses low-voltage microgrids.
mand and supply in with intelligent single facility. A more The authors discuss strategies to deal
emerging economies monitoring, control, modern, integrated with a fundamental turnaround from
and enabling access microgrid will pro- ac to dc architecture at the grassroots
communication,
to modern energy in vide secure sources levels of low-voltage distribution sys-
places like India. In and self-healing of power, with high tems. In that sense, a particular dc
the case of off-grid technologies. levels of quality and subsystem connected to a supreme
and remote areas, it is reliability, through a ac distribution through a dedicated
not to be assumed combination of on- dcac converter automatically
that microgrids will give way to central- site generation, storage, distribution, implies the lack of power quality
ized grids if technologies make it possi- and energy management technolo- issues initiated from the utility side.
ble. Microgrids have to be seen as gies. Microgrids that make the most Furthermore, dc systems provide a
value-based entities that coexist with of each of these values and exploit natural interface for modern elec-
the centralized grid. They are potent the full range of revenue streams and tronic loads as well as most renew-
entities that can operate essential ser- incentive opportunities will be in a able energy sources and energy
vices even in the case of emergencies better position to attract third-party storage systems like batteries. The
such as natural calamities, as demon- financing, especially if they consoli- possibility of islanded operation,
strated by the Sendai microgrid, when date them in easily understood which makes the system fully resis-
the 9.0-magnitude earthquake struck financial analyses. Moreover, the best tant to major blackouts in the main
off the northeastern coast of Japan and financing opportunities might be grid, is simpler in dc microgrids
triggered one of the deadliest tsunamis, obtained by combining multiple when synchronization problems and
and San Diego Gas & Electrics Borrego microgrid projects together into a reactive power flows do not exist.
Springs microgrid during the intense portfolio. While an individual Moreover, with the proper selection
thunderstorms on 6 September 2013. microgrid project might be too small of nominal operating voltage, the dc
Microgrids are designed to be smart to to attract interest from private equi- system efficiency will generally be
incorporate innovative products and ty and institutional investors, a higher than its ac counterpart. The
services together with intelligent moni- microgrid portfolio could provide authors envisage that dc subsystems
toring, control, communication, and opportunities to raise equity or debt will constitute the core of future dis-
self-healing technologies. Microgrids financing in public markets. tribution networks and that they will
can better facilitate the connection and The fourth article by Roach is on a be gradually adopted in applications
operation of generators of all sizes and new distribution paradigm to meet such as dc homes, hybrid electric
technologies, allow consumers to play climate goals, enhance system resil- vehicle charging stations, and com-
a part in optimal operation of the sys- ience, and stimulate local economic mercial and industrial facilities.
tem, provide consumers with more in- development. Roach points out that The sixth article by Che et al. dis-
formation and choice of supply, community power companies tradi- cusses adaptive protection systems
significantly reduce the environmental tionally originated from local for microgrids. The authors point out

4 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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that despite the numerous advantag- strategies in microgrids. The authors business processes and to enable effi-
es of using microgrids, there are conclude the article with several ex- cient functioning of the deregulated
technical challenges regarding the amples of a practical microgrid. energy market for the benefit of con-
control and protection of microgrids. The seventh article by Dimeas et al. sumers and businesses.
One of the prominent challenges in discusses the SmartHouse project in Finally, in the Viewpoint column,
microgrid operation is the design of a the European Union (EU). The authors Chiesa and Zirkelbach argue that mi-
proper protection scheme for mi- point out that the infrastructure that crogrids help utilities more than they
crogrids. The integration of distribut- will exist in the future smart houses is hurt. They point out that microgrids
ed energy resources (DERs) and novel expected to be highly heterogeneous. are not coming; they are already here.
topologies embedded in microgrids However, it seems that, at some level, From the innovations that created
would challenge the characteristics all deviceseither by Pearl Street to the
of protection schemes in microgrids themselves or via gate- transformations that
Many of the microgrids
as compared to those of conventional wayswill be able to are driving the grid
distribution systems. The conven- communicate over the in the northeast that innovations today,
tional protection strategies in distri- Internet protocol and continued to operate microgrids are here
bution systems rely on the radial participate in bidirec- through Sandy and to stay and repre-
topology of distribution networks tional collaboration sent a new business
its aftermath were built
with the supply located at one end. with other devices and model for both con-
In this configuration, the fault cur- enterprise services. for cost-saving reasons. sumers and utilities.
rent is provided by the utility grid Similarly, multiple The past is littered
with protective device (PD) settings concepts for monitor- with old business
adjusted accordingly to localize the ing and controlling the smart houses models, such as pay phones, and the
impact of faults. PDs are coordinated and the smart grid will emerge, with companies that survived the introduc-
based on unidirectional power flows different optimization and control tion of disruptive technologies are the
from the feeder toward loads algorithms. It is therefore imperative ones that adapted and changed their
in radial distribution networks, in not to focus on a single one-size-fits-all business models appropriately, such as
which fault currents would be lower approach but to prove that an amalga- AT&T and Verizon. Therefore, utilities
as fault locations get farther from mation of the existing approaches and customers need to continue to
feeders. However, these unidirectional should be developed. The SmartHouse/ work together to find ways to adapt
characteristics change in microgrids. SmartGrid project in the EU can be the old grid models to the new smarter
The DER units located in microgrids seen as the first step to developing grid realities.
can increase fault currents, change mechanisms for gluing different
fault current flow paths, result in bidi- monitoring and control approaches as In the End
rectional power flows, and affect PD well as empowering the next-genera- We believe that it is important to
operations. The inclusion of DER units tion enterprise services and applica- understand the end game. Are
with power electronic interfaces, such tions. The authors point out that microgrids a silver bullet for the indus-
as converters, would limit fault cur- innovative technologies and concepts try, replacing central-station genera-
rents and desensitize PDs to faults es- will emerge as power systems shift tion and the grid? No. There are many
pecially in island mode. The large toward a more dynamic, service-based, reasons for a vibrant, cost-effective
difference between fault currents in market-driven infrastructure where grid and large-scale generation busi-
grid-connected and island modes energy efficiency and savings can be ness. But, over time, microgrids will
presents new challenges in microgrid facilitated by interactive distribution become a mature tool in the toolbox of
fault protections. Moreover, the mi- networks. A new generation of fully cost-effective, reliable, resilient, and
crogrid topology can be looped, interactive information and communi- sustainable electric system design
meshed, or mixed networks, which cation technologies infrastructure has and that is exciting!
could result in more complex fault to be developed to support the optimal
current paths and affect protection exploitation of the changing, complex

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 5

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TECHNOLOGY LEADERS

Microgrids Beyond the Hype:


Utilities Need to See a Benefit

By John D. McDonald

O MOVE MICROGRIDS standards, and policies join grid to management functionality to bal-
T from the potentially irritat-
ing hype cycle across the
microgrid. To develop the proper con-
text for interconnection-related
ance the supply/demand mix, per-
haps aided by energy storage in
dreaded trough of disillusionment issues, I will begin by defining chemical or thermal form.
and up the slippery slope of enlight- microgrids in general terms and Drivers are many, and they range
enment to reach the long-sought describing typical use cases. Then, I from energy assurance, where that
plateau of productivity might seem will turn to recent efforts by the state single benefit is sometimes deemed
a daunting task, particularly given the of Minnesota to explore microgrid to outweigh high costs, to implemen-
obviously melodramatic language drivers, opportunities, hurdles, and tations based on a variety of specific
that often accompanies technolo- next steps. It is in that specific con- goals that offer a positive business
gy maturation and market accep- text that a description of ongoing case. Likely sponsors range from utili-
tance. Nonetheless, the promise of changes to interconnection stan- ties to large customers such as cities
microgrids for achieving energy as- dards and policies will make the and towns and military installations,
suranceessentially a measure of most sense. The discussion is rele- universities, schools, and hospitals
reliabilitywhen coupled with other vant not only to Minnesotas interest (MUSH). The fact that a microgrid can
crucial value propositions, including in microgrids but to other states, util- serve a nonutility sponsor by provid-
environmental and economic goals, ities, microgrid sponsors, and readers ing a degree of self-sufficiency, of
deserves review. While not all tech- of IEEE Electrification Magazine. course, is often perceived to challenge
nology advancements survive be- utility interests by reducing volumet-
yond the hype cycle, every successful Definitions, Drivers, ric sales, a traditional avenue for utili-
technology must endure a journey and Hurdles ty revenue. That is a policy issue that
that begins in a giddy whirlpool of Definitions can be a perilous exer- must be addressed as such. But tech-
potential outcomes. cise, but let us try one. Microgrids nological challenges presented by
In the case of microgrids, many are often conceived as self-con- microgrids must be overcome as well,
stakeholders are optimistic that the tained energy systems with the abil- particularly regarding their intercon-
fundamental strengths of the technol- ity to operate independently of the nection with the utility grid. In fact,
ogy and its myriad applications will grid, either as stand-alone systems amendments to fundamental inter-
prevail over what appear to be sur- or, if grid tied, by islandingdiscon- connection standards are ongoing,
mountable hurdles. But to move necting from the grid while continuing and all stakeholders will gain by
beyond the hype, the technologys driv- to operate. Microgrids must possess tracking progress in this vital area.
ers and opportunities should be their own generation source(s), typi- Although this article focuses on
spelled out alongside an honest review cally under the category of distribut- interconnection standards and poli-
of the barriers to implementation. ed generation (DG), which could be cies, I will finish by discussing how
My own related work focuses on fossil fuel-driven (likely diesel) gen- regulatory reform to a more results-
interconnections, where technology, erators and/or renewable resources based approach can improve incen-
such as wind turbines, solar photo- tives for utilities to implement or
voltaic (PV) cells, fuel cells, or other accommodate microgrids. In fact,
Digital Object Identifier 10.1109/MELE.2013.2297181
Date of publication: 18 March 2014 means. Microgrids include load the path of least resistance to

6 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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accelerated adoption of microgrids Utilities in California and Maine determined last year to take a hard
will be the path that supports clear, are exploring the latter opportunities, look at microgrids, which appeared to
attractive benefits for the affected while in Connecticut, nonutility align with the states energy, environ-
utility. Certainly, the default position actors, including municipalities, are mental, and economic policy goals,
in a case where a microgrid is sought considering microgrids to bolster sys- with an emphasis on energy assur-
by an end user or a third-party devel- tem reliability in the wake of a series ance as a pillar of the local economy.
oper is, at the very least, to not of devastating storms that culminated
adversely impact the affected utility. in 2012s Hurricane Sandy. In contrast, American Recovery and
Minnesota has a history of viewing Reinvestment Act Grant
Typical Use Cases energy assurance as a fundamental for Microgrid Study
It is worth reviewing typical use aspect of economic productivity and The Minnesota Department of Com-
cases to provide context for Minneso- stability and energy innovations as a merces Division of Energy Resources
tas exploration of microgrid opportu- means to achieve environmental and sought and won a U.S. Department of
nities. The U.S. Department of self-sufficiency goals. Energy grant under the American
Defense (DoD) is a leading adopter of Recovery and Reinvestment Act that
microgrids for stationary bases to The Land of 10,000 Lakes funded many related smart grid proj-
meet its fundamental obligations to Minnesota is the 12th largest state ects in the 20082009 time frame.
protect the American people, the and straddles the continental craton, (The fact that Minnesotas Depart-
homeland, and our allies, where our which has been etched by glaciers, ment of Commerce has a Division of
bases are located, overseas. The busi- leaving innumerable freshwater Energy Resources reflects the fact
ness case, which is so important to lakes, thus its nickname, Land of that energy assurance is considered a
private enterprise, takes a backseat 10,000 Lakes. Its population of mainstream, bread-and-butter issue
to mission criticality in this example. roughly 5.5 million to the economic
In contrast, a variety of industrial citizens is relatively health and welfare of
The path of least
facilities, such as ports, mines, refin- highly educated and the state.) Policy mak-
eries, airports, and campuses, require exhibit high voter
resistance to ers wanted to better
uninterruptible power to ensure the turnout. More than accelerated adoption understand the driv-
continuity of processes, the safety of half of the states of microgrids will be ers, opportunities,
patients and the public, and/or the residents cluster the path that supports and barriers associat-
protection of assets. Energy assur- around the Twin Cit- ed with microgrid
ance and its costs in those cases are ies of Minneapolis
clear, attractive adoption and the
typically weighed in light of the cost and Saint Paul, hubs benefits for the effects on the gamut
of the consequences of power failure. of business, industry, affected utility. of stakeholders. To
On corporate campuses, especially in transportation, edu- that end, the state
regions where the cost of grid-based cation, government, contracted with a
electricity is high or very volatile, a and a thriving arts community. Its microgrid team led by Burr Energy
self-contained system offering a mix economy, historically based on agrar- LLC, to which I contributed my exper-
of DG and load control creates an ian pursuits and natural resource tise on interconnection standards
attractive business case. The same is extraction, has evolved into a well- and policies. I was one of seven
true for isolated, off-grid communi- integrated mix of finished products co-authors of the resulting study,
ties where fossil fuel must be and services. Thirty-three of the top Minnesota Microgrids: Barriers,
shipped in at great cost. 1,000 publicly traded companies in Opportunities, and Pathways Toward
On the utility side, a microgrid the United States by revenue were Energy Assurance, which was pub-
can provide the advantage of island- headquartered there in 2008. Minne- lished by the Minnesota Department
ing to reduce load on a stressed cir- sota borders Canada to the north, the of Commerce in September 2013. The
cuit, defer capital investment in Dakotas to the west, Wisconsin and white paper was incorporated as an
capacity (known as a deferral Lake Superior to the east, and Iowa to annex to the official Minnesota Ener-
opportunity), or meet load growth the south. gy Assurance Plan.
through a line extension. Microgrids Whether those factors translate to The six-point scope of the white
can provide a controllable means of the states policy support for DG, paper (paraphrased for brevity) lays
managing DG, especially where renewable energy resources, and out the context here.
intermittent renewable energy energy alternatives I will leave to the [ Review regulations and policies
sources can lead to voltage instabili- experts on Minnesota. Suffice it to say affecting microgrid development,
ty and other operational issues. here that state policy makers ownership, and operation.

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 7

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TECHNOLOGY LEADERS

[ Identify applicable interconnec- even beneficial from a utility stand- install expensive capacitor banks
tion standards and practices, point. This wisely recognizes utilities and voltage regulators to main-
including interoperability and prerogatives as well as the practical tain voltage stability.
control of distributed resources. issues surrounding interconnections 4) Utility grid operators often have
[ Explain how traditional contract- between microgrids and utility grids. little or no visibility into custom-
ing, risk assessment, and financ- Identifying mutual benefits makes er-owned DG, resulting in subop-
ing practices apply to microgrids sense because Minnesotas current timal operations for both parties.
and analyze Minnesota policies regulatory approach, which is based Recent developments in intercon-
that affect microgrid development. on cost-of-service rate making and vol- nection technologies and new
[ Research and model potential umetric pricing, initially puts investor- approaches to microgrid control have
electric loads available to mi- owned utilities and microgrids provided cost-effective solutions to
crogrids in Minnesota, and seg- squarely at odds, as the white paper many utility concerns. And new
ment those loads by user groups. put it. As Minnesota clearly recognizes, methods of testing and simulation
[ Identify renewable resources in utilities concerns about microgrids can rapidly prove the safety of
the state potentially accessible in potential impact on their business microgrid-related technologies and
microgrid applications and model as well as impacts on opera- practices. (The white papers appen-
examine economic and opera- tional matters based on interconnec- dices offer case studies in support of
tional factors for possible renew- tion issues are well founded and need this statement.) That said, it certainly
ables-based microgrids. to be addressed. behooves utilities to have an active
[ Recommend policy steps that testing program to assess how new
would capture microgrid benefits Utility Concerns on technology affects their systems, a
for Minnesotans and assist in the Microgrid Control, Safety precaution that can benefit their cus-
safe, cost-effective implementa- The interconnection of a utility grid tomers. However, cultural factors
tion and integration into the util- with DG systems is governed by a finite must be addressed as well. Power
ity system. number of industry standards issued systems engineers experience has
My charge, the focus of this arti- by the usual suspects, including the bred mistrust of new systems until
cle, can be articulated at slightly IEEE, Underwriters Laboratories, the exhaustive field testing has conclud-
greater length. The importance of International Electrotechnical Commis- ed that they are effective and safe.
interconnection standards and poli- sion, and the Federal Energy Regulatory Given utilities public obligations and
cies in this context was viewed as a Commission (FERC). All applicable the danger of high-voltage power,
fundamental, pragmatic matter. So standards are intended to address utili- caution is justified. And, as we shall
the team was tasked with identifying ties concerns, for the simple reason see, in Minnesota as elsewhere, cur-
Minnesotas applicable interconnec- that utilities operate the grid to which rent policies may give utilities the
tion standards and practices, includ- microgrids would interconnect and upper hand in facilitating or inhibit-
ing interoperability and control of they have significant, regulated public ing microgrid development. Thus, the
distributed resources. The team was responsibilities. Those concerns can be onus is on microgrid sponsors to
also directed to compare and con- summarized in four categories: demonstrate the safety, reliability,
trast Minnesotas standards and 1) Anti-islanding features are need- and cost-effectiveness of their sys-
practices with current federal and ed to prevent the unintentional tem to the utilityif utility coopera-
industry standards and articulate dif- flow of current from grid-con- tion is to be expected.
ferences that might affect microgrid nected DG onto a circuit that oth-
development and optimization in erwise should not be energized, Applicable Standards
utility systems. as in an outage. and New Amendments
The reference to standards 2) Distribution systems do not all For microgrid development in Minne-
regarding optimization in utility sys- have protection equipment to sota, the most important standard is
tems in this element of the scope (as safely prevent short circuits from IEEE 1547, Standard for Interconnect-
well as a similar reference in the final DG running in synchronous, ing Distributed Resources with Elec-
point listed previously) underscores parallel interconnection to the tric Power Systems . IEEE 1547,
that Minnesota is exploring microgrids utility grid. approved in 2003, aims to provide a
for the benefit of its citizenry, with a 3) Synchronized generators that uniform set of criteria and require-
clear intent to work with utilities. fluctuate to follow microgrid ments for interconnecting the grid
Minnesota public policy regarding loads or intermittent renewable with DG. Its requirements relate to
microgrids reflects a commitment to energy sources can cause voltage the testing, operations, maintenance,
make this innovation workable and instability, forcing the utility to and safety of the grid-to-DG

8 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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interconnection. IEEE members have due to a dip in frequency on the grid. standards for intentional islanding.
approved eight complementary stan- If an unscheduled outage at a major Pending changes in the standard
dards, including IEEE 1547.4 and IEEE power plant caused the underfre- should clarify how the two effects
1547.8, which may be affected by a quency, then a sudden loss of DG differ or relate.
currently active amendment process. power could exacerbate the situation. Anti-islanding, a crucial safety
In recognition of the measured These amendments will enable function of protective systems, will
pace that characterizes standards microgrids to better meet utility inter- remain as a provision of the amend-
development and the speed with connection concerns to operate more ed 1547 standard. Grid-tied, stan-
which microgrid technology is efficiently and, thus, encourage their dards-compliant DG systems typical-
advancing, IEEE P1547a-Amendment 1 development. The first amendment ly are grid activated, meaning that
was introduced to speed up high pri- provides for microgrid they automatically
ority changes to IEEE 1547. This integration with dis- shut down when an
Anti-islanding, a
amendment updates practices tribution control sys- outage occurs, pre-
regarding voltage regulation and tems and allows a
crucial safety function venting unintention-
responses to abnormal voltage and microgrid to serve of protective systems, al islanding.
frequency conditions on the grid. As grid-support func- will remain as a An amended IEEE
of this writing, the amendment has tions, a direct answer provision of the 1547 will likely provide
cleared the balloting process and is to specific utility con- specific provisions to
subject to a comments period. If cerns. The second
amended 1547 enable intentional
approved, as expected, the changes amendment allows a standard. islanding in cases
in this amendment will go into effect microgrid to remain where a microgrid or
in early 2014, followed by a compre- grid-connected, other islandable DG
hensive overhaul of IEEE 1547 to which will preclude the introduction source is designed to function both con-
resolve the additional issues that of unneeded backup generation for nected to and disconnected from the
surfaced during work on IEEE P1547a- the utility. If an interconnected grid. For instance, IEEE 1547 originally
Amendment 1. microgrid is feeding power onto the encouraged highly sensitive trip-off set-
Two specific changes in IEEE 1547 grid, the ride-through (second) tings. The downside of that approach is
address microgrids. DG systems amendment contributes to avoiding a that a minor fault could lead to DG
henceforth may participate in volt- bad-to-worse scenario. deactivation. Given the high penetra-
age regulation via changes in real Further work on standards will be tion of DG, such hair-trigger settings for
and reactive power supplies, allowing needed. Standard information mod- anti-islanding can lead to problems.
utilities to integrate DG as grid-sup- els for microgrid control point func- Also, those settings represent a nui-
porting resources. (Before this tionality are in the early stages of sance for systems designed to isolate
change, DG was not allowed to development. The vision of a distribu- themselves and initiate backup genera-
actively regulate voltage at the point tion system comprising multiple, tion upon sensing a system fault. The
of common coupling.) This change interactive microgrids in support of proposed amendments to IEEE 1547 are
permits the microgrid sponsor to reg- reliability for both distribution and focused on allowing a wider ride-
ulate voltage and save energy in transmission systems is getting clos- through tolerance so that DG and
cases where the utility does not prac- er to reality. These standards will take microgrids can continue generation
tice conservation voltage reduction. time, largely because technologies despite fluctuations in grid frequency.
Whereas IEEE 1547 defined rec- and applications are still maturing. In other words, the main differ-
ommended practices for DG system Sophisticated smart grid applications ence between anti-islanding and
behavior in response to abnormal in this context will require uniform intentional islanding is that once a
frequency conditionsi.e., spelling standards as the need for interopera- system is intentionally islanded, anti-
out when a DG system must stay bility increases. islanding requirements no longer
connected and when it must discon- apply. The islanded DG system is dis-
nectamendments were fast Islanding and Anti-Islanding connected from the grid and, there-
tracked because of evolving con- One important clarification is in fore, is no longer a safety concern.
cerns. A rapid increase in the pene- order here. The terms islanding and IEEE 1547.4 will contain recommend-
tration of PV rooftop systems in anti-islanding can be confusing. ed practices for intentional islanding,
pockets around the country present- IEEE 1547s anti-islanding tenets and the forthcoming 1547.8 standard
ed utilities with the possibility that were written to prevent unintention- addresses the functionality of small
perhaps hundreds of DG systems al islanding of grid-connected gener- generators such as microgrids, which
might disconnect at the same time ation. Separate provisions provide are designed to intentionally island.

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 9

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TECHNOLOGY LEADERS

In summary, islanding and anti- the peak load on the segment in states approach to traditional utility
islanding features are designed to question. Both limits remain in place, business models in the smart grid era.
work in tandem in an amended IEEE but projects that do not meet the 15% A more flexible, results-based reg-
1547. Furthermore, systems that com- of peak bar criterion remain eligible to ulatory scheme that accommodates
ply with the amended version of IEEE proceed if they meet the 100% of the and rewards utility actions that
1547 will allow for the stable intercon- minimum load criterion. demonstrably benefit their customers
nection of islandable microgrids while While Californias revision of its reg- has been proposed by my colleague,
maintaining the safety of anti-island- ulations was driven by high penetra- David Malkin, and his co-author, Paul
ing features. tion of DG, largely rooftop solar PV, it Centolella, in their recent article,
has implications for Minnesota. A large Results-Based Regulation: A More
Interconnection Costs microgrid on a single distribution seg- Dynamic Approach to Grid Modern-
Many if not most states, including- ment could generate electricity at a ization (Public Utilities Fortnightly,
Minnesota, have adopted regulations level equal to scores of rooftop PV February 2014). The simplest notion
regarding (synchronous) intercon- arrays. Standards that accommodate in this realm, of course, is well-known
nection based on IEEE 1547 and DG systems in which smart inverters as decouplingcreating a model for
FERCs small generator interconnec- provide voltage support can also apply utility revenue that is independent
tion procedures (SGIP), adopted in to a microgrid acting as a DG source, a of the utilitys volumetric electricity
May 2005 under FERC Order 2006. controllable load, or both. The best sales. Malkin and Centolellas article
Several states that are concerned practices established by California and provides a rationale for that thinking
about the potential impacts of faults FERC illustrate how policies can make and advances it.
and unintentional islanding require interconnection studies more trans- Results-based regulation is
the affected utility to study the parent and certain. designed to support investments that
impacts. This leaves the door open for FERC policies are relevant to Min- deliver long-term value to customers,
utilities to delay a proposed microgrid nesotas case in that they cover DG reward utilities for exceptional perfor-
via lengthy, expensive studies. Subse- projects up to 20 MW in size and how mance, and remain affordable by
quently, the microgrid developer might they interconnect with interstate encouraging operational efficiencies
be required to pay for added protection transmission systems, which is and sharing the cost savings with cus-
measures on the grid to the tune of important if a Minnesota microgrid tomers, Malkin and Centolella write.
thousands of dollars per kilowatt of wishes to sell wholesale power into As one example in which results-
capacity. Such a cost in Minnesota, the Midwest Independent System based regulation would reward utilities
where retail electricity rates are rela- Operator market. FERC has issued a for providing that long-term value to
tively low, could easily sink a project. notice of proposed rule making that it customers, Malkin and Centolella cite
Knowing that such charges could be seeks to amend its SGIP and small the fact that distribution utilities are
imposed and are largely unquantifi- generator interconnection agreement increasingly expectedand, in many
able at the outset can deter developers (SGIA) policies to, in FERCs words, cases, requiredto perform funda-
from even proposing a microgrid proj- ensure the time and cost to process mentally new functions, including
ect. These potential deterrents have led small generator interconnect requests resiliency in the face of extreme
FERC and some states to simplify the will be just and reasonable and not weather, the integration of distributed
impact study process and make it unduly discriminatory. and variable, renewable generation,
more transparent. and cyber security. The limits of more
Changes in Californias regulations Enter: Results-Based typical cost-of-service regulation often
promise to provide a path forward in Regulation fail to consider the value of uninter-
such circumstances. The California I have discussed the gamut of utility rupted electric service to different cus-
Public Utility Commission revised its reactions to microgrid proposals, from tomers, Malkin and Centolella write.
Rule 21 interconnection policies to an enlightened grasp of the opportu- If a state such as Minnesota
set time limits for interconnection nity for grid benefits and shared capi- wishes to encourage microgrid
studies and mechanisms to resolve tal investment to the use of impact development, regulatory policy will
disputes between utilities and studies to derail a proposal. We have need to evolve along with standards
microgrid developers. California also reviewed the strengths and weak- not simply to enable microgrid
established that interconnected DG nesses of existing and evolving stan- adoption but to reward the cooper-
on a distribution line segment can dards and policies to address the ating utility for making possible a
equal 100% of the segments mini- uncertainties that produce such a customer benefit that cuts into its
mum load. The previous policy limit- wide range of utility stances. Looming revenue base. Thus, policy and stan-
ed the interconnected DG to 15% of over these crucial details is each dards should work in tandem.

10 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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Minnesota Standards Policy of economic stability and growth, it analysisgroup.com/uploadedFiles/


Interconnection requirements in the has regulatory and legislative paths to Publishing/Articles/Centolella_GE_
________________________
state of Minnesota were issued on 28 achieve its aims. Currently, its inter- Whitepaper_Electricity_Regulation.pdf
________________________
September 2004 (Docket No. E-999/ connection standards and tariffs are K. Fox, S. Stanfield, L. Varnado, T.
CI-01-1023). A subset of those regula- outdated. They do not accommodate Culley, M. Sheehan, and M. Codding-
tions governs small, grid-tied DG. The grid-integrated microgrids with a com- ton, Updating small generator inter-
IEEEs consideration of IEEE 1547a bination of generation, storage, and connection procedures for new market
amendment and more likely changes load-management functionality, and conditions, NREL Technical Report,
to come to existing IEEE 1547 stan- they set outmoded thresholds and lim- NREL/TP-5500-56790, National Renew-
dardsplus FERCs proposed revi- its for size. An ongoing review and able Energy Laboratory, Dec. 2012.
sions to its SGIP and SGIAshould revision of the states interconnection M. A. Hyams, A. Awai, T. Bourgeois, K.
lead Minnesota to review its own policies will help it keep pace with Cataldo, S. A. Hammer, T. Kelly, S.
existing interconnection standards evolving standards. As technology Kraham, J. Mitchell, L. Nurani, W.
and tariffs. This should be an ongoing changes often outpace IEEE balloting Pentland, L. Perfetto, and J. Van
process for years to come, given the and FERC rule-making processes, Min- Nostrand, Microgrids: An assessment
speed of change in standards, best nesota can look to other states whose of the value, opportunities, and barriers
practices, and technology in this standards and practices better reflect to deployment in New York State, Final
space. If Minnesota continues to see prevalent industry norms as a guide. Report, prepared for the New York State
value in microgrid adoption, it needs Of course, interconnection stan- Energy Research and Development
to institute a regular standards review dards and tariffs are but one set of con- Authority (NYSERDA), Rep. 10-35, Sept.
process and swiftly adopt new, cerns and opportunities for action in 2010.
approved standards. On the utility Minnesota and elsewhere. Minnesotas M. T. Burr, M. J. Zimmer, B. Meloy,
side, some of Minnesotas utilities microgrid road map includes many J. Bertrand, W. Levesque, G. Warner, and
have staff that serve on the IEEE Stan- steps best taken simultaneously. One J. D. McDonald. (2013). Minnesota mi-
dards Committee and, thus, are well important step, among others, is to crogrids: Barriers, opportunities and
aware of pending changes in these establish a working microgrid with pathways toward energy assurance,
areas. Other utilities have dedicated stakeholders that include the state, a Minnesota Department of Commerce.
distribution technology teams local utility, and a microgrid developer; [Online]. Available: http://mn.gov/
charged with reviewing standards and make it a pilot project not a demon- commerce/energy/images/MN-
_________________________
best practices, which will have to stration projectthe technology has Microgrid-WP-FINAL-amended.pdf
_____________________
monitor and adapt to related changes. been demonstrated; use the microgrid (2013). Model interconnection pro-
One immediate change Minnesota and its interconnection to satisfy utili- cedures, Interstate Renewable Energy
needs to make in its own regulations is ty safety concerns and create a busi- Council. [Online]. Available: http:// ____
to change its restrictive definition for ness case that demonstrates value to w w w. i re c u s a . o rg / w p - c o n t e n t /
DG capacity. The states interconnec- the utility as well as its shareholders uploads/2013-IREC-Interconnection-
_________________________
tion requirements set thresholds and and customers; and make sure that Model-Procedures.pdf
______________
size limits on DG and microgrids, with interconnection policy, standards, and P. Sheaffer. (2011, Sept.). Intercon-
thresholds at 40 and 100 kW and a sys- practices are kept current to enable the nection of distributed generation to
tem capacity at 10 MW, half the size of technologys potential. utility systems: Recommendations for
FERCs 20-MW limit for small genera- We may be climbing that slippery technical requirements, procedures
tor treatment. Thats lower than most slope of enlightenment, but the and agreements, and emerging issues,
other states, several of which have no plateau of productivity beckons Regulatory Assistance Project (RAP).
limits at all. The current rules force from the horizon, clearly visible. [Online]. Available: www.raponline.
larger microgrid proposals to forge Many, including myself, believe that org/document/download/id/4572
unique agreements with a utility at we can get there from here.
greater cost and uncertainty. Biography
For Further Reading John D. McDonald (johndougmcd@
___________

Next Steps D. Malkin and P. Centolella. (2013). gmail.com) is the chair of the Board of
Should the state of Minnesota decide Results-based regulation: A modern the Smart Grid Interoperability Panel
that encouraging microgrid develop- approach to modernizing the grid. GE (SGIP) 2.0, Inc., and the Smart Grid
ment aligns well with its policies Digital Energy/Analysis Group. Consumer Collaborative (SGCC). He is
regarding energy assurance as a pillar [Online]. Available: http://www. a Fellow of the IEEE.

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 11

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By Peter Asmus

Improving the efficiency of the larger power grid.

HE U.S. UTILITY GRID WAS GRADED A asset that is fully amortized. Yet, the fundamental archi-
lowly D+ by the American Council of Civil tecture of todays electricity grid, which is based on the
Engineers in 2009. Although that was five idea of a top-down radial transmission system predicated
years ago, the performance of the U.S. grid on unidirectional energy flows from large centralized
has actually declined since that grade was power plants, is increasingly becoming obsolete. The econ-
issued. The Galvin Electricity Initiative estimates that the omies of scale that once favored such monopoly models
present antiquated dumb electric grid costs U.S. consum- no longer hold as markets now favor distributed and
ers US$140 billion annually because of power outages. decentralized devices whose energy services are more
This declining quality of power service in the United customized and based on local availability and timing.
States is contributing to a flood of interest in the concept Perhaps the most glaring statistic gleaned from the
of microgrids. These modular low- to medium-voltage U.S. Energy Information Administration is this: for every
distribution level networks can (theoretically) provide 1 MW of power consumed by U.S. commercial and resi-
24/7 energy services regardless of the status of any larger dential customers, rate payers are paying for 2.2 MW of
utility grid network. At the same time, microgrids can generation and transmission capacity. That means that
reduce carbon emissions regionally and improve the we are building twice as much wholesale supply capaci-
overall efficiency of the larger power gridif they are ty as what is ideally needed. If instead, the utility power
authorized to do so by regulators and utilities. It is this grid took advantage of new smart grid technologies as
latter possibility of providing ancillary services to the well as growing innovation on the financial side in the
larger grid that is allowing microgrids to inch their way form of new transactive energy service business mod-
into the mainstream, sparking debate within the corpo- els, these numbers would look very different. One
rate suites of utility executives as well as within the cir- answer to this inefficiency is networks of distributed
cles of utility engineers. energy resources providing a greater share of local
No doubt, the future development of the U.S. grid will needs, shrinking line losses associated with centralized
require the safe and economic operation of the high-volt- power plants, and building greater resiliency into the
age meshed transmission grid since it is a US$800 billion overall system. In short, a greater reliance upon
microgrids to aggregate and optimize distributed energy
resources (DERs).
A clear definition of what is and what is not a
Digital Object Identifier 10.1109/MELE.2013.2297021
Date of publication: 18 March 2014 microgrid is still open to debate. Do microgrids need to

12 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 2325-5987/14/$31.002014IEEE

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incorporate renewables? Must they deploy smart meters? systems that were first called microgrids decades ago
Must they be able to seamlessly disconnect and then before anyone mentioned the phrase smart grid.
reconnect to the larger ac utility power grid? These are all
open questions. Why Microgrids Now?
The only government agency to define a microgrid is As noted at the outset, the recent performance of the U.S.
the U.S. Department of Energy (DOE): power grid has highlighted the shortcomings of the status
A microgrid is a group of interconnected loads and quo. Lawrence Berkeley National Laboratory statistics show
DERs within clearly defined electrical boundaries that 8090% of all grid failures begin at the distribution level
that act as a single controllable entity with respect to of electricity service. This is the exact portion of the power
the grid. A microgrid can connect and disconnect system where microgrids can play an important role, bol-
from the grid to enable it to operate in both grid-con- stering reliability from the bottom up, rather than from the
nected and island-mode. top down. The U.S. average outage duration is 120 min
Navigant Research has broadened this definition of annually, and that number is getting worse, while the rest
microgrids to include remote systems in its analysis. Remote of the industrialized world is less than 10 min and getting
microgrids are networks that are not typically interconnect- better. Since electricity travels almost at the speed of light,
ed with any utility grid or may interconnect with a highly 186,000 mi/s, a power outage of just 1/60th of a second can
unreliable grid; therefore, they operate in island mode for a crash critical radar systems at a military base or life support
majority of the time. Paradoxically, it is these remote, off-grid systems in a hospital, with catastrophic impacts.

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 13

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Capturing the Reliability Value Microgrids Provide


such networks can offer if compared to a
U ntil recently, the vast majority of
microgrids coming online, whether grid-
connected or off-grid, have been pilot projects
host distribution utility (whose cost of
service also varies per geography and utility
investments in more advanced energy
storage options, many of which are ideally
suited to remote microgrid applications
or R&D experiments. Now, the industry market structure). Despite this diversity and efforts by nongovernmental organizations

is moving into the next phase of project complexity, the business cases for microgrids and governments to provide universal
development, focusing on how to develop continue to mature as project performance is access to energy in the developing world
projects on fully commercial terms. It appears increasingly measured and quantified. efforts by large technology companies,

that the main technology components of a such as ABB, Boeing, General Electric,
microgrid have made significant headway. The What About Remote Microgrids? Lockheed Martin, Siemens, Samsung,
key to future growth now rests with greater The remote microgrid market epitomizes SMA, and Toshiba, to secure their place
creativity in both the public policy and the promise and the perils attached to new in the emerging microgrid market
business model arenas. business models that shake up the status quo. growing interest among financial institutions

The increasing frequency of severe weather Although the term microgrid once applied on new business models for energy delivery,
is prompting utilities in the United States and almost exclusively to off-grid hybrid systems, including on-site power generation
around the world to reconsider their historic it now refers more commonly to grid-tied the proliferation of cell phone technology,

opposition to customer-owned microgrids systems that deploy smart grid technologies. which is prompting demand for electricity
that can disconnect from the larger grid and From a vendor revenue perspective, remote in remote regions of the world, providing
island, allowing critical mission functions to systems are remarkably robust, thanks to their a model of technology dispersal that
stay up and running. Yet, utilities continue to assumed 24/7 performance, which requires mimics the Internet, and is more in line with
worry about how a proliferation of customer- significant investments in both hardware and microgrids than traditional utility distribution
owned microgrids might complicate their software. On a per-kilowatt basis, remote systems.
job and whether regulators would instead microgrids represent a 50100% cost The International Energy Agency estimates
allow utilities to build, own, or control these premium over equivalent grid-tied microgrid that by 2020, developing countries will need to
microgrids in some sort of coordinated installations: the smaller the system, the double their electrical power output. The demand
enterprise-wide fashion. higher the per-unit value. for energy, especially electricity, is growing much
Quantifying the benefits of reliability is both Todays remote microgrids target niche more rapidly in these nascent economies than
art and science. At this point in time, there markets are the following: commodity the rate of expansion of conventional electricity
is no widely recognized financial metric to extraction facilitiessuch as a minethat grids in the major industrialized world. All told,
monetize the value of energy security and are not connected to an existing grid, the developing nations will represent 80% of
reliability. An analysis conducted by the physical islands burning diesel fuel for power, total growth in energy production/consumption
National Renewable Energy Laboratory looked rural villages in the developing world, and by the year 2035. One could safely assume that
at a military base, Fort Belvoir, and found the mobile and tactical applications for military the majority of these new power supplies will be
that value of electrical energy security (VEES) agencies. The key market drivers of todays produced and distributed via remote microgrids
at that site ranged from US$2.2 million to remote microgrid market are: and other related forms of DERs, offering
US$3.9 million annually. This range reflected declining cost of solar photovoltaic (PV) substantial vendor revenues (see Figure S1).
the mission of the respective loads within technologies
the base and recent performance metrics of rising costs of diesel fuel, the default Why Remote Microgrids Matter
each respective utility. Since each microgrid generation choice for much of the DOE-defined grid-tied microgrids offer
is a customized solution, it is also difficult to developing world and for physical and significant societal value and billions of
generalize about any VEES cost advantages commodity extraction off-grid applications dollars in potential vendor revenues. But the

Instead of using a utility smart grid program to raise the local distribution grid level and even sell ancillary services
level of homogeneous power quality for all captive cus- back to either utility or transmission system operators.
tomers of a regulated utility monopoly, microgrids that It has become quite clear that the modern digital econo-
function within the developed worlds utility transmission my requires a more advanced, robust, and responsive power
and distribution networks offer the flexibility to provide grid framework than what exists today, especially in North
heterogeneous power products and services to meet spe- America, which is the worlds leading market for microgrids
cific end-user needs and requirements. Microgrids can also (see Figure 1). While many smart-grid technologies can help
shrink the amount of fossil fuels consumed to create elec- manage outages and allow power to be restored much more
tricity by networking generators as a system to maximize quickly than in the past, the most promising technology
efficiency. In addition, they can be used to help integrate that has evolved to mitigate extreme weather events is, in
renewable energy resources (such as wind and solar) at the my view, the microgrid. Potential on-site DER solutions, such

14 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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best value proposition for microgrids today is


9,000
remote islands. Thousands of these islands
8,000 Rest of the World Asia Pacific
in Indonesia, China, the Caribbean, and the Europe North America
Mediterranean are still powered by dumb, dirty 7,000

(US$ Millions)
diesel generation. Others showcase smart 6,000
and much cleaner combustion technologies 5,000
capable of reducing diesel consumption 4,000
by as much as one third, even without any 3,000
renewable generation. When renewable
2,000
distributed energy generation (RDEG) is
1,000
added to the mix, these remote systems begin
to look like the classic microgrids that have 0
2013 2014 2015 2016 2017 2018 2019 2020
been the focus of most of the DOE and U.S.
Department of Defense funding. Figure S1. The total remote microgrid revenue, all segments, base scenario, world markets
The closest analogy to remote microgrids from 2013 to 2020. (Source: Navigant Research.)
funded by the U.S. government are the
so-called mobile microgrids deployed
at military forward-operating bases in these systems tend to rely on a bottom-up critical path for microgrid commercialization.
Afghanistan and Iraq as well as at other distributed control model rather than the The diversity of companies and hardware
temporary or remote bases throughout the topdown centralized controls paradigm that and software solutions designed to solve
world. Companies such as Lockheed Martin dominates the larger power grid. these controls challenges grows almost
have developed hybrid controls, featuring In the case of grid-tied microgrids, the utility weekly. Will CERTS become the common
both distributed and supervisory modes grid offers inertia that can often help resolve dominator, or will an ABB, GE, Siemens,
of operations. Sandia Labs and IPERC supply, frequency, or voltage irregularities that or Schneider Electric become the Intel or
are experimenting with advanced artificial can compromise service performance. In the Microsoft of the microgrid world?
intelligence algorithms to make extremely case of remote systems, an existing gridif It could all come down to the right controls
complex decisions to develop super-secure there is oneoften plays the opposite role philosophy. Whether remote microgrids will
microgrids. Boeings offering embeds due to poor reliability and may jeopardize the really reshape the vendor landscape for
cybersecurity down to the end-device level, operations of the microgrid. To perform well, microgrids remains to be seen. The market
something they developed decades ago for remote microgrids must rely on a fossil prime is clearly best served by the diversity of
our nations satellite program. mover to set frequency or voltage, or employ controls approaches being deployed today.
These projects pencil out because diesel- advanced microgrid-enabling technologies The entire global microgrid market could
power incumbent minigrids are so expensive such as a smart grid-forming inverter or some reach US$10, $20, or $36 billion in vendor
(US$1$30 per kWh) and the cost of solar form of advanced energy storage. In either revenue by 2020. In any case, this market
PV has dropped so dramatically. The falling scenario, redundancy and resilience must be is on the move despite a lack of clear
price of lithium-ion batteries is also playing factored in during the design process. standards and policies. I anticipate that the
a role. And perhaps most importantly, they The future of the microgrid market really status quo will not prevail and that disruptive
are pioneering ways to aggregate and rests on the controls and what they will cost. new business models will propel microgrids
optimize microgrids. Generally speaking, This is the black box, the secret sauce, the into the mainstream by 2020.

as rooftop solar photovoltaic (PV) systems, combined heat these smart inverters to take action remains high,
and power (CHP) plants, batteries, and other storage devices momentum is building within the regulatory and policy
(including electric vehicles), can become stranded assets community to accommodate technology advances in
that trip offline as the larger network of nuclear, coal, and decision making. If we can break away from past protocols
natural gas plants also goes down in a storm. However, this that preclude intentional islanding and move toward
is not the case if one incorporates this diverse set of DER inverter-based DER such as solar PV systems, small wind,
within an islanding microgrid. fuel cells, or advanced energy storageall key microgrid
Thanks to advances with smart, bidirectional inverters, enabling technologiesthe overall system can be cleaner,
microgrids connected to utility distribution grids can now more efficient, and more reliable.
provide a level of reliability and sustainability not possible Current trends toward a more distributed energy future
a decade ago. While resistance among utilities to allowing appear to make microgrids an inevitable augmentation of

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 15

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future revenue sharing between developer and system


4,500 host from the provision of ancillary services.
4,000 Middle East and Africa
3,500 Latin America
Asia Pacific Upgrades to IEEE 1547
3,000 Europe Utility engineers have historically opposed the concept of
(MW)

2,500 North America islanding, citing safety concerns. This opposition is


2,000 embodied in the Underwriter Laboratories (UL) 1741 safety
1,500 standard, which was originally devised in 1999 and
1,000 requires disconnection of distributed inverter-based gen-
500 eration systems during an outage. Officially titled The
0
2013 2014 2015 2016 2017 2018 2019 2020 Standard for Inverters, Converters and Controllers for Use
in Independent Power Production Systems, UL 1741 was
Figure 1. The total microgrid capacity, base scenario, world markets updated in 2011 and is now a certification that verifies
from 2013 to 2020. (Source: Navigant Research.) which distributed generation units will not backflow onto
the larger utility grid when it goes down. Microgrids chal-
todays centralized grid infrastructure. (See Capturing the lenge that anti-islanding assumption; yet, many new
Reliability Value Microgrids Provide.) Aggregation plat- inverter devices gain UL 1741 certification and still enable
forms similar to microgrids will be absolutely necessary if islanding. This is a clear sign of the schizophrenic relation-
energy infrastructure follows in the footsteps of telecom- ship DER has with utilities and power grids. Fears of being
munications and the evolution of todays Internet. Without electrocuted while fixing outages at the distribution level
a doubt, the existing radial transmission grid will still pro- still shape perspectives on microgrids for many older line
vide the majority of power supplies to the industrialized workers in the trenches.
world in the near term. RDEG, never- This preconception was most clear-
theless, will also play a larger role in ly expressed in IEEE Standard 1547,
providing energy supply, reliability, which requires an automatic and rapid
security, and emergency care services Remote microgrids disconnection of all distributed energy
when these and other DER are net- generation during grid outages. For
worked via microgrids. are networks that well more than five years, the IEEE
worked on developing a guide on
are not typically
The Top Four Microgrid islanding to round out this series of
Drivers Today interconnected with standards. This guide, IEEE Standard
This article focuses on the four prima- 1547.4, went into effect in July 2011
ry reasons why grid-tied microgrids any utility grid or and is a major step forward for
are moving into the mainstream. may interconnect microgrids. It spells out safe utility pro-
These are briefly described and ad- tocols for islanding while also putting
dressed in more detail: with a highly into place standards for reactive
[IEEE has played a vital role in power, which will allow microgrids to
increasing knowledge about tech- unreliable grid. sell ancillary services to distribution
nology advances to the broader utilities. Although 1547.4 may not
engineering community, updat- become a binding standard for utility
ing grid protocols to create room for modern operators for another five to ten years, it is a major mile-
microgrids. stone for this emerging industry.
[Engineering arguments on behalf of microgrids have Also approved in 2011, IEEE Standard 1547.6 addresses
also added momentum to a push to recognize advan- recommended practices for interconnecting microgrids
tages attached to medium-voltage dc. with electric power supply distribution secondary net-
[Instead of representing the departing load of attrac- works. Among the other related IEEE guides in this series
tive commercial and industrial (C&I) customers to that help build consensus support for the engineering
utilities, there is a growing recognition that microgrids impacts of microgrids are:
can serve as the most reliable form of real-time [ IEEE Standard 1547.5: Guidelines for interconnection
demand response (DR) and, if compensated properly, of electric power sources greater than 10 MVA to the
can lower the environmental (and economic) cost of transmission power grid.
voltage and frequency balancing. [ IEEE Standard 1547.7: Draft guide for conducting distri-
[Copying successful business models from the solar PV bution impact studies for DER interconnection. Among
industry, a growing pool of microgrid developers/inte- the long list of issues relevant to microgrids covered by
grators is moving forward with power purchase agree- this guide are voltage regulation schemes, unintentional
ment (PPA) contracts, some of which even anticipate islanding prevention, false inverter trips due to utility

16 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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line transients, reactive power control schemes for mul- voltage dc networks. Among the advantages of dc distri-
tiple inverters, impact of cloud cover on solar PV, use of bution network infrastructure are:
DR, and issues surrounding the reverse power flow on [eliminated reactive power constraints
secondary grid networks. [eliminated need to synchronize diverse generation
[IEEE Standard 1547.8: Draft recommended practice sources to a single ac grid frequency
for establishing methods and procedures that pro- [overall higher system efficiency
vide supplemental support for implementation strat- [ease of interconnection of dc generation sources
egies for the expanded use of IEEE 1547 standards. (solar, wind, and fuel cells)
The purpose of this guide is to segregate fast-tracked [ease of interconnection of electrochemical devices
DER projects from those requiring deeper levels of (flow and other forms of advanced battery systems).
analysis due to high penetrations of distributed solar Led by companies such as Intel, Johnson Controls, and
PV. It seeks to make RDEG and other DER utility Emerson Network Power, the EMerge Alliance is now
friendly, with the prime solution advocating for a return to dc systems
set revolving around advanced Current trends in the developed world. These sys-
smart inverters. The top topics of tems would subsequently pave the
inquiry by IEEE are voltage regu- toward a more way for state-of-the-art dc digital sys-
lation and power quality and tems in the developing world. Even
how best to optimize the group
distributed energy today, companies like Nextek Power
behavior of DER sized between future appear to specialize in dc power distribution
10 and 20 MW in scale. optimization. Nextek Power offers a
This set of IEEE 1547 standards was make microgrids direct coupling technology that dis-
being reviewed in December 2013 and places the need for dc/ac inverters for
will likely undergo further revisions
an inevitable microgrids interconnecting to the
and enhancements moving forward. augmentation of larger utility ac grid. In addition, ABB
Another set of IEEE standards that has been selling high-voltage dc
would accelerate the deployment of todays centralized transmission systems for about five
microgrids is the Smart Grid Interop- decades and also offers a variety of
erability 2030 Series, which repre-
grid infrastructure. dc-based products relevant to
sents a draft guide for IT, electric microgrids.
power systems, and end-use loads There is heated debate today
and applications. An IEEE Working Group is currently about the advantages and disadvantages of dc. Here are
building on the overall interoperability subjects embod- just a few of the myths that need to be debunked,
ied in IEEE Standard 2030. The latter covers the engineer- according to dc advocates, for this class of power distri-
ing, communications, and IT industries products bution equipment to become widely accepted and help
designed for the smart grid, including standards for EV push dc microgrids into the mainstream:
integration (IEEE Standard P2030.1) and energy storage [DC is only 1% or 2% more efficient, so why bother? While
(IEEE Standard P2030.2 and IEEE Standard P2030.3). this may be true at low-voltage levels, recent research
by a variety of entities that include Intel shows that
The Buzz About dc medium voltage (380 V dc) is 78% more efficient.
The world has changed over the past 100 years. While DC requires large conductors and can only be trans-
[
large centralized power plants will continue to play a role mitted for a few meters at a reasonable cost. Again,
in providing ac power to the wholesale macrogrid, there is this is true for the majority of systems deployed today
growing momentum at the distribution level of electric at the 12 V, 24 V, or 48 V level, it does not hold true
service to diversify power offerings and pursue dcac at the same 380 V medium voltages now being devel-
hybrid solutions. More and more, the loads served today oped for distribution networks.
by ac power grids are natively dc. In fact, according to If a network is run off of dc batteries, this eats up all
[
some estimates, approximately 80% of loads in commer- of the efficiency gained by the dc current. While there
cial and residential structures are now native dc. Given the is some validity to this fear, it is equally true that this
enormous political and policy support for inverter-based may be an appropriate tradeoff for a reliability gain
native dc power sources such as solar PV, wind, fuel cells, that can reach 1,000%.
and energy storage, it makes sense to reduce dcacdc Arc flash is an unacceptable hazard for dc. Again, new
[
conversion losses and integrate dc distribution networks technologies, such as magnetic arc breakers and
such as microgrids into the power supply infrastructure. switched interlocks, can address these safety
Many of the utility concerns and the subjects described concerns at a relatively modest cost.
by the aforementioned IEEE standards relating to AC is safer because the voltage crosses zero at either
[
microgrids can be mitigated in novel ways by medium- 50 or 60 times/s (i.e., 50- or 60-Hz ac grids). This is

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 17

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only true if the current is not leading or lagging. While to the larger utility grid with the right combination of
components are currently more expensive to address technology and regulations, include:
such issues, these extra costs can be offset by the [Frequency regulation: Contracted with traditional gen-
large cost savings at the higher voltage distribution erators, and/or new entrants to correct frequency vari-
level due to a 1015% gain resulting from simplicity in ations in the operation of the grid. These services are
system design. expensive to deliver, and generators, microgrids, battery
At present, the majority of progress in developing dc- storage, and renewables providers can participate,
based technologies has occurred at either the high-voltage depending on the market structure.
(more than 1,000 V) or low-voltage (less than 100 V) level of [DR: Automated or manual kilowatt demand load cur-
electricity service. Since microgrids typically operate at tailment services, contracted and called on by the util-
medium voltage (~380400 V), much work needs to be done ity or the grid operator.
to bridge this voltage innovation gap. [Voltage control: Manages reactive power to maintain
As Figure 2 illustrates, interest in dc microgrids is high- the system at an acceptable range of voltage given its
est in the Asia Pacific region, with the vast majority of operating conditions; this is a service that lasts just
these being small remote microgrids featuring remote cell seconds. In parts of Europe today, semiopen markets
phone towers as anchor loads. Banks will finance this exist for voltage support. Response time, when called
infrastructure. These networks can then be expanded to upon by grid operators, needs to be fewer than 1 min.
local communities. The modularity of the dc backbone to [Load-following reserves: Especially relevant to vari-
a microgrid is well suited to this application. The other able renewable energy generation, these services,
most promising dc microgrid market is grid-tied data cen- typically provided by energy storage, are purchased
ters, such as the 1-MW dc microgrid deployed by ABB in on a 5-min basis.
Zurich, Switzerland. [Spinning reserve: A service to restore generation and
load balance; can take anywhere from seconds to
Emerging Organized Markets almost 10 min.
for Grid Ancillary Services [Supplemental reserve: Similar to spinning reserve;
A natural consequence of the growth in renewable gener- typically lasts fewer than 10 min.
ation is the emergence of a new organized market for [Replacement reserve: Less urgent service, but also
ancillary services required to keep the power grid in bal- designed to keep grid in balance; typically lasts fewer
ance. As carbon limits clamp down on the fossil genera- than 30 min.
tion units that have historically been used to help mitigate Much more work needs to be done to create viable rev-
swings in renewable supply, new technologies such as enue streams for provision of these grid services, and
fast-acting DR are being called upon to the fill the void. many of these services can be provided without a
Although regulators will always lag behind technology microgrid. At the same time, microgrid deployments help
advances, there is movement in key markets throughout bolster the business case for new DER-focused solutions,
the world to open up to a greater diversity of third-party of which microgrids will become an increasingly attractive
solutions from an equally diverse set of new technologies. vehicle to bundle up services previously rendered by more
The types of ancillary services that microgrids already conventional means such as gas-fired generators.
address internally, but which could be provided externally
PPA Business Models
This is the business model that now dominates the U.S.
residential and commercial solar PV markets, and, mov-
6,000 ing forward, is expected to become the primary vehicle
5,000 for commercial grid-tied microgrid projects. Similar to
the energy service performance contract (ESPC)
(US$ Millions)

4,000
described previously, there are no upfront costs for the
3,000 customer. In the case of solar PV, deep private-sector
2,000 pockets own the hardware and lease out the systems
until all tax credits and accelerated depreciation is maxi-
1,000
mized. Some vendors in the commercial space are now
0 moving forward with PPAs for microgrids, taking on the
13

14

15

16

17

18

19

risk of performance in exchange for capturing revenue


2
20

20

20

20

20

20

20

20

Middle East and Africa Latin America streams from ancillary service sales.
Asia Pacific Europe North America For this business model to work, the network controls
element needs to use a streamlined and open architecture,
Figure 2. The dc microgrid revenue by region, base scenario, world limiting customized engineering costs as new hardware
markets from 2013 to 2020. (Source: Navigant Research.) is added to the microgrid over time. Performance also

18 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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Bundled PPA
PPA Components
Lower Than
Existing Utility Rate 3Generation
Better Combined Cooling Heating Power
Reliability (CCHP), Solar, Wind, and Other
Renewable Energy/
Alternative Generation
PPA: (cent/kWh Usage Fee)
x cent/kWh
3Generation Export Revenue Share
Energy Energy Export Revenue Share
Solution
(Equivalent cent/kWh Credit)
Bundle
Enhanced Improved 3Energy Savings Service Modules
Security Cost

Example:
Potential CapEx Reduction
Green Avoided Capital 3 Leveraging District Heat and Cooling to
Expense (CapEx) Offset Heating, Ventilation, and
Opportunities Air Conditioning (HVAC) Installations
in New Buildings on the Campus

Figure 3. The financial model of an energy solution funded by a blended PPA structure. (Source: Navigant Research.)

needs to be monitored closely. For example, PPA solar design, build, and help finance microgrids. Notably, it is
projects outperform those installed by smaller contrac- among the most creative of the prequalified U.S. Depart-
tors since the financial success of these PPA projects ment of Defense contractors when it comes to thinking
hinges on good design, installation, and maintenance. through how microgrids can gain traction as vehicles for a
Given that microgrids are much more complex than a broad array of services through PPA third-party financing
simple solar PV system, companies willing to enter into schemes, focused on projects with low-cost natural gas
long-term PPAs must be smart about risk and choose base load deployments. The company believes the best
suppliers wisely, favoring simple, elegant controls that do way to create economic value via microgrids is to focus on
not require ongoing customized engineering every time a base load generation, limit energy storage costs, and cap-
new resource is integrated into the microgrid. ture new revenue streams with the greatest value embed-
One of the most interesting vendors pursuing the PPA ded in thermal energy. Leidos sees microgrids as
business model is Green Energy Corporation, which platforms for offering a full range of serviceselectricity,
merged with Horizon Energy in 2013. The two firms pre- thermal energy, water, waste, and communications servic-
merger shared an affinity for a software as service con- esa big picture vision. The company is also exploring
cept for microgrids and committed to an open-source how utilities can be willing partners in microgrids, espe-
controls platform. cially multiparcel C&I projects. Figure 3 shows how the
The vast majority of microgrids tracked in Navigant company views a bundled PPA microgrid opportunity
Researchs Microgrid Deployment Tracker database are delivering on a variety of value propositions: better reli-
either funded by government agencies or academic insti- ability, improved cost, improved sustainability, and
tutions as R&D projects or by the asset owners them- enhanced security.
selves. The newly expanded Green Energy Corporation is
instead serving as an integrator/developer, absorbing any Biography
risk of performance of the microgrid, while taking care of Peter Asmus (Peter.Asmus@navigant.com)
___________________ is a principal
the financing. The combined company claims in excess research analyst with Navigant Research and is a leading
of 15 projects on the drawing board, with four projects global authority on microgrids and virtual power plants.
completed and one 11-MW project in Connecticut under He has more than 25 of years experience as an analyst, con-
current development that incorporates diesel, CHP, solar sultant, and writer, having authored four books on energy
PV, small wind, and advanced energy storage, and which and environmental topics.
saves a significant amount of money in the long run.
Another company pursuing the PPA model is Leidos, a
spin-off of SAIC, a Fortune 500 company. Leidos can

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 19

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By Kumudhini Ravindra, Balaraman Kannan,


and Nagaraja Ramappa

Microgrids:
A Value-Based
Paradigm
The need for the redefinition of microgrids.

NERGY, A CRITICAL INFRASTRUCTURE, FORMS A VITAL INPUT, ESPECIALLY


in emerging countries like India. At present, the centralized grid-based elec-
tricity is considered the most convenient and reliable form of energy for con-
sumers but is unable to keep pace with the growing demand, which requires
100% reliability for a digital economy. With more than 1.3 billion people who
still have no access to modern forms of energy, this inability to meet consumer demand
affects the energy security of the country at national and consumer levels. There is a need to
consider augmentative mechanisms for bridging the demandsupply gap such that they
meet the varying needs of different types of consumers in an effective and efficient way.
Microgrids are poised to become the best augmenting technology to address these needs.
This article explains the need for the redefinition of microgrids in the context of emerging
economies and sustainable development. The feasibility of different types of microgrids appli-
cable in an emerging economy context is presented as case studies and lessons learned along
with the potential barriers for implementation. We also demonstrate how microgrids can be a
leapfrogging technology, given the energy landscape of emerging economies, as it is a value-
based paradigm that caters to the varying needs of different stakeholders.

Energy Landscape of India and Emerging Countries


Energy forms a vital input and critical infrastructure for the economic development of
countries and for improving quality of life. The focus across the world has been to enable
better access and use of modern energy sources to ensure increased productivity, better
livelihoods, and a higher standard of living. This translates into a growing demand for
energy and energy services. Some of the key drivers shaping the increasing demand and
state of the global energy supply in the 21st century are population growth; economic and
social development resulting in an increase in individual expectation for energy; financial
and institutional conditions; local, regional, and global environmental concerns; efficiency
of energy supply and use; technological innovation and deployment; dependency on fossil

Digital Object Identifier 10.1109/MELE.2013.2297738


Date of publication: 18 March 2014

20 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 2325-5987/14/$31.002014IEEE

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fuels and their limited availability; climate change


and its relation to energy supply; and access to mod-
ern energy in the developing world.
It is often viewed that meeting the demands of con-
sumers is the key to progress. Emerging economies have
not been able to keep up with the rising demand
because of existing supply shortages and other structur-
al issues. In this regard, decisions taken in terms of the
choice of supply resources, technology, site selection,
operations and maintenance, and safety measures have
a considerable impact on energy systems and on society.
Individuals, communities, and also nations are rendered
more or less vulnerable to systemic and environmental
changes by such decisions. Given this situation, energy
demandsupply matching takes on a strategic and sub-
stantial role in ensuring the growth and development of
a country.

Issues with Traditional Solutions


Traditional demandsupply matching has been achieved
by increasing supply centrally. The motivation for this
choice is that centralized grid-based electricity is per-
ceived to be the most convenient, safe, efficient, and reli-
able form of energy for consumers and communities
across the globe. The advantage of centralized grid-based
systems is that they capitalize on the economies of scale,
which is the focus of policy makers and power utilities.
These systems are amenable to the topdown policy-mak-
ing framework exercised by most decision makers with
the standardized management structure. They are con-
sidered to have higher quality standards, and most of the
innovations and R&D are also directed toward developing
bigger and better systems with technology push strate-
gies driving the decision-making process.
Energy systems in emerging economies and devel-
oping countries are plagued by problems, such as the
poor performance of the power sector and traditional
fuels, the transition from traditional to modern econo-
mies, and structural deficiencies in society and the
economy. The growing demand for energy in these
countries is not being adequately met by the central-
ized systems. A significant gap exists between the
energy supplied by the utilities and the energy
demanded by consumers. Since increasing supply cen-
trally requires high lead times, load shedding (load
shedding is the manual cutting off of electric power to
any locality by the utility due to power shortage) and
planned and unplanned brownouts are the response
CREATAS
used by power utilities to secure the grid and deal with
the shortage of energy supply in the short term. This

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response impacts the activities of consumers and entails Furthermore, utilities are often economically delinked
economic losses. from the demand side. Policy makers being supply and
For example, India, an emerging economy with 17% of grid focused implies a lacuna in their understanding of
the worlds population, ranking second after China, only consumer needs. The social and environmental impact of
ranks fifth in the world in total energy consumption. India individual choices remains unknown. Engineering solu-
has been investing heavily in centralized power systems to tions are preferred to social solutions. Centralized power
meet its growing demand for energy, but it faces the criti- plants do not ensure access, affordability, and energy
cal challenge of meeting a rapidly security at the individual consumer
increasing demand for energy. The and community level. On the micro-
estimated peak shortage is about 10% economic level, per-unit energy prices
across the country, and this figure is Microgrids are not influence consumer choices and
rising despite attempts to increase behavior, and this can affect macro-
generation capacity. Also, the opera-
just a stopgap economic development and growth.
tional efficiency of the power system solution for All of the above factors suggest the
is low given the high aggregate techni- need to invest in additional systems
cal and commercial (AT&C) losses (in matching demand that can adequately plug the existing
the range of 3040%). Therefore, utili- demandsupply gaps and also provide
and supply in
ties in India resort to load shedding in access to modern energy to the mil-
the short term to deal with energy emerging economies lions who are dependent on outmoded
shortages. The consumers connected forms of energy.
to the grid have to invest in expensive and enabling access
backup systems to ensure acceptable to modern energy. Stakeholder Needs
power quality and reliability (PQR). Demandsupply matching of energy
Apart from the shortage in power, and power is not just a technical prob-
according to International Energy lem as often perceived. It requires an
Agency estimates, more than 400 million Indians are with- understanding of the intricate nature of the energy system
out access to electricity or modern forms of energy. at the economic, social, and environmental levels. The deci-
The issues with centralized grid-based power systems sion is one of choosing between an optimal solution or a sat-
for demandsupply matching are: isfying solution, an organic or an inorganic growth model,
[ Centralized power systems are capital intensive and and an inclusive or an exclusive decision. It is about
have long gestation periods. Difficulties in attracting acknowledging individual consumers and communities as a
such capital for energy investments impede economic significant part of the system with entitlements, rights, and
development, especially in less developed countries. duties and that the power system exists to serve their needs.
There is a fair amount of inertia with regard to the All of this calls for a paradigm shift. Strengthening commu-
rate of change that can be introduced in the energy nities to be self-sufficient or at least less dependent on grid
system. Decisions on centralized power plants are power for their reliability would reduce vulnerability and
delinked from social and environmental aspects. adverse impacts on the economy, society, and the environ-
There is an excessive focus on technology and ment. From this perspective, if one were to define the needs
economic aspects in the decision making rather than of energy consumers, it is for sustainable energy systems.
on resources and their availability. Sustainable energy systems imply:
[ Centralized power systems are considered to be highly [ reliable and secure availability of quality power to all
efficient. However, it can be shown that, for certain consumers
end uses, it may be more efficient to use local energy [ meeting the legitimate energy demands of all sections
resources than grid-based electricity when the overall of the present and future generations at affordable
efficiency of the energy chain is considered. prices with the least effect on the environment
[ The dependence on external sources and imports [ energy conservation using effective supply- and
increases the vulnerability of the dependent regions demand-side management
and nations to geopolitics and reduction in energy [ generation by using clean and renewable energy
security. Rising energy prices for energy imports can sources
lead to skyrocketing import bills, with adverse conse- [ efficient handling and balancing of the conflicting
quences for business, employment, and social welfare. equity, environment, and economy objectives under
[ The relationship between the cost of the system and different spectral, spatial, and temporal conditions.
PQR is exponential in nature. To improve PQR, redun- While making decisions, stakeholders have to consid-
dancy needs to be introduced into the power system. er the additional costs of the different sources of energy:
There is an increasing order of magnitude of costs for logistics, safety, storage, and environmental costs. It is
every percentage point improvement in reliability. important to return to the basics of power generation and

22 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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storage technologies. Any decision made on energy has to Thus, microgrids are being predominantly seen as 1) an
be techno-economic from the first principles. The chal- off-grid solution to improving access to remote areas, 2) a
lenge here is to identify which is the best solution. This mechanism for locally improving the PQR of a specific
implies that modeling and design of both centralized consumer/area, 3) as a means of better control for the
power systems and decentralized combination of different distributed
power systems must essentially be energy resources connected to the
considered as a transportation prob- grid from a grid perspective, and 4) a
lem, where the tradeoff is between
Strengthening means of operating in an islanded
transmission of electricity and trans- communities to be mode in case of grid failure when
port of fuel for energy needs. The connected to the grid. All of these are
choice is 1) between whether one self-sufficient or at true, but microgrids can be much
invests in storage of the fuel (natural more in the context of emerging
gas, coal, diesel, and biomass) or stor-
least less dependent economies, such as in India and
age of electricity, which is the trans- on grid power for some countries in Africa, where
mission medium; 2) how and from power systems have hardly made a
where this fuel is obtained; and 3) the their reliability would dent in the economics of the region.
logistics of transporting fuel versus Microgrids can be suitably designed
the logistics of transmitting electrici-
reduce vulnerability to meet such needs as access to
ty. These decisions also have to con- and adverse impacts modern energy, energy indepen-
sider the environmental costs of dence, local resource utilization,
designing the optimal systems. on the economy, specific consumer end-use require-
In this regard, microgrids using ments, livelihood generation, PQR
renewable and clean energy resources
society, and the requirements, sustainable develop-
and demand-side management are environment. ment, and their combinations.
suitable decentralized alternatives to Furthermore, looking into defini-
augment the centralized grid-based tions wherein microgrids constitute
systems and enable demandsupply even liquid fuel generators and fossil
matching at the consumer and community level. fuel sources if they are located at the consumer side of the
grid make one feel that the microgrid is not a new con-
Microgrids and Their Definition cept. Historically, grids developed as isolated systems that
The last decade has seen an increased focus on microgrids. were managed and controlled locally. These too could be
The current definitions of microgrids are as follows: viewed as microgrids.
[Microgrids, as first defined by Lasseter (2002) and later The beginning of the 21st century heralded new situa-
by Hatziargyriou et al. (2007), comprise a low-voltage tions: global wars, susceptibility to terrorist attacks, energy
(1 kV) or medium-voltage (usually 169 kV) locally security issues, and the breakdown of the grids at impor-
controlled cluster of distributed energy resources that tant junctures, all demanding a new thought process. These
behave, from the grids perspective, as a single produc- situations challenged the existing worldview of bigger is
er or load both electrically and in energy markets. better. Suddenly having large power plants and extensive
[A microgrid, as defined by the smart grid association, interconnected grids did not seem like such a smart move
is an electrical system that includes multiple loads at all. Thinking began to shift toward smarter grids. Grids
and distributed energy resources that can be operated that were able to self heal, operate in islanded modes, and
in parallel with the broader utility grid or as an electri- take advantage of the information and communication
cal island. technologies (ICT) revolution became the favorite topic of
[The U.S. Department of Energys (DOEs) official defi- academicians across the globe. In all of this, microgrids
nition of a microgrid is a group of interconnected were touted as offering the potential of better control and
loads and distributed energy resources within clearly management at the low-voltage level. It was like transition-
defined electrical boundaries that acts as a single ing back into the era of the small, isolated grids of yester-
controllable entity with respect to the grid (and can) year. The novelty was in the communications and
connect and disconnect from the grid to enable it to information technology piece of the system and access to
operate in both grid-connected or island mode. The renewable energy resources.
microgrid includes integration and control of Looking into the above discussion, and given the need for
multiple local generation and storage assets [diesel moving away from greenhouse gas- (GHG-) intense systems
generators, combustion turbines, photovoltaic (PV) to clean sources, we need to reexamine what constitutes a
arrays, battery systems, among others] to provide on- distributed energy system or microgrid. All of these con-
site generation for local loads in both grid-tied and siderations call for a redefinition of the microgrid based on
islanded modes of operation. the context.

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 23

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With the foregoing discussion and given the global that are coordinated with the operations of the grid to
context, microgrids can be defined as a group of intercon- ensure reliable access to power the essential services.
nected loads and distributed energy resources within Microgrid choice in emerging economies depends on
clearly defined boundaries that acts as a single controlla- central grid power availability, the energy security needs
ble entity of the region, and, at consumer levels, local conditions,
[ designed on the basis of the local consumers or com- technoeconomic efficiency requirements, power quality, and
munities energy needs and end uses, where the loads reliability requirements in the context of environmentally
and energy uses are qualified and segregated based sustainable development. The growth perspectives are
on their reliability requirements toward expanding reach of power into off-grid areas, manag-
[ that optimally matches these end uses and locally ing growth of existing systems, and transforming growth of
available clean environmentally friendly energy the new regions. The main drivers are highlighted in Figure 1.
resources without the need for transporting the fuel,
with or without the grid Taxonomy of Microgrids for Emerging Economies
[ that may or may not be connected to the centralized grid Microgrids are the power systems configuration providing
[ that can connect and disconnect from the grid to clear economic and environmental benefits compared to
enable it to operate in both grid-connected or island- expansion of legacy modern power systems. The taxono-
mode (if it is connected to the grid) my of the types of microgrids suitable for emerging mar-
[ that can communicate with the grid using ICT and kets are:
enable demand response. 1) Energy independence model: focuses on independence
from the centralized grid typically in areas that are
Microgrids for Emerging Economies remote or off the grid.
The traditional use of microgrids in emerging economies 2) Resource-based model: the emphasis is to maximize
is to provide power to communities, specifically in times usage of locally available resources such as solar,
of emergency, and to supplement the main grid in times microhydel, wind, and other naturally available energy
of peak usage or grid unavailability. Here, microgrids are resources.
still a norm, with every commercial establishment and 3) End-use-focused model: considers the energy end uses
closed residential community opting for backup systems of communities, such as illumination, cooking, and

Microgrid Drivers for Emerging Economies

Stakeholder
Local Conditions
Needs

Government
Consumer Utility Grid Availability
(Society)

Techno-Economic Resource
Energy Security Energy Security
Efficiency Availability

Power Quality and Local Employment Technology


Better Reliability
Reliabilty Generation Availability

More Smartness
Cost Governance
(Lower AT&C Losses)

Participation in Better Control Access to Modern


Decision Making Operations and Energy
Management
Specific Energy Cleaner Greener
End-Use Needs Solutions

Long-Term
Sustainability

Figure 1. The microgrid drivers for emerging economies.

24 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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water pumping, as the main criteria for


the selection of the appropriate resources.
4) Livelihood model : can be a means for
improving the livelihoods of poor commu-
nities by providing opportunities for
increasing the skill base of individuals.
5) PQR-based microgrids: the traditional
microgrids that enable local definition of
PQR requirements and are designed for
the same.
6) Environment focused model: can be used for
addressing environmental issues at the
community level, targeting the carbon cred-
its and GHG certificates.
Microgrids can also be designed for more than
one purpose in which case a combination of
the above models can be used. Figure 2. Greenpeace Indias solar project in Bihar. (Photo courtesy of Power Engi-
neering International and Greenpeace India.)

Case Studies of Successful Microgrids


Based on the Above Taxonomy wind-based systems, and biogas systems have been
For countries like India, where, according to International installed in this remote area to meet the energy needs of the
Energy Agency estimates, more than 400 million people consumers. The Sagar Islands 11 solar stations can each
are without access to electricity, produce between 25 and 100 kW, total-
microgrids may be the next best alter- ing close to 800 kW distributed via
native and can coexist with central- power lines 23 km long. They supply
ized grid systems. An example of
Demandsupply 1,400 households and commercial
such a microgrid is that developed by matching of energy establishments. The generation cost
Greenpeace India in Bihar (Figure 2). is about Rs 10 (US$0.20) per unit
The rural electrification microgrid and power is not just (1 kWh), which is then sold for Rs 7,
project is based in the Dharnai Village and the difference of Rs 3 is borne by
in the Jahanabad district of Bihar. This
a technical problem the government.
solar-based technology model will as often perceived. Lessons Learned: The sustainable
have about 100 kW of solar panels and scalable solution to provide
that supply round-the-clock electrici- renewable electricity to the remote
ty to 350 households in Dharnai on an Sundarbans has led to some mean-
affordable and sustainable basis. The microgrid is targeted ingful cost savings, engaging the rural community in
to become operational by 2014. an energy-independent framework, and demonstrated
Similar off-grid microgrid projects based on microhydro- the possibility of a path to zero kerosene. The use of
systems have been successfully installed in the western
coastal regions of India by Prakruti Hydro Labs (Figure 3).
Lessons Learned: Microgrids benefit all sections of the
society, facilitating peoples access to modern energy
resources and removing inequity in energy access.
They empower people by allowing them a stake in their
energy generation and distribution. This is the future of
energy investment.
Globally more than 1.3 billion people are without
access to electricity, and 2.7 billion people are without
clean cooking facilities. More than 95% of these people are
either in sub-Saharan Africa or developing Asia, and 84%
are in rural areas. Microgrids, due to their proximity to the
consumer and the ability to use process heat, have the
potential to address specific end-use needs such as illumi-
nation and cooking.
A case in point is the microgrid implementation in the Figure 3. A microhydel in the western coastal district of India. (Photo
Sagar Islands in the Sundarbans. Several solar initiatives, courtesy of Prackruti Hydro.)

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kerosene and biomass in traditional ways have direct The Biomass Energy for Rural India Project, sponsored
impacts on global warming. The success of this pilot proj- by the global environmental facility United Nations Devel-
ect and multifaceted benefits enable larger-scale deploy- opment Program, India-Canada Environmental Facility
ments of solar energy units in the Sundarban region. (GEF-UNDP, ICEF), the Government of India, and the Gov-
Microgrids can also address the livelihood issues of com- ernment of Karnataka, a 500-kW biomass power plant
munities as demonstrated by the Gram Power microgrids established near Kabbigere village in Thovinkere Gram
and Gram Vikas Biogas-based systems. These microgrids aim Panchayat in the State of Karnataka, is another initiative
to provide reliable, affordable power to the 2.7 billion world with an aim of implementing a decentralized bioenergy
poor living without it. They also help skill building and technology for rural India. It uses locally available biomass
ensure sustainable livelihoods in rural households. to supply a high-quality, reliable power supply at a reason-
Gram Power was involved in setting up Indias first able price. The project also provides tradable water rights
solar-powered smart microgrid in the Rajasthan hamlet of to landless households that are equivalent to those held
Khareda Lakshmipura in March 2012, providing energy for by land-holding members of the village, along with creat-
rural households. Gram Powers core innovation is their ing employment, improving agro and village industries,
smart distribution technology with smart meters and grid and improving the livelihood of the people. Although the
monitoring systems to provide on-demand, theft-proof success of these types of projects depends on the various
power with a unique pay-as-you-use schedule that is stakeholders, the main objective and spirit can be replicat-
determined by the end user. The Gram Power systems ed in rural areas.
enable local village entrepreneurs to purchase bulk energy Lessons Learned: Microgrids can be suitable mecha-
credits from Gram Power and transfer them to individual nisms for improving the livelihoods of individuals, and
smart meters in the village. Once recharged, the meters new business models developed for microgrids can enable
can be used to operate a variety of household appliances the growth of enterprises even in rural and remote areas,
and other devices. Importantly, Gram as shown in Figure 4.
Powers microgrids can be integrated Microgrids can also be designed
with the utility grid. keeping in mind the type of consum-
Centralized power
Gram Vikas is an Indian nongov- er using the system. Echelon and
ernmental organization based in Oris- systems are capital Valence Energys microgrid system for
sa and founded in 1979. Gram Vikas an apartment complex, Palm Mead-
works on creating livelihood-enabling intensive and have ows in Hyderabad, India, is designed
infrastructure and renewable energy long gestation to integrate distributed generation to
systems. The organization actively compensate for disruptions in utility-
implements community-based renew- periods. supplied power. Palm Meadows is an
able energy programs using biodiesel, 86-acre integrated gated community
biogas, microhydro, smokeless chullas, with 335 homes and residential ser-
and solar PV applications to provide energy access to rural vices. The Palm Meadows community gets its bulk power
households. supply from a dedicated grid substation from the utility. In

(a) (b)

Figure 4. The improvement in livelihood as seen in the Sundarban Islands. (a) Solar street lamps. (b) Women empowerment through battery-
backed solar power. (Photos courtesy of Subhendu Ghosh/HT Photo.)

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case of a disruption in the grid supply, the community criticality. However, one has to make a distinction as to
uses diesel generators for their needs as a distributed unit whether these are the types of systems that we need to
and will incorporate solar generation in the future. Resi- propagate given that most of the backup systems are
dences within the community are equipped with smart based on liquid fuel (GHG-intensive fossil fuel).
meters that connect into data concentrators at distribu- Lessons Learned: Microgrids have to be redefined in terms
tion transformers and feed near real-time usage informa- of what constitutes one. According to the current definition,
tion to their energy system software. liquid-fuel-based backup systems can also be classified as
Lessons Learned: Smart microgrids are an ideal way microgrid systems. But whether consumers should invest in
to integrate distributed generation at the community such systems requires additional assessment.
level and allow for customer participation in the elec-
tricity enterprise. In this case, microgrids can act as an Value Proposition
aggregation and optimization platform to extract the Microgrids, which in a way encapsulate the mindset small
most value out of existing and new distributed energy is beautiful, are much more than a new-age phenomenon.
assets, such as small wind generation and solar PV cou- They enable the centralized grid operators and load dis-
pled with smart meters. They are also the building patch centers to view them as single entities, enabling bet-
blocks of a smart grid whose modularity can reduce ter communication and management. The improvement in
energy consumption by 1015% through more intelli- ICT also enables better control and management of power.
gent networking. Thus, demand response has a greater meaning when used
Microgrids can also help engage in in conjunction with microgrids.
environmental sustainability initia- Consumers can play a more active
tives. Wipros Green Leaf Initiative, an role in defining their needs in such
Intelligent Automated Power Manage-
Energy demand systems.
ment, which identifies power savings, supply matching takes The value propositions of
measures carbon reductions and the microgrids, as put forth by the DOE,
implementation of customer organiza- on a strategic and are 1) reduced cost of energy and
tions green goals, enables cleaner better management of price volatil-
substantial role in
usage of its microgrid system, and ity, 2) increased resilience and secu-
targets savings of up to 30% of normal- ensuring the growth rity of power delivery, 3) improved
ized energy costs, is one such example. reliability and power quality, 4) pro-
Also, to achieve its ecological targets as and development motion of deployment and inte-
part of its sustainability initiative, Wipro of a country. gration of energy-efficient and
attempts to minimize its internal foot- environmentally friendly technolo-
print on energy, water, and waste. This is gies, 5) assisting in optimizing the
accomplished by incorporating 19% power delivery system, including the
renewable energy into the energy portfolio and the use of provision of services, and 6) service differentiation
energy-efficient measures. About 63 million kWh are pro- through different levels of service quality and value to
cured from renewable energy via rooftop solar PV at three customer segments at different price points.
campuses, and canteen food waste is converted into biogas The additional value propositions of microgrids in
and used as a source of cooking fuel, helping to avoid 100 emerging economies can be explained from the perspective
tons of GHGs annually. of LOLP (which is a measure of the reliability of an electrical
Lessons Learned: Microgrids can help institutions and grid, the probability that there is an insufficient generating
communities participate actively in sustainable develop- supply to support electrical demand) and value of lost load
ment by enabling the use of locally available renewable (which is the estimated amount that customers receiving
resources and better energy management. electricity with firm contracts would be willing to pay to
Given the high loss of load probability (LOLP) in emerg- avoid a disruption in their electricity service). Microgrids
ing countries, it is a norm for commercial establishments can improve the reliability of the power system locally at
and residential complexes to have expensive backup the consumer site without significant investment in the
power systems. These microgrids focus on improved PQR. utility infrastructure. They improve the PQR of the system
For example, the information technology enabled services and, thus, significantly reduce the LOLP.
(ITES), hospitality, and health-care industries in India The value created by microgrids can be multifold. In
require very high reliability and quality of power. Present- terms of technology microgrids improve efficiency, reliabili-
ly, institutions from all of these industries have backup ty, access, and affordability and also enable local resource
with an in-house diesel generator, inverter, storage bat- usage. Investing in local microgrids creates employment
tery-based system to ensure 24/7 PQR. Such microgrid sys- opportunities and livelihood options as they require addi-
tems have the ability to work independently of the grid, tional human capabilities and skills, which in turn requires
and the loads are classified and segregated based on their education/training. This implies an increase in human and

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 27

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social capital creation. Given that microgrids provide access of the whole electricity supply system, and deliver
to modern power, there is an increase in the economic cap- enhanced levels of reliability and security of supply at the
ital, including the gross domestic product, FDI, and GNP, of local level.
the region. When these systems use clean forms of energy, Currently, the centralized grids interact with individu-
the natural capital of the regions is protected and improved. al consumers. This makes demand response and con-
From all of these perspectives, it can be said that microgrids sumer inclusion in decision making a difficult
are value-enriching systems that have to be supported by proposition. The future architecture of a power system
all stakeholders. can actually consist of a centralized grids interacting
In addition to improving PQR, mi- with a cluster of community-level
crogrids for developing countries like microgrids. These microgrids with
India provide flexibility, increased built-in intelligence, local generation
energy security, and access to mod-
A significant gap facilities, and control mechanisms
ern energy in remote areas. Accord- exists between the would be a better option to optimally
ing to a market research report operate the power system.
published by Markets and Markets, energy supplied by
the total market for microgrids is Potential Drivers and Barriers
expected to reach a total installed
the utilities and the Not everything is perfect in the
capacity of 15.4 GW by 2022, growing energy demanded microgrid space. Several challenges
at an estimated compounded annual and barriers exist for the creation of
growth rate (CAGR) of 17% from 2012 by consumers in microgrids. These can be classified
to 2022. The expected worth of the into operational, financial, social, tech-
market is about US$27 billion. This
most of the nological, governance, sustainability,
study, however, only considers re- developing countries and business-related issues. These are
newable power generation, solar PVs, formulated in Figure 5.
wind microturbines, battery, energy The operational barriers include a
storage, and control systems from the traditional use of lack of standards and options for the different microgrid
microgrids. Once we consider the other potential types of technologies; acceptability by the industry and public; and
microgrids as explained earlier, the size of the market operations, maintenance, and upkeep of systems. Some of
will be much larger. the technological issues are the availability and maturity
of tested and proven microgrid technology for different
Future of Microgrids regions, technical issues such as connection issues (with
Microgrids are not just a stopgap solution for matching the central grid), islanding, voltage regulation, and
demand and supply in emerging economies and enabling harmonics.
access to modern energy. In the case of off-grid and remote The financial barriers are affordability (consumers
areas, it is not to be assumed that microgrids will give way capacity to pay), cost and pricing models for microgrids,
to centralized grids if technologies make it possible. application procedures, exit fees, feed-in tariffs and
Microgrids have to be seen as value-based entities that metering, financing, load retention rates, interconnection,
coexist with the centralized grid. They are potent entities insurance, rate-based return on investment, siting and
that can operate essential services even in the case of permitting, skilled labor, and standby fees. The sustain-
emergencies such as natural calamities, as demonstrated ability issues are access, affordability, security, and envi-
by the Sendai microgrid when the 9.0-magnitude earth- ronmental sustainability-related issues. There is also no
quake struck off the northeastern coast of Japan and trig- clarity on the appropriate business models for the diffu-
gered one of the deadliest tsunamis recorded (http:// ____ sion of microgrid technologies.
spectrum.ieee.org/energy/the-smarter-grid/a-microgrid-
______________________________________ The social issues are the ignorance of stakeholders, the
that-wouldnt-quit)
____________ and the San Diego Gas and Electrics lack of education of consumers, cultural dimensions in
Borrego Springs microgrid during the intense thunder- terms of usage of energy technologies, the growing rich
storms on 6 September 2013 (http://www.utsandiego.com/ poor divide, and a lack of interest. Governance-related
sponsored/2013/nov/10/sgde-repair-crews-storm/).
_________________________________ They barriers include stakeholder commitment, lack of harmo-
can be designed to be smart to incorporate innovative prod- ny and trust among the different stakeholders, lack of
ucts and services together with intelligent monitoring, con- coordinated efforts by the different stakeholders, lack of
trol, communication, and self-healing technologies. accountability, political interference, and lack of regulatory
Microgrids can better facilitate the connection and opera- and policy frameworks for implementing microgrids.
tion of generators of all sizes and technologies, allow con- Presently, microgrids have only been showcased in test
sumers to play a part in optimal operation of the system, beds and pilot implementations. Models for the large-
provide consumers with greater information and choice scale diffusion of technologies do not yet exist. There is no
of supply, significantly reduce the environmental impact agreement of who does what and how. All of these

28 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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Microgrid
Barriers

Business
Operational Financial Technological Governance Sustainability Social
Related

Affordability Stakeholder Clarity of


Ignorance of
Standards (Capacity to Availability Commitment and Access Business
Stakeholders
Pay) Accountability Models

Lack of Lack of
Microgrid Cost and Connection Diffusion
Harmony and Affordability Education of
Options Pricing to the Grid of Models
Trust Consumers

Acceptability Procedures
Coordinated Cultural
by Industry and and Islanding Security
Efforts Dimensions
Public Processes

Operations,
Regulatory and
Maintenance, Return on Power Rich-Poor
Policy
and Upkeep of Investment Quality Divide
Frameworks
System

Figure 5. Microgrid barriers.

barriers and issues need to be The traditional use G. Venkataramanan and C. Marnay,
addressed to ensure that microgrid A larger role for microgrids, IEEE Power
technologies are adopted and suc- of microgrids in Energy Mag., vol. 6, no. 3, pp. 7882, May
cessfully diffused in the markets. June 2008.
emerging economies IEA. (2011). Energy for all: Financing
Conclusion is to provide power access for the poor. [Online]. Available:
There is enormous potential for set- http://www.iea.org/media/weowebsite/
ting up microgrids, and they can be a to communities, energydevelopment/weo2011_energy_
_________________________
value proposition for emerging econo- for_all.pdf
______
mies. Several different options in
specifically in times Gram Power. [Online]. Available:
microgrids are possible other than the of emergency, and to http://www.grampower.com
traditional PQR model being consid-
ered in developed countries. Given the supplement the main Biographies
differing scenarios and objectives of Kumudhini Ravindra is a researcher
the various stakeholders, the chal-
grid in times of peak involved in several initiatives in the
lenge will be to find suitable microgrid usage or grid clear energy technology and business
systems that will meet the objectives analysis domain. She is a Member of
in a satisfactory way. If a good match is unavailability. the IEEE.
made, microgrids have the makings Balaraman Kannan (balaraman@
________

of a success story and can act as a prdcinfotech.com) is the chief general


leapfrogging technology in the energy industries of manager of PRDC in Bangalore, India. He is a Senior Mem-
these countries. ber of the IEEE.
Nagaraja Ramappa is the managing director of PRDC,
For Further Reading Bangalore, India. He is a Senior Member of the IEEE.
Central Electricity Authority. (2013). Growth of electricity sec-
tor in India from 1947 to 2013. [Online]. Available: http://www.
cea.nic.in/
______

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 29

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By Michael T. Burr, Michael J. Zimmer,


Guy Warner, Brian Meloy, James Bertrand,
Walter Levesque, and John D. McDonald

Emerging
Models for
Microgrid
Finance
Driven by the need to deliver value
to end users.

MICROGRID PRESENTS A CHALLENGING PACKAGE TO


finance. The primary difficulty arises from the fact that a
microgrid is not just one type of asset but rather a portfo-
lio of assets that represent different value streams, tech-
nology risks, and depreciation lives.
A microgrid includes generation, a distribution system, consumption,
and often storage. The system is integrated and managed with advanced
monitoring, control, and automation systems. Many microgrids will have
almost 2025% of their on-site generation from renewable technologies,
often integrated with thermal energy storage and electric battery storage.
Government incentives for energy efficiency, renewable power genera-
tion, and electric infrastructure all might qualify for an investment stim-
ulus for advanced energy infrastructure.
In addition to this array of factors, the implementation of a microgrid
rarely occurs as one project and a common project investment. Instead,
the value proposition of the microgrid evolves over multiple phases, cen-
tered on demand and consumption reduction, on-site generation and
storage, advanced control systems, and automatic grid independence.
Each phase is not completely distinct from the others, and each phase

Digital Object Identifier 10.1109/MELE.2013.2297022


Date of publication: 18 March 2014

30 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 2325-5987/14/$31.002014IEEE

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does not have to be implemented in a rigid


sequence. Often phases overlap, and newer tech-
nologies might be considered later in the life cycle
of the project.
Not all phases or assets will qualify for incen-
tives or grants, and the overall capital invest-
ment is substantial. The simple payback
calculation might exceed 15 years. However, eco-
nomic considerations are not the sole factors for
investors or end users. Some are mostly interest-
ed in resilient, reliable, and secure power; physi-
cal and cybersecurity; planned transformation
and growth; regional and sector benefits; tech-
nology advancement and demonstration; envi-
ronmental strategies; emission reductions; or
some combination of value drivers, although all
will include financial considerations. All such
investments will be driven by the need to deliver
value for end users.
Starting from that premise, securing affordable
financing for a microgrid project depends first on
clearly defining value drivers and seeking opportu-
nities to improve the cost-benefit attributes of
microgrid solutions and architecture while con-
forming to project schedules that satisfy custom-
ers requirements. The strongest business
propositions will likely depend on the cost-effec-
tive deployment of energy management systems,
efficiency measures, and demand response (DR)
technologies to minimize capital costs and operat-
ing expenses. Efforts to reduce consumption of
fuel, electricity, water, and other resources offer
quicker payback and higher returns on investment
(ROI) and can be compounded with simple DR pro-
grams to further improve ROI.
As project sponsors and host customers seek
to develop and finance cost-effective microgrid
systems, they face a range of variables that
change over time, from customer requirements to
long-range trends in utility market structures.
This article, adapted from Minnesota Microgrids,
the final report in a 2013 study performed for the
Minnesota Department of Commerce (see Burr et
DIGITAL VISION

al.), seeks to address those issues as they relate to


microgrid development and financing. While
some examples and details are drawn from Min-
nesotaa state in the U.S. upper midwest with a
well-developed and mostly reliable utility

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 31

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systemthe parameters of analysis apply to many loca- municipal bond financing, renewable energy incentives,
tions that have similar market characteristics. and technology and economic development grants and
loan guarantees.
Customer Needs and In one recent example, District
Applications Energy St. Paula publicprivate part-
A variety of applications offer the
Multiple financing nership that serves 100 buildings in
potential for microgrid develop- options can be downtown St. Paul, Minnesota, with
ment, and each offers different district heating and cooling services
options for project structuring and used or adapted commissioned a study to explore the
financing. potential for combining resources
For example, customer groups in
to design, build, and needs for energy planning in the
the military, universities, schools, own, operate, and Green Line light rail corridor. The
and hospitals (MUSH) category, and study included development of a
other customers with a similar scale transfer microgrids prefeasibility methodology, which
and attributes, have special needs was intended in part to help other
for reliability and security and are
in exchange for system planners assess options and
willing to accept longer paybacks agreements to pursue opportunities for EID projects.
over an extended period. They
include facilities that are considered purchase energy DBOOT Project Finance
critical for community services and, Approaches
therefore, merit investment for
products and services. Multiple financing options can be used
stronger energy assurance. Such or adapted to design, build, own, oper-
customers also might be interested ate, and transfer (DBOOT) microgrids
in a range of values and benefits, including local economic in exchange for agreements to purchase energy products
development, as opposed to requiring only a bare financial and services. A financing framework for microgrid projects
calculus to drive their investment decisions. Finally, they will focus on the following issues initially:
might improve microgrid financing options by providing [ What is the best way to fund the early-stage microgrid
access to funding sources and structures inaccessible to designs and ownership and operating structure to
strictly commercial projects. secure project financing and attract third-party
Commercial and industrial customers also offer inter- capital?
esting possibilities for microgrid development, especially [ Can lessons from publicprivate partnerships, bond
in cases where requirements for high resilience carry a financing, and infrastructure banks apply to strategies
high-value premium. In one microgrid example discussed for microgrid funding?
in the Minnesota Microgrids report, the Treasure Island [ How should corporate finance and accounting
Resort and Casino places a high premium on resilience practices treat microgrid assets, revenues, and service
because its primary source of revenue, gambling, is agreements? Do state or municipal governments have
entirely dependent on stable and reliable electricity. Such a role in entering or supporting long-term microgrid
a customer also values the worry-free, turnkey nature of a service contracts?
third-party-managed microgrid and, thus, is well prepared [ Might an investor-owned utility acquire microgrids or
to engage in a long-term contract arrangement for its full their components as regulated rate-base assets or
scope of utility services. unregulated investments? Might cooperative or public
A third possible arrangement, although perhaps more power utilities support microgrid projects or contrib-
complicated, offers interesting prospects for microgrid ute infrastructure or services on behalf of their mem-
development: the cluster or community microgrid devel- bers/customers?
oped through a special economic development or energy [ What role might Property Assessed Clean Energy
improvement district (EID) structure, perhaps in coopera- (PACE) 2.0 financing play in funding microgrid invest-
tion with a municipality. Such a cluster approach can ments for commercial purposes?
combine a range of synergistic values and benefits, and [ What project structures will facilitate access to capital
maximize the utilization of generation resources by diver- and credit enhancement?
sifying load profiles and criticality attributes. In some [ What roles will be played by various developers, engi-
cases, it might be developed around a core asset, such as a neering and construction firms, and vendors of equip-
combined heat and power (CHP) plant installed to replace ment and services?
an aging boiler that must be shut down to meet Clean Air For the purposes of this analysis, a hypothetical microgrid
Act regulations. A project of this type could deliver an project finance company will be a limited partnership (LP) or
attractive energy cost proposition while also capturing limited liability company (LLC) established by a developer to
tangible incremental benefits such as tax-advantaged secure debt and equity financing needed to design and own

32 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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the microgrid. Energy project development companies will technology revolution with microgrids. Ultimately, a
likely contribute the equity investment necessary to com- change in distribution company business models could be
plete the design of the microgrids and act as the general fostered by these developments integrated with technolo-
partner of an LP or company. Under this approach, microgrid gy. These evolutionary trends resemble the changes and
end usersif other than the equity partner(s)would pay transformation that happened when decentralized tele-
little or no capital costs toward the development of the communications, information processing technologies,
microgrid. The experience of the developer and its partners and cloud computing merged. Just as the telecom industry
will be pivotal to attracting third-party capital. transformation led to the emergence of new service mod-
A significant benefit of a DBOOT approach is that the els and a wave of investment in infrastructure, the indus-
LP or company can earn significant tax benefits that are trys evolution toward a more distributed model will bring
not available to entities such as municipalities, special dis- new investment and business opportunities.
tricts, and nonprofit and other government bodies that are The effects on legacy central utility models might lead to
not tax-paying entities. Businesses utility stranded asset compensation
within the community can be offered claims. Theories of stranded cost
options and assume roles as invest- recovery could appear at the state level
ment partners in the LP or company Safe interconnection for distribution assets, which could
and thereby earn federal tax incen- can occur using impose a chilling effect on the devel-
tives to lower their investment costs. opment of microgrids and distributed
Under the DBOOT approach, ener- standardized and energy resources (DERs) in general if
gy users served by a microgrid would they prompt policy makers to reduce
enter into an Energy Services Agree-
proven systems and existing support for the increasingly
ment (ESA) with the company to pay procedures, fostering distributed architecture of the power
charges for electric, heating, and cool- grid or even to erect additional regula-
ing services, and to manage efficiency a new technology tory barriers and limits.
and DR measures. The ESA can have a Additionally, however, utility
term of up to 20 years and allow the
revolution with companies will have new opportu-
LP or company that financed the microgrids. nities to earn returnsregulated or
microgrid to recover capital costs and unregulatedon distribution assets
expenditures for construction of the serving independently managed
microgrid. After payback to the com- microgrids. This precedent exists
pany, sole ownership of the microgrid asset could transfer where utilities earn a regulated rate of return on transmis-
and vest to the end users in its entirety. sion assets already in the utilitys rate base but indepen-
The company might guarantee that the ESA service dently managed by the regional transmission organization
charges would be no higher than the same rates that the or independent system operators. In other cases, utilities
energy users would have paid without the microgrid. Such unregulated affiliates earn revenues on nonutility assets,
charges could include costs to obtain qualitative benefits including independent power producers and merchant
from the microgrid beyond bare costs for energy supply. transmission systems.
This would guarantee that energy users in the microgrid In some cases, regulated utilities might initiate or par-
never pay more than utility rates and other costs they ticipate in microgrid development. As in Connnecticut
would incur for the same set of benefits, but in the ESA, it Light & Powers participation in the Hartford Parkville Clus-
does not limit the possibility that they would pay less. A ter microgrid, San Diego Gas & Electrics Borrego Springs
true-up could be used annually, and any savings from demonstration project, and initiatives at Duke Energy to
actual costs would be shared among the company and the develop neighborhood-level microgrid architectures, utili-
microgrids energy users. ties might continue earning regulated rates of return on
existing distribution assets used in a microgrid project as
Utility Models for Financing well as incremental revenue streamsregulated and
Utility grid models have been evolving since the enact- unregulatedon additional related investments.
ment of the Public Utility Regulatory Policies Act in 1978 In some cases, environmental compliance obligations
and its implementation by the Federal Energy Regulatory will necessitate replacing aging boilers, creating opportu-
Commission and the states by 1982. Technology advances nities for utilities to participate and contribute toward
have gradually affected the utility system, increasing optimizing new plants or repowering investments with
opportunities for development and operation by nonutility integrated microgrid solutions. In other cases, load pock-
stakeholders. Now technology is creating opportunities in ets requiring new transmission service might be better
electricity distribution. served with localized resources, of which microgrids or
Safe interconnection can occur using standardized and microgrid-type load-management and distributed genera-
proven systems and procedures, fostering a new tion (DG) models might prove to be more effective.

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For such projects, the utility could partner and operate new technology options, they could face the prospect of a
or manage microgrid control systems. The utilitys role shrinking role in the market and, therefore, an eroding
could be important in a campus microgrid, where value proposition. Ultimately, this could lead to higher
microgrid wires or pipes serving a single campus cross a capital costs as investors shift resources toward compa-
public right of way or other demarcation line in the utility nies with more future-proof business models. On the con-
franchise. The utilitys participation trary, utilities that pursue win-win
would also help reduce barriers approaches to exploit emerging
encouraging previously unaffiliated technologies and resource opportu-
customers to voluntarily join the The utilitys nities, including microgrids, will be
microgrid for service by contract. better positioned to benefit from
participation would
Joint ownership or cooperative those changes rather than be mar-
structures could collectively own and also help reduce ginalized by them.
operate a microgrid, and they could
grow to add other customers. In each barriers encouraging Transactive Energy
case, utilities could play a key role in previously unaffiliated Market Models
making microgrids more cost effective Alongside more sophisticated
by ensuring that they are planned and customers to approaches to energy asset valua-
developed as part of the integrated tion and cost recovery, new opera-
distribution system. Moreover, utilities voluntarily join the tional and market models are
with investment-grade credit ratings microgrid for service emerging in the electricity industry
and deep balance sheets would bring with advances in information pro-
easier access to low-cost financing, by contract. cessing technology, communication
making them logical partners in networks, and automated power
microgrid projects. systems. Collectively, these can be
Other physical microgrid models or referred to as smart grid technolo-
structures might emerge as they have already in some gy, big data analytics, and transactive energy (TE).
locations. Eventually, microgrids might be structured to Utilities in some jurisdictions are applying smart grid
also connect with each other and with other distributed and big data analytics technologies to optimize real-time
resources. In such scenarios, a common pooled resource system performance and guide system planning and
would emergei.e., a virtual power plant. investment decisions. These technologies and practices
At this stage, no single party would own the network lead toward a future in which system resources can be
business or control the markets growth and direction; an managed on a more granular, dynamic basis. While those
Internet-style model would emerge that would be capabilities serve traditional utility operational structures,
federally regulated, if regional, or state regulated within they also could enable a new market model to emerge in
the boundaries of a single distribution company. But ener- which retail energy consumption and supply decisions are
gy sale and purchase transactions could occur outside of driven by competitive market pricing through a combina-
the rate-regulated utility framework. tion of long-term contracts and spot- and forward-market
The ownership role of incumbent utility companies in bids and tenders.
such a scenario still bears scrutiny and remains to be Such a TE model could introduce market efficiencies
determined. In the short- and medium-term future, utili- and price transparency into an energy industry hereto-
ties occupy a strong position as effectively sole providers fore characterized by central dispatch methodologies
of retail electric and gas services, but creeping disinterme- and postage-stamp rate structures. Although those struc-
diation and new technology options will erode that posi- tures historically brought reliable service at affordable
tion over time. Whatever the market structure and prices, their ability to continue doing so is eroding in a
regulatory model, utilities increasingly will be forced to market characterized by flat load growth, rising costs,
compete with other types of service providers, including and increasing competitive pressure. TE architects
consumer services companies in IT, cable TV, telecommu- suggest that the transactive market model might be the
nications, financial, independent power, energy technolo- natural next step in the utility industrys evolution and,
gy, and related industries that offer more innovative arguably, it would be better suited to allocating the fixed
solutions and that demonstrate a better ability to assume and variable costs of service in an increasingly distribut-
entrepreneurial risk than the incumbent utility industry ed operating structure.
has shown. TE could factor into microgrid planning in two ways.
To the degree electric utilities choose to focus on pre- First, microgrids could demonstrate TE models in a micro-
serving and protecting a rate-regulated commodity busi- cosm, providing the opportunity to test automation and
ness with approved pass-through provisions, while other data processing systems and competitive energy market
companies are offering enhanced customer service with models in real time, and to gauge their ability to manage

34 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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energy sale and purchase transactions while maintaining continues and TE concepts are demonstrated and
reliable service. Second, microgrids and their asset compo- deployed in operating energy markets, they might support
nents could operate as part of a larger TE market, maxi- or complement the emergence of microgrids as efficient
mizing their cost-effective operation in a larger, deeper systems for deploying and managing resources. And ulti-
pool of resources that also are being traded in real time. mately they could offer visionary approaches for trans-
Moreover, the TE vision proposes a forming regulatory and operational
new electricity market structure that models to exploit the capabilities of
exploits new technology capabilities new DER technologies.
to enable the cost-effective, market- A microgrid could
based deployment of distributed qualify for federal or Microgrid Organizational
resources while resolving the disin- Models
centives, cross-subsidy concerns, state tax incentives Generally, three types of organization
and unintended consequences of entities are best positioned to
disruptive forces. for certain discrete finance and govern the microgrid.
Specifically, the basic principle of a elements of the Other organizational structures will
TE market is for customers and sup- likely follow with supportive federal
pliers to enter into long-term con- project. or state legislation.
tracts or subscriptions for fixed
quantities of electricity services (ener- EIDs
gy, distribution, and transmission) for Energy or special improvement dis-
fixed payments. Then, automated agents and devices act- tricts are organizations with one or more energy users
ing for customers would buy and sell electricity services as enabled by state and local laws to self-generate and dis-
market prices and customer needs change. tribute power for both heating and cooling services. The
The TE idea is simple, with familiar analogs in wholesale initial customer for a microgrid could choose to be the
commodities markets, where participants enter long-term sole participant in the EID or add other neighboring partic-
contracts to secure commodity supply and transport capac- ipants to optimize microgrid efficiency and capacity utili-
itye.g., natural gasand then engage in spot-market and zation. The EID is formed for the following reasons:
forward trades to manage fluctuating needs and price [ It enables the initial customer and other participants
exposure. The TE model is foreign to the utility industry (if any) to capitalize the microgrid with the same cash
because historically the industry has been designed and flows already allocated for traditional gas and electric
operated under a strict central dispatch model with regulat- service. The initial customer and each EID participant
ed cost-of-service rates. would sign an ESA to purchase a specific quantity of
Market pricing within a central dispatch model has electric, heating, cooling, and energy management
been less than satisfactory, especially in competitive retail services from a microgrid company. This operates
markets, largely because end users can only make energy much like a performance contract. If structured as an
purchase decisions. They cannot sell their energy or operating lease, the ESA could avoid a liability on the
capacityor that ability is severely constrainedleaving balance sheet.
market power in the hands of the central dispatcher. Par- [ It allows legal access to electric power from both the
ticipation in such central-dispatch markets is complex new microgrid and existing grid sources.
even for the largest customers. [ It enables low-cost regulation as a municipal or coopera-
Also, the TE market model has been impeded in part tive utility.
because storing electricity is expensive, and a key feature
of most commodities markets has been the ability to store Private Equity DBOOT
supply resources. However, the need for storage becomes In a private equity DBOOT structure, the company uses
less important in a system where market resources can be private equity funding to design, build, own, operate, and
dispatched or curtailed very quickly, virtually in real time; transfer the microgrid. The DBOOT structure enables the
where resources are increasingly modular and distributed; participants to monetize federal tax credits, reduce com-
and where information processing power is sufficient to munity and energy user exposure to project risk, avoid
manage the real-time dispatch of localized resources any liabilities on their books, and add a valuable asset to
through competitively priced transactions. the community infrastructure once the company achieves
TE concepts and standards are being discussed and payback. Especially when combined with PACE financing,
developed through such organizations as the GridWise this model offers substantial potential.
Architecture Council, the Harvard Electricity Policy Group,
the Open ADR Alliance, the Organization for the Advance- Microgrid Operating Company
ment of Structured Information Standards, and the Smart A microgrid operating company is commissioned to
Grid Interoperability Panel (SGIP). As such development design, build, and operate the microgrid for the end users

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 35

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TABLE 1. Microgrid Revenues, Costs, and Expenses.

Revenue Sources Capital and Development Costs Operating Expenses


A microgrid services fee can be assessed Capital cost for procurement and instal- Costs of fuel for generation
to all participants in the system for its lation of on-site CHP systems, solar PV systems, with associated hedging
management, operation, and maintenance. arrays, storage capacity, and thermal arrangements.
energy conduits, etc., and their associ-
ated rights of way and permits.
Payments for power and thermal energy Capital costs and licenses for microgrid Operational costs, such as salaries
sales (especially for CHP systems) can energy management and control sys- of management and operational
consist of fixed or variable rates per tems and software. employees of the system, expens-
kilowatt hour, shared savings payments, or es of physical premises of company
some combination of the two. (rent), and fees for professional
advisors to the operator (accoun-
tants, attorneys, etc.).
If a customer desires ultrareliable power, it Fees of professional consultants in the Fees of consultants and subcon-
can be provided under a special ultrareli- development phase, such as engineers, tractors employed to support
ability tariff as a premium service. financial advisers, attorneys, permitting operation and maintenance of the
specialists, and financial placement system.
firms.
Payments from building owners for the Capital costs of protective relaying A management fee for the manag-
installation of energy-efficiency measures, needed for interconnection, costs for in- ing general partner or operating
such as upgrades of HVAC systems and terconnection and transmission studies manager.
lighting and installation retrofits, can con- for connecting microgrid systems to the
sist of fixed payments for services and utility grid, and for possible upgrades to
shared savings incentives. Grants from utility substations for standby power and
state and federal agencies also might be fault protection.
available.
Payments from third-party customers for Capital cost of equipment needed to Standby service rates to be paid to
thermal energy for heating and cooling implement energy-efficiency measures, the central grid for providing backup
if they wish to be connected to a district such as new boilers, chillers, lighting, power.
energy system. and insulation, and fees of service
providers.
Incentive payments from government agen- A financing fee payable to the managing Insurance premiums, including for a
cies and private foundations. general partner or operating manager in new insurance product coupled with
connection with a successful raising of ultrareliable power covering busi-
capital. ness losses in the event of power
loss (which is much less likely with
reliable on-site
generators).
Sales of renewable energy credits, emis-
sion allowances, or emission reduction
credits where applicable.

Source: Minnesota Microgrids: Opportunities, Barriers, and Pathways Toward Energy Assurance, Figure 4-1, p. 70.

or community under what is effectively a concession or to support adequate cash flow. These revenues, and their
operating agreement. Mechanisms and contracts used in integration in firm ESAs, will provide the critical frame-
cases 1) and 2) in the Microgrid Revenues and Expenses work for accessing third-party capital in microgrid project
section could also apply in a commissioned microgrid. financing structures.
Planning and building a microgrid will require capital
Microgrid Revenues and Expenses investments, start-up spending, and ongoing expenses.
The value stream from microgrids is critical to generating These need to be accurately reflected in modeling. Table 1
revenues to retire debt service. Two sources of value arise outlines several examples of potential microgrid revenue
from: 1) the benefits provided by the specific DER applica- streams and categories of expenses.
tions that are used within a given microgrid and 2) the
additional benefits created by the unique attributes and Attracting Third-Party Capital
geographic location of the microgrid. A microgrid could qualify for federal or state tax incentives
Several potential sources of revenue can be developed for certain discrete elements of the project. These include

36 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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policy provisions and incentives for renewables, energy effi- Treating microgrids as infrastructure investments will
ciency, energy storage, demand-side management, and CHP. allow developers to begin accessing broader and deeper
A commercial focus to the microgrid opportunity will be pools of funds, including bond financing. Numerous possible
appealing to third-party developers because it will provide structures can be explored and exploited for specific projects,
more effective access to private capital markets for microgrid including public benefit funds, such as Xcel Energys Renew-
hosts or government entities. Without such a business orien- able Development Fund; PACE loans and loan-loss funds;
tation, effective microgrid development will depend on direct tax-equity pooling matched with bonds for debt; establishing
funding by microgrid hosts, such as universities and public new asset classes for infrastructure, especially to attract
agencies, as well as utilities. The host-funding approach will investment by pension funds; credit enhancement with
restrict implementation and introduce uncertainties that bond financing; regional bond banks; special bonding for
will constrain microgrid applications. Critical support among microgrids; statewide pools; and project or contract aggrega-
a handful of states will also foster better market penetration tion. Credit enhancement will be key to reducing the risk of
with access to capital. Minnesota has tools to show development. This will increase the credit rating of a project,
leadership for microgrid development. which reduces the cost of debt capital
Critical to financing success will be for financing.
an understanding of both the costs and Congress is also considering leg-
sources of economic value that
Critical to financing islation (the Master Limited Partner-
microgrids can provide. Historically, success will be an ships Parity Act) to extend master
projects offered emergency services and LPs (MLPs) to renewable energy
little more. They were not integrated or understanding of assets. MLPs help project developers
interconnected with the grid and gener- and investors avoid double taxation
ally have served only a single facility. A
both the costs and and thereby attract capital at lower
more modern, integrated microgrid will sources of economic costs. MLPs generally are publicly
provide secure sources of power with traded entities that operate like a
high levels of quality and reliability value that microgrids corporation but do not pay corpo-
through a combination of on-site gener- rate income taxes. After raising cap-
ation, storage, distribution, and energy
can provide. ital in the public markets, MLPs
management technologies. Microgrids distribute the income to sharehold-
that make the most of each of these val- ers, who pay taxes at their personal
ues, and exploit the full range of revenue streams and incen- income tax rate.
tive opportunities, will be in a better position to attract Whether microgrids could qualify for MLP treatment will
third-party financing, especially if they consolidate them in depend on the legislative outcome as well as development
easily understood financial analysis. approaches that structure projects specifically to qualify. The
Moreover, the best financing opportunities might be opportunity for microgrids might be substantial as it would
obtained by combining multiple microgrid projects togeth- create opportunities to access new investment pools.
er into a portfolio. While an individual microgrid project
might be too small to attract interest from private equity Minnesota Incentives
and institutional investors, for example, a group of Minnesota has tools to offer upon review that could
microgrids could achieve the scale needed to raise cost- provide support or credit enhancement value to
effective financingmost likely through a secondary-mar- microgrids. Minnesota has enacted a system benefits
ket transaction after most or all of the assets are chargevia the Xcel Energy Renewable Development
operating. Such a microgrid portfolio YieldCo could even Fund, established in 1999 in legislation authorizing
provide opportunities to raise equity or debt financing in Xcels on-site storage of spent nuclear fueland legisla-
public markets. tion to facilitate PACE bonding (H.F. 2695 and H.F. 3729).
Minnesota is one of 15 states, along with Washington,
Federal Incentives D.C., and Puerto Rico, that have public benefits funds for
Existing financing strategies are being adapted and imple- renewablesprojected to offer in the aggregate nation-
mented to accelerate access to funding under clean energy wide US$7.7 billion by 2017. Minnesota raised US$19.5
finance requirements for federal, state, and local financing. million in 2012 and offered in the aggregate US$339 mil-
Several tools are emerging that can benefit microgrids, lion from 1999 through 2017. The Minnesota fund does
especially as the clean energy sector seeks alternatives to not have a current expiration date. One microgrid proj-
traditional tax-equity funding. Historical reliance on tax ect advocated by the University of St. Thomas was con-
equity-driven structures has yielded one-off deals with ditionally selected for funding under the latest Xcel
high transaction costs and has subjected the renewable Energy Renewable Development Fund solicitation pro-
energy industry to feast-and-famine cycles that have hin- cess. Clearer guidance on how future funding will be
dered rational long-term success. allocated by the state could help microgrids access

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these resources. Future additions to the funds could be property to qualify for PACE financing. A broader defini-
allocated to microgrid projects, and other funds could tion of eligible property or improvements would also rec-
be sourced from financial penalties assessed by the ognize that microgrids favor no specific technologies but
Minnesota Public Utilities Commission for utility non- instead focus on performance and results. They should
compliance under Minnesota renewable portfolio stan- not be penalized for access to financing as a community-
dards (RPS) policiesif and when Minnesota utilities based energy system that links multiple clean energy
fall short of RPS goals. resources to multiple properties (building or owners).
PACE financing allows property owners to borrow
money from newly established munici- Win-Win Scenarios
pal financing districts to finance efficien- In states where microgrid develop-
cy and renewable energy measures in ers are pursuing project opportuni-
retrofit projects. The loan is repaid Energy project ties, the lack of win-win business
through an annual special tax, which is models for microgrid users, other
usually assessed on property owners development utility customers, and utility com-
real estate tax bills. Minnesota enacted companies will pany shareholders often prevents
legislation (H.F. 2695) in 2010 that allowed projects from moving forward. Util-
cities, counties, and towns to offer PACE likely contribute the ity disincentives create a powerful
financing programs. These loans provide barrier, and utilities wield potent
for energy conservation improvements,
equity investment tools for preventing or delaying
including upgraded heating, ventilation, necessary to microgrid development such as
and air conditioning (HVAC) equipment uncertain and excessive intercon-
and investments in renewable energy complete the design nection study requirements. How-
systems. On-demand bond-financing ever, developers in a few states are
structures are provided for smaller proj-
of the microgrids finding microgrid use cases that
ects, and pooled or interim financing and act as the clearly demonstrate safe, affordable
structures are being developed. Subse- islanding while providing net bene-
quently in H.F. 3729, Minnesota allowed a general partner of fits to utility customers and share-
local government to designate another holders. This is particularly true in
authority as an implementing entity to
an LP or company. the case where existing DG systems
implement a PACE program. that cannot island to provide unin-
Clarification for microgrids is start- terrupted power during utility out-
ing to appear, while implementation issues are being ages can be retrofitted with new interconnection
ironed out. PACE tools are critical for microgrids in Minne- technology and reconfigured as microgrids.
sota as they offer very low or zero risk of loss. Property tax Several Minnesota utility companies have expressed
liens are senior to mortgage debt, with 97% of property interest in exploring win-win models. One example is
taxes current, and losses on PACE loans currently total less the buy-all, sell-all proposal advanced by Xcel Energy.
than 1%. PACE financing is beneficial to the community as Such models offer promise, assuming that the valuation
it promotes local job retention and creation while impos- models are successfully developed to implement such an
ing no credit or general obligations risk. approach. Quantifying win-win benefits will depend on
The St. Paul Port Authority recently approved the issu- utility companies contributing data about the marginal
ance of almost US$10 million in revenue bonds for PACE cost of grid power at particular times and places.
financing. The authority will issue the bonds to finance However, such win-win models are meaningless with-
loans to cities throughout the state for projects to boost out projects to implement them. Microgrids and other
efficiency or install renewable energy systems. This DERs are novel and disruptive technologies, and main-
financing builds from the Trillion BTU Program, in which stream demand is not likely to emerge organically
Xcel Energy and a local nonprofit have teamed up to fund especially in the face of arrayed challengeswithout pilot
energy retrofits in commercial buildings for heating and projects by first adopters. As with other disruptive
lighting. These bonds have a repayment term of 20 years, technologies, such as peer-to-peer computing and even
and their issuance represents one of the first PACE financ- the Internet itself, some states are finding that universities
ing transactions in Minnesota since 2010. and the U.S. Department of Defense make ideal first
Working with local governments in establishing EIDs adopters for microgrids. Other states, such as Connecticut
would be a logical step for microgrid development. The and California, are assisting local communities in energy
inclusion of district heating and cooling systems along assurance efforts that involve microgrid development. In
with microgrids as eligible community-based clean ener- each case, pilot projects require supportive organizations
gy systems would be an important next step. This would and governments to help resolve complexities and craft
allow for equipment that is not permanently fixed to the win-win models.

38 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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Finally, as projects emerge, market M. A. Hyams, A. Awai, T. Bourgeois,


penetration will improve with a
The best financing K. Cataldo, S. A. Hammer, T. Kelly,
microgrid governance structure that opportunities might S. Kraham, J. Mitchell, L. Nurani, W.
enables multiple users to manage Pentland, L. Perfetto and J. Van Nostrand.
shared energy investments as an be obtained by (2010, Sept.). Microgrids: An assessment
infrastructural commons. Like many of the value, opportunities, and barriers
other states, Minnesota has already
combining multiple to deployment in New York State, final
begun activities within EID structures. microgrid projects report. Prepared for the New York State
A cooperative approach involving EIDs, Energy Research and Development
local community leaders, utilities, and together into a Authority (NYSERDA). [Online]. Avail-
the state seems likely to result in a able: http://www.nyserda.ny.gov
win-win framework that serves utili-
portfolio. T. Stanton. (2012, October). Are smart
ties, rate payers, and microgrids alike. microgrids in your future? Exploring chal-
lenges and opportunities for state public
Acknowledgments utility regulators. National Regulatory Research Institute.
This article is adapted from Minnesota Microgrids: Opportu- [Online]. Available: http://www.nrri.org/documents/
nities, Barriers, and Pathways to Energy Assurance (Final 317330/896d162c-efe2-4a76-9ffe-30be1bc745bd
____________________________
Report), (30 Sept. 2013), prepared by a Microgrid Institute R. G. Sanders, L. Milford, and T. Rittner. (2013, Aug.).
team for the Minnesota Department of Commerce, Divi- Reduce risk, increase clean energy: How states and cities are
sion of Energy Resources. This material was based on using old finance tools to scale up a new industry. Clean Energy
work supported by the Department of Energy under award and Bond Finance Initiative. [Online]. Available: http://www.
number(s) DE-OE0000096. This project was made possible cleanegroup.org/assets/Uploads/2013-Files/Reports/CEBFI-
______________________________________
by a grant from the U.S. Department of Energy and the Reduce-Risk-Increase-Clean-Energy-Report-August2013.pdf
_____________________________________
Minnesota Department of Commerce through the Ameri-
can Recovery and Reinvestment Act of 2009 (ARRA). Biographies
Michael T. Burr (mtburr@microgridinstitute.org)
_____________________ is the
For Further Reading director of the Microgrid Institute and editor-in-chief of
M. T. Burr, M. J. Zimmer, G. Warner, B. Meloy, J. Bertrand, Public Utilities Fortnightly.
W. Levesque, and J. D. McDonald. (2013, Sept. 30). Minnesota Michael J. Zimmer (zimmerm@ohio.edu)
_____________ is the Wash-
microgrids: Opportunities, barriers, and pathways to energy ington counsel for the Microgrid Institute and executive-
assurance (final report). Microgrid Institute for the Minnesota in-residence at Ohio State University.
Department of Commerce, Division of Energy Resources. Guy Warner (gwarner@paretoenergy.com)
__________________ is the founder
[Online]. Available: http://www.microgridinstitute.org/ and CEO of Pareto Energy LLC.
resources.html
_________ Brian Meloy (Brian.Meloy@leonard.com)
_________________ is a partner of
R. L. Dohn. (2011). The business case for microgrids: The Leonard, Street, and Deinard.
new face of energy modernization, white paper, Siemens James Bertrand (james.bertrand@leonard.com)
____________________ is a
AG. [Online]. Available: http://www.energy.siemens.com/us/ partner of Leonard, Street, and Deinard.
pool/us/energy/energy-topics/smart-grid/downloads/The%
______________________________________ Walter Levesque (walter.levesque@dnvkema.com)
______________________ is
20business%20case%20for%20microgrids_ Siemens%
_______________________________________ the microgrid director, DNV GL.
20white%20paper.pdf
_____________ John D. McDonald (johndougmcd@gmail.com)
__________________ is the
U.S. Department of Energy. (2013, Apr. 29). DSIRE: Data- chair of SGIP 2.0, Inc. He is a Fellow of the IEEE.
base of State Incentives for Renewables & Efficiency. [Online].
Available: http://www.dsireusa.org/incentives/incentive.
cfm?Incentive_Code=MN09R&re=1&ee=1
__________________________

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 39

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By Michael Roach

Meeting climate goals, enhancing


system resilience, and stimulating
local economic development.

OMMUNITY POWER HAS BEEN A PART OF OUR ENERGY INFRASTRUCTURE


for as long as investor-owned electric utilities. These small community utili-
ty companies often originated from local hydropower resources or were in
rural areas that for-profit utility companies did not want to serve because of
the high cost of the infrastructure relative to demand.
Today, most of these traditional community power utilities operate on a not-for-profit
basis, and, just like for-profit electric utilities, they strive to provide reliable, safe, and rea-
sonably priced electricity to their communities. Although demand is minor in community
power markets compared to large urban centers, local demand has grown beyond the
capacity of local generation sources so these utilities must purchase power in bulk elec-
tricity markets.
To improve their negotiating position, many of these small utilities have joined suppli-
er aggregators to receive better long-term prices and availability. Some of these

Digital Object Identifier 10.1109/MELE.2013.2297011 HANDS COURTESY OF STOCK.XCHNG/MICHELINI.


Date of publication: 18 March 2014 BACKGROUND COURTESY OF WIKIMEDIA COMMONS/ELECTRIC SHEEP.

40 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 2325-5987/14/$31.002014IEEE

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aggregators, e.g., WPPI Energy, own generating facilities Pressures Changing the Old Paradigm
and acquire electricity through power purchase contracts. An individuals values and actions, when aggregated with
Their generation mix mirrors that of conventional utilities, other people, express themselves in two forms: consumer
with coal and nuclear supplying the bulk of the power and demand for products and services and voting behavior for
wind power augmenting the supply where it is available. all levels of government. Consumer demand creates bot-
Distributed resources usually do not factor into their sup- tom-up pressures for change, and political choices create
ply chain. topdown legislative and executive pressures. When one
This article looks at the potential of a new paradigm of pressure does not work, sometimes the other does. Some-
community power organization that still remains locally times they work together: in conjunction with external
controlled and focused on serving community energy needs geopolitical events, they create pressure for changes that
but avails itself of the latest distributed energy resources were once thought impossible or not even imagined, espe-
(DERs), enabling distribution technologies and market mech- cially in the power industry.
anisms to develop a local energy system that is more sustain-
able, more secure, and that generates more tangible From Protests to Sustainability
economic benefits for the community. The political and consumer pressures to create a new energy
An essential tool to implement infrastructure paradigm to better serve
this new paradigm is Consortium for community needs can be traced back 40
Electric Reliability Technology Solu- years to the seminal year of 1973. In Jan-
tions (CERTS) microgrid technology, A fleet microgrid- uary of that year, the United States and
which generates power and heat Vietnam finally signed a cease-fire to the
from DERs, manages loads, main- enabled distribution long-running war and, by March, the last
tains stability, and goes into island U.S. troops had left Vietnam. In the Unit-
mode when the main grid goes into
system may increase ed States, after the end of the war, the
fault and then resynchronizes auto- the short-term LCOE massive social movement that opposed
matically. To date, most CERTS the war disaggregated and people
microgrids have been designed for while at the same moved on to more personal paths. In the
single-facility-level operation. We can late 1970s and 1980s, the antiwar politi-
envision three types of CERTS
time bringing cal movement and its counterculture
microgrids: counter-balancing transposed into lifestyles of health and
1) energy assurance microgrids : sustainability (LOHAS).
cover critical loads (3060%) local economic Many people went on to apply the
2) energy independence microgrids: critical social change ideas and organi-
cover 100% of loads
benefits. zational techniques that they learned
3) revenue microgrids: cover 100% during Vietnam War protests to domes-
of loads plus considerably more tic sectors such as the food industry,
capacity (100300%) to sell excess power in different health care and medicine, automobile efficiency and safe-
value streams into local distribution systems. ty, environmental issues concerned with air and water
This article presents an overview of the pressures leading quality, and consumer product life cycles. By the 1990s,
communities to examine a new energy paradigm and out- these disaggregated LOHAS movements focused on the
lines a rough framework on how a fleet of revenue concept of sustainability to unify what they learned into
microgrids could be used to provide different services for a concepts and practices that brought tangible benefits to
municipal-owned distribution system. Elements of this new consumers, businesses, and government. Today, sustain-
community power paradigm include: ability concepts and practices are embraced by many busi-
1) capacity assessment for local generation and reconcili- nesses and governments around the world.
ation with distribution system planning goals
2) standardizing microgrid project engineering, procure- Oil Embargo of 1973 and Growth of Nuclear Power
ment, construction (EPC), and interconnection. Another series of events in 1973 changed forever the con-
3) integrating fleet microgrids with advanced distribu- cept of energy security around the world. When Egypt and
tion management and power control systems Syria invaded Israel on the Yom Kippur holiday, a ferocious
4) interfacing microgrid secondary control networks for war ensued that only lasted a few weeks with Israel even-
power dispatch tually defeating its opponents. The aftermath of the war
5) establishing distribution-level transactive markets for had an enormous impact on world energy markets. Dur-
energy pricing and settlement ing the war, the United States and the Soviet Union resup-
6) developing an integrated financial model that links plied their respective allies. This American foreign policy
microgrid project development, energy micromarkets, action led the Organization of Arab Petroleum Exporting
and distribution system operations. Countries to proclaim an oil embargo against the west and

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 41

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the United States in particular. Petroleum prices shot up, in the electric generation industry, utility executives and
and gasoline shortages ensued. Politicians faced almost the national security establishment pushed through a
unbearable pressure to do something and do it quickly. plan to massively scale up the installation of nuclear
Strategic oil reserves were called into play, and rationing power stations to a one-year record of 41 new plants.
was instituted to spread out supplies and buy time. (Most of the plants built during that time are still in oper-
Concerted efforts were made to revive domestic oil ation today.) The public was endlessly reassured that the
production, especially offshore wells. plants would be built and operated absolutely safely. Citi-
The war and the resulting oil embargo forced zens were told that the risk of incidents or a major catas-
unintended changes in other sectors of the U.S. economy. trophe was so remote that the public did not need to
The golden age of gas guzzlers for the American auto- worry at all.
mobile industry came to an abrupt end. Consumers Only six years later, on 28 March 1979, those absolute
began to demand more fuel-efficient vehicles. Compact assurances proved unwarranted when the Three Mile
cars, mostly foreign manufactured, entered the American Island (TMI) nuclear plant in Pennsylvania experienced a
market in increasing volumes and retained large market major accident and a radioactive release. Although the
shares to the present day. incident was contained and a general evacuation was not
Another industry that was profoundly changed was called, the emergency evacuation plans proved to be total-
the power industry. Although petroleum was little used ly inadequate. After TMI, the American public no longer

Brunsbttel
Brokdorf Greifswald
Krmmel
Unterweser

Emsland Gorleben

Konrad
Grohnde
Ahaus Moresleben
Asse

Jlich
Name of the Facility
Nuclear Power Plant
Grafenrheinfeld
Major Interim Storage Facility for Spent Fuel
Biblis
Mitterteich Major Interim Storage Facility for Non-HGW
On-Site Interim Storage Facility
Philippsburg
Neckarwestheim Final Disposal Facility for Non-HGW

Isar Former Final Disposal Facilities


Karlsruhe Gundremmingen

Figure 1. German nuclear facilities. (Image courtesy of ________


picstopin.com.)

42 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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passively trusted the nuclear power industry and the con- the Chernobyl disaster made many German citizens ask a
struction of new plants ceased in the United States. more fundamental and worrisome question: What would
happen to their small country (approximately the size of
German Path to Renewable Power Integration New Mexico with a 1986 population of more than 77 mil-
In Europe, after the 1973 oil embargo, the energy security lion) if a nuclear catastrophe of Chernobyl scale happened
push to build a huge fleet of nuclear power plants for within their borders rather than 1,000 km away?
baseload power proceeded as it did in the United States, German citizens of all political stripes now looked to
especially in France and Germany (Figure 1). When Ger- other sources for energy security. Domestic coal, both lig-
many was ramping up its nuclear power plant fleet, the nite and hard-to-reach hard coal, were available but very
campaign encountered strong opposition from many local expensive without large government subsidies. European
communities, especially with regards to the safety of oper- Union (EU) courts forced the eventual removal of those
ating plants. This opposition to the siting of nuclear plants subsidies. Natural gas supplies were not available domes-
led local community leaders to start reassessing their tically so Germany had to turn to the Soviet Union and
local energy infrastructure and energy resource mix. Norway for supplies but at considerable economic cost
On 26 April 1986, during a routine system test, reactor and political risk.
number four of the Chernobyl plant on the border of the The only alternative to fossil fuel supplies for Germany
Ukraine and Belarus experienced a series of failures that was renewable energy, a technology and industry still in its
led to the largest nuclear power accident in history. The cas- infancy. R&D programs and small pilot programs were
cading events resulted in a fire of the graphite moderator, launched to test the feasibility of developing a domestic
and the resultant plume spread radioactive particles across renewable energy industry and integrating large-scale wind
Russia and western Europe for months (Figure 2). More and solar into the resource mix of electricity generation.
than 350,000 residents surrounding Chernobyl had to be In 1990, the Bundestag passed the Stromeinspeiegesetz
permanently evacuated and relocated. (StrEG), the first feed-in law, with support from all parlia-
In the United States, the Chernobyl disaster was a mentary factions. The law mainly benefited small hydro-
major media event that TV viewers watched with fascina- power producers in southern Germany and wind power
tion but with little real danger. In Germany, the danger companies in the north. From 1990 to 2000, wind power
was much more tangible, and the reaction was more capacity increased almost 1,000% from 68 MW to more
visceral. Low-level radiation clouds swirled over Germany than 6,000 MW (Figure 3). Under the StrEG, solar power
all the way to the French border. German citizens were only received 10% of production costs and languished.
warned not to consume milk, wild game, and vegetables. Throughout the 1990s, vested interests waged a massive
Although low-level radiation was their immediate worry, campaign to derail the program through legal challenges,

Radiation from Chernobyl

KiloBecquerels (KBq) Per Square Meter


More than 1,480
1851,480
40185
1040
210
Fewer Than 2
No Data
Chernobyl Plant

0 500 1,000 km

Figure 2. The radiation from Chernobyl. (Image courtesy of GRID Arendal.)

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 43

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Verteilung von Windkraftanlagen participate with large-scale projects;


in Deutschland (2007) there was an automatic decrease of
Installierte Leistung rates going forward; there would be a
< 3 MW review every four years to revise rates
310 MW depending upon technological
1030 MW improvements; and additional costs
> 30 MW
SH of the program were to be spread
Hamburg MV
across all utilities. The last remaining
obstacle disappeared when the Euro-
pean Court of Justice ruled that feed-
NI in tariffs did not constitute state aid.
During the first decade of the 21st
Berlin century, Germany embarked upon a
BB
massive technological effort to ramp
ST
up its manufacturing capacity for
solar and wind while simultaneously
striving to drive down costs. Germany
SN became a global leader in both tech-
NW
HE nologies. In the northern parts of
TH Germany with high wind power
resources, some communities own all
RP
or a part of the wind turbines. Some of
the areas where rooftop solar is com-
bined with local wind power have
become net energy exporters.
SL
The key to Germanys success
was not merely its engineering and
BY manufacturing prowess but also its
BW financial acumen. The national feed-
Mnchen in-tariff that was instituted drove
the ramp up of installations at a
phenomenal pace while also reduc-
ing costs. The success of the German
0 100 km
feed-in-tariff model continues to be
Figure 3. The high penetration of renewablesGerman wind farms. (Image courtesy of the an energy policy that other countries
German Wind Power Association.) have tried to emulate.
In 2010, the German government
published their plan for the Ener-
parliamentary maneuvers, and bureaucratic obstacles, but giewende, which means energy transition (Table 1). The ener-
the renewable energy program slowly took hold and began gy transition program directed the country away from
to grow because of continued efforts of the burgeoning nuclear and coal to renewables over a 40-year schedule.
renewable energy industry and grassroots campaigns by On 11 March 2011, the Fukushima Daiichi nuclear disaster
citizens. Over the years, the economic growth benefits and occurred in the wake of the tsunami created by the
the emerging export market convinced more people to Tohoku earthquake. This was the largest nuclear disaster
support the program. in history since Chernobyl. Three months later, in June
In 1998, after 16 years out of office, a coalition govern- 2011, the German Parliament, in an almost unanimous
ment of the Green Party and Social Democrats took over vote of ruling and opposition parties, confirmed Germa-
and set new goals for the percentage of renewable energy in nys long-range energy transition to renewables.
electricity production: 12.5% by 2010 and 50% by 2050. They
passed the 100,000-roof program that offered low-interest Technical Challenges of Integrating
loans for photovoltaic (PV) development. They then worked High-Penetration Renewables
to reform the original 1990 feed-in law through the Erneuer- The tremendous growth of renewable energy in Germany
bare Energie Gesetz of 2000. Reforms included: rates were brought with it many challenges, especially technical issues
fixed for 20 years (which increased investor confidence); over grid stability, price volatility in wholesale electricity
rates were different for various sources, size, and location; markets, and disruptions of the business model of investor-
rates increased (especially for solar); utilities were eligible to owned utility (IOU) companies.

44 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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TABLE 1. The Status Quo and the Main Targets of the Energiewende.

2011 2020 2030 2040 2050


Greenhouse Gas Emissions
Greenhouse gas (versus 1990) 26.4% 40% 55% 70% 90%
Efficiency
Primary energy use (versus 2008) 6% 20% 50%
Electricity demand (versus 2008) 2.1% 10% 25%
Heat in residential sector n.a. 20%
Energy use in transport (versus 2005) 0.5% 10% 40%
Renewable energy
Share in electricity consumption 20.3% 35% 50% 65% 80%
Share in final energy use 12.1% 18% 30% 45% 60%
Source: Agora, 12 Insights on Germanys Energiewende.

Both wind and solar technologies were intermittent by sit idle and their return on investment plummets. This
nature, but geographical dispersion in Germany mitigated profitability decline has severely impacted the financial
some of their variability. On excellent days, wind and solar condition of German utility companies.
provide up to 40% of the national demand. On dark and
dreary days with little wind, traditional fossil fuel generators Changes in German Utility Business Model
need to be brought back online to maintain stability in the The global investment banking and credit rating commu-
grid. Unfortunately, many of the power plants providing this nity monitors the German utility market closely. Their
capacity were never designed for such erratic rates of cycling. recent assessments have been very pessimistic. Citibank,
Most of Germanys wind potential is in the northern part UBS, Deutsch Bank, and Moodys have issued a series of
of the country, and the best solar irradiation is in the south- reports documenting this decline of the industry.
ern part. Another technological solution to the intermitten- Seeing the writing on the wall, RWE (the second largest
cy of these renewables and their geographical dispersion is German utility company) has decided to change its business
to firm up their power via virtual power plants (VPPs). VPPs model as a result of the high penetration of renewable ener-
were originally developed to aggregate small DERs into a gy technologies and their disruptive impact on wholesale
large enough capacity so that they could participate as a electricity markets. RWE plans to transform from a tradi-
single unit in wholesale electricity markets. tional electricity provider into a renewable energy service
VPPs are designed to aggregate DER sources from a provider, helping to manage and integrate renewables into
widely dispersed region or even Germany as a whole. This the grid. EON, the largest utility in Germany, looks like it is
wide dispersion helps to somewhat mitigate local weather now following the RWE path. No American utilities have fol-
conditions. For additional firming, biogas is the preferred lowed RWEs lead.
energy source to fire gas turbines.
VPPs depend upon high-speed information and control Energy Policy Quagmire
technology for both primary and secondary control. This in the United States
dependency upon information networks introduces both In the United States, over the last year, energy policy wonks
an operational and security risk. VPPs are designed to and electric utility professionals have been in a frenzy con-
always be grid-tied and to be dispatchable (like any other templating the potential death spiral of IOUs due to the dis-
utility generator source) from utility network control cen- ruptive effects of large-scale integration of renewables and
ters. Numerous pilots are underway to prepare VPP tech- microgrids. A multitude of solutions have been developed
nology for large-scale ramp up such as the Combined to assist the utilities to restructure their business models
Power Plant that links 36 geographically dispersed wind, and progress into the smart grid of the 21st century.
solar, biogas, and hydro facilities into a VPP. Most IOUs have been highly resistant to embracing high
On good days, the displacement of peak demand by penetration levels of renewable energy and adjusting their
renewable energy generators has created havoc in the tra- business models to facilitate the transition to a low-carbon-
ditional wholesale energy markets. Many fossil fuel peak- generation fleet. In advance of a larger fight against
ing plants depend upon a very limited number of hours of microgrids, many utilities are currently fighting the
operation per year at very high rates of remuneration. onslaught of DERs, especially solar PV, through contentious
When the wind blows and the sun shines, peaker plants battles over net energy metering (NEM) and dragging their

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 45

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heels on renewable portfolio standards In Europe, climate leaders are seeking new solutions for
(RPSs). The Edison Electric Institute rec- their energy future that are not
ommended a range of counter- change responsibility dependent upon national politics or
measures, including instituting new incumbent utility companies.
monthly service charges on all tariffs to
has been embraced In Europe, climate change responsi-
recover costs, developing new (punitive) and national climate bility has been embraced and national
tariffs for DER customers, restructuring climate and energy policies have been
net energy metering to pay out at and energy policies designed and implemented. A decade
wholesale rates rather than at retail as ago, the EU mandated greenhouse gas
is the current practice, adding stranded
have been designed reductions for all member states. Most
cost charges to customer bills, making and implemented. EU members have been able to meet
customers pay in advance for new the standards on schedule.
assets, and factoring in charges for dis- In the United States, at the federal
ruptive forces in requested rates. level, climate change policies have only
At the federal level, the lack of a national energy plan been possible by federal and state executive action. Con-
leaves the United States energy future to long, drawn out gressional obstructionism has left a policy void, and real
political and legal battles that squander precious time and change is left up to local community leaders. Communities
allow other countries to overtake the United States competi- across the United States are starting to respond to this vac-
tive advantage in intellectual property and new energy tech- uum of leadership.
nologies.
In Congress, Tea Party members and their Republican col- FLEET MICROGRID PARADIGM
leagues allow even simple bills on energy efficiency to be
killed or delayed indefinitely. It appears that passage of any The Energy Future Plans of Boulder, Colorado
bills to fight climate change are totally out of the question for One community that has taken leadership in gaining con-
years to come. The Obama administrations only alternative trol over its energy future is Boulder, Colorado, a town of
to congressional energy and climate policy intransigence is more than 100,000 people in the foothills of the Rocky
to push executive actions that do not require congressional Mountains. Beginning in 2002, the city council passed a
approval, such as the Environmental Protection Agency (EPA) resolution with the goal of reducing the communitys
restricting pollutants from electricity generating plants. Even greenhouse gas emissions to 7% below the levels of 1990.
these actions will be attacked politically and legally. In 2006, voters approved a Climate Action Plan tax to
fund programs to meet their Kyoto emission reduction
Crisis Management for Superstorm Sandy goals. The programs included residential and commercial
Superstorm Sandy created devastating damage across energy efficiency, especially lighting and energy audits;
the northeastern United States on 29 October 2012. The ramping up solar installations; diverting more than 40%
storm left an enduring legacy: indelible images of com- of waste into composting and recycling; and reducing
munities ravaged by massive flooding, almost unac- vehicle miles. However, no matter how much they tried to
countable property damage from water and fire, use their energy as efficiently as possible, they could not
extended loss of power and essential services, lower meet their 2012 Kyoto greenhouse gas emission reduction
Manhattan in nearly complete blackout, and utility com- goals because of something apparently outside of their
panies and political leaders with no credible alternatives controlthe energy mix they received from their legacy
when future storms strike again. utility company.
Since the storm, state and local political leaders, under Xcel Energy serves Boulder and communities as far
immense pressure from their constituents, are compelling away as Minneapolis, Minnesota. Although Xcel complies
utilities to come up with new ways to deal with the with the Colorado state RPS, it could not meet the Kyoto
ferocity of Mother Nature. The State of Connecticut has goals of Boulder because the Xcel energy mix included
instituted two rounds of bidding for vendors to supply 55% coal and 25% gas, and they could not (or would not)
microgrids for municipalities in the state. Projects are change that mix. This wall led Boulder to consider other
starting to roll out, but the utility business model is inca- options. From 2005 onward, the city commenced a series
pable of dealing with this situation other than by man- of public events and feasibility studies that analyzed
date. No structural changes are anticipated in the whether Boulder could municipalize the distribution
business model of utility companies servicing the state. assets of Xcel and determine their own energy mix.
In 2011, voters approved ballot initiatives to create a munic-
Climate Change as the Tipping ipal utility company if certain metrics were met including:
Point for Paradigm Change [ rate stability
Whether it is extreme weather events or the long-term [ service reliability
threat of global climate change, communities and their [ reduction of carbon emissions

46 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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local control of energy decisions


[ On 11 October 2013, a referendum
and maximum investments in
The success of the passed by a three-to-one margin to
local power. German feed-in-tariff create a new municipal utility that
During 2012 and 2013, additional was to be an energy services provider
feasibility studies were conducted to model continues to for Boulder customers, not just a com-
analyze the legal, financial, engineer- modity provider of fossil fuel energy.
be an energy policy
ing, and environmental issues to The new energy future for Boulder rests
move ahead with municipalization. that other countries upon the traditional business model
The City of Boulder and its consul- used by countless other municipalities
tants developed detailed models with have tried to and electric co-ops around the country,
various scenarios for demand and emulate. where distribution assets are locally
energy mix over 20 years. owned but energy is purchased in the
The five stages of the modeling bulk market. The is the same business
process included: model that Denton Municipal Electric
1) understanding how Boulder uses energy now and in (Denton, Texas) uses: 40% from the Wolf Ridge wind farm;
the future 50% from the Gibbons Creek coal plant; and the remainder
2) developing the options model that compared low- and from a landfill gas project and supply contracts through NRG
high-cost resource mixes with different amounts of Power Marketing LLC.
renewable energy Boulders variation is to purchase as much electricity as
3) identifying the best resource options possible from distant utility-scale wind farms and wheel the
4) determining overall costs energy through Xcels transmission grid. There is a finite
5) identifying and mitigating current and future risks, level (approximately 40%) to the percentage of wind power
including stranded and acquisition costs. acquired due to intermittency issues and the resulting grid
As a baseline, the 2010 aggregated city load profile was stability problems. To firm the wind power beyond 40%
used: requires either that Xcel balances the intermittency (with
[ load factor: 68% fossil generators) or Boulder uses a gas turbine plant. Either
[ peak demand: 236 MW in July way, fossil fuels remain a major component of the energy
[ base load: 116 MW mix and high levels (e.g., 80%) of renewables are not possible.
[ annual energy: 1,396,234 MWh Without a fundamental change in the business model
[ annual growth: 1.80% paradigm, even local ownership of distribution assets lim-
[ commercial and industrial (C&I) load: 82% its the ability of communities to pursue a low-carbon
[ C&I load: 1,114,986 MWh. future. The rest of this article examines a business model
In 2017, the first year of municipal operation, the Boulder paradigm in which distribution assets are owned locally;
model envisions a low-cost option with a resource mix of: DERs, especially microgrids, become the prime energy
[ 45% gas source; and the bulk power market is used only as a last
[ 35% wind supply resort or for selling energy services from the micro-
[ 13% coal grid-enabled distribution system back into the bulk power
[ 4% solar market just as demand-response programs have been
[ 3% hydro. doing for years.
The wind power in the mix would be purchased
through large contracted must-take power purchase Framework for Fleet Microgrid-Enabled
agreements balanced with natural gas for reliability. Solar Municipal Distribution
power would be funded through municipal finance at the We use Boulder as a conceptual framework for two reasons:
rate of US$3.5$7 million annually. This model assumes Boulder will own their distribution assets, and the city
[
that Boulder would have approximately 20 MW of solar distribution company, in coordination with Boulder
installed by 2017. The model projects that the city would internal departments, could set up expedited permit-
retain approximately US$24 million (in 2011 dollars) annu- ting and interconnection protocols that could speed
ally from operating the distribution system themselves. the time to market for microgrid projects and result in
Another option that the city considered is a Local- lower installation costs that, in turn, help to lower the
ization Portfolio Standard (LPS) for Electricity and Natu- help to lower the levelized cost of energy (LCOE).
ral Gas. This option is intended to meet or beat the Because of the many consulting studies that Boulder
[
incumbent energy economics, a difficult task given that has conducted in its due diligence to determine the
electricity is relatively inexpensive (US$0.943/kWh 2013) feasibility of municipalization, sufficient data are avail-
in Boulder. The LPS option focused primarily on demand- able to rough out a vision of a distributed generation
side resources including energy efficiency, conservation, system and how it could be integrated and managed
and residential and commercial demand response. by the distribution company.

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TABLE 2. The Boulder Private Building Inventory.

Size Category Number Bldgs Total ft2 Average ft2/Bldg % Total ft2 % Number Bldgs
Tier 1
Fewer than 1,000 69 35,344 512 0.1% 4.3%
1,0004,999 437 1,273,455 2,914 3.6% 27.0%
5,0009,999 340 2,449,221 7,204 6.9% 21.0%
Subtotal 846 3,758,020 4,442 10.6% 52.3%
Tier 2
10,00019,999 300 4,212,723 14,042 11.9% 18.5%
20,00029,999 173 4,198,069 24,266 11.9% 10.7%
Subtotal 473 8,410,792 17,782 23.8% 29.2%
Tier 3
30,00039,999 92 3,257,714 35,410 9.2% 5.7%
40,00049,999 57 2,540,362 44,568 7.2% 3.5%
50,000 and 150 17,390,654 115,938 49.2% 9.3%
above
Subtotal 299 23,188,730 77,554 65.6% 18.5%
Total 1,618 35,357,542 21,853 100.0% 100.0%
Data from Boulder County Assessors Records.

The first step in our framework involves looking at the The fundamental technological design advantage of the
total number of buildings in Boulder and the square feet CERTS microgrid technology is that the software algorithms
per sector (Table 2). In the 2010 baseline, the total private used to control individual DER units are embedded in the
and public square footage was 46,984,398 ft2. The pri- firmware of each DER unit at the manufacturing stage. This
vate sector accounts for 75.3% of the square footage approach allows the microgrid system to respond dynami-
(35,357,542 ft2) and 89.3% of the buildings (1,618). In the cally to balance the DER performance and load adjust-
following framework, we only use private sector data for ments without depending upon custom command and
the sake of simplicity. control software. CERTS microgrids eliminate command
Boulders C&I electricity annual demand is estimated and control system single points of failure and immensely
at 1,114,900 MWh (82%) of the 2010 total demand baseline simplify the design of microgrid projects, thereby providing
of 1,396,324 MWh. This level of C&I demand is significant- the basis to compress the economic value chain and reduce
ly above the national average of 62% C&I demand. Boul- project costs significantly over custom engineered systems.
ders higher level is attributed to a high number of The CERTS approach provides a solid basis upon which to
industrial process companies with higher energy intensity construct a new class of plug-n-play DER units, cost-
in their consumption. effective on-site facility microgrid systems, and the basis
for building out networks of coupled microgrids. Because of
Microgrid Fleet Generation Capacity and Rollout this lean and ultraefficient design, CERTS microgrids pro-
The microgrid fleet that we propose is a simple PV solar vide the most cost-effective choice of enhanced reliability,
and combined heat and power (CHP) hybrid system based power quality, and energy savings.
on CERTS architecture that embeds primary control in For the solar component, with the above commercial
each distributed resource. The CERTS model of microgrids property inventory, we estimate that more than 88 MW of
is based on the pioneering research work of Prof. Robert rooftop solar capacity could be installed and that the solar
Lasseter of the University of Wisconsin, Madison. Prof. systems could generate 128,931,277 kWh/year. Additional
Lasseters solutions allow a new class of true plug-n-play solar carport space is available but not used in this esti-
and peer-to-peer implementations of DERs into an inte- mation. Therefore, solar PV could generate approximately
grated on-site energy system without the need for a dedi- 11% of 2010 C&I demand.
cated command and control system. CERTS microgrids The CHP component would be composed of
leverage the best available microscale power generation 1,900 100-kW Tecogen InVerde units and they would be
and load management technologies to optimize the per- installed in 772 buildings (tier 2 and tier 3 buildings over
formance of local supply and demand. 10,000 ft2). Tecogen CHP units are widely implemented

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and they were one of the only available power sources in private works programs would have an enormous eco-
lower Manhattan following Superstorm Sandy. nomic impact on the city of Boulder over many years.
CHP capacity is estimated at 190 MW with an electricity Although the installation of 772 CERTS microgrids
output of 1,139,194,827 kWh/year (at a maximum 90% run would be a daunting task, they could be completed in less
rate). The CHP output is calculated only for its electricity gen- time than the permitting and EPC costs of a gas turbine
eration. The Tecogen units generate large amounts of waste plant (approximately five years) that would be necessary
heat that can be economically used in building heating or air for balancing very high levels of wind power as envisioned
conditioning (through absorption chillers). This very signifi- in the Boulder energy future plans. Also, the construction
cant additional energy efficiency is not included in the esti- of a gas turbine plant would generate very little local eco-
mation of load coverage. Also, although many legacy on-site nomic development.
generators could be incorporated into microgrids, they are
not included in the total capacity estimation. Microgrid Fleet Management
When the solar PV systems and the CHP systems are Assuming that such a large fleet of microgrids could be
combined into a fleet of CERTS microgrids, the combined designed, financed, and installed, how could the munici-
systems could generate 100% of the annual load for the pal distribution company manage the fleet?
entire city of Boulder distribution grid. Conceptually, this Currently, most companies that focus on microgrid
microgrid fleet rollout would convert every commercial control and optimization have concentrated on the host
building in Boulder into a net-zero smart building with side of the meter to optimize a single facility microgrid or
100% on-site generation and flexible load management an aggregated campus microgrid, such as the University of
and many sites would also have the capacity to export California at San Diego. Companies such as Power Analyt-
excess energy for other Boulder grid customers. The entire ics have developed sophisticated packages for these types
distribution grid could become net zero energy system of stand-alone microgrid host sites.
producing as much as it consumes. However, fleet management must be considered from the
The process of installing commercial PV solar and CHP perspective of the distribution company. Major system inte-
systems is well known. With the standardization of per- gration vendors (e.g., Schneider Electric, Siemens, ABB, and GE)
mitting and components, and with large competitive pro- serving the utility industry have developed new solutions to
curement contracts, systems could be installed for integrating large numbers of distributed resources into mod-
US$2.50 per watt or less. Buildings below 10,000 ft2 would ern distribution grids (Figure 4).
only have PV solar, and all buildings more than 10,000 ft2 As an example, from the perspective of Schneider Elec-
would also include from one to five CHP units. This public/ tric, the business objectives of a smart grid advanced

Integrated ADMS
Wholesale Markets
Weather Service
Balancing Authority Trading Partners

Power Control System Wholesale and Customer


(Load and Renewable Market Information
Forecast, AGC) Operations System

Advanced Distribution Automated


Management System Dispatch System AMI and MDMS

Geographic
Information System
Fiber/Wireless Networks/Internet

Customer Building
Portal Management
Distributed Thermal Systems
Energy Demand Storage
Generation Units
Storage Response

Figure 4. A framework for microgrid fleet management. (Image courtesy of Schneider Electric.)

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distribution management system (ADMS) that could when grid stability is detected. While they are in island
accommodate a large fleet of microgrids includes: mode, CERTS microgrids automatically balance their
[integration of supply-side and demand-side resources, internal generation and loads and maintain stability
including microgrids, into real-time and day-ahead within their circuits.
operations Variability: Variability is a major problem with traditional
[
[automation and optimization of dispatch of resources. solar and wind systems. In contrast, CERTS microgrids
Schneiders ADMS and Power Control System includes are good citizens of the grid and always balance DER
applications for: variability internally so that they do not present them-
[economic dispatch selves as a problem to the distribution operator.
[load forecast Overvoltage: A problem that microgrids will present is
[
[renewables generation forecast overvoltage on local circuits. Currently, under NEM, utility
[automatic generation control companies have limited customers from sending energy
[interchange transaction scheduler back into the system of no more than 105% of their load.
[unit commitment Under a fleet microgrid system, the basic concept is to
[fast load shedding generate 100% of local load and to be able to generate
[planning and operation of distribution grid. excess energy that can be economically dispatched by
The integration of a high number of microgrids into a the distribution operator. Some microgrids may have the
distribution system presents numerous technical chal- capacity to export significant amounts of energy.
lenges (Figure 4) including: Monitoring and control of each source on each microgrid: To
[
[Protection and stability of distribution circuits: As everyone determine the available capacity of the microgrid fleet,
in the electric industry knows, distribution systems have the distribution operator needs to know the capacity,
been designed as one-way power flow systems. When status and forecasted production of each source so that
traditional PV solar systems are installed, they are planning and operation of distribution meets supply
required to automatically disconnect from the distribu- requirements and conventional power flow constraints.
tion grid when a fault is detected, and then they must This secondary control requires a secure communica-
come back online from a black start authorized by the tions network that can process a large number of control
distribution operator. In contrast, with their built-in safe- points in real time.
ty technology, CERTS microgrids do not present them- Dispatchability of microgrids: The key to the economic
[
selves as energized hazards to utility work crews. With and power supply roles of revenue microgrids is that a
fast, intelligent switches, they automatically disconnect portion of their predictable capacity can be dispatched
into island mode and then automatically resynchronize reliably by the distribution operator (Figure 5). The

Integrated ADMS Business Objectives


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16 ,#*$"1/ic $'("*$0
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2 8 3
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7Au1-+ 1$ ,#.1(+(6$(0. 1"'-%$0-2/"$0

Figure 5. Integrating microgrids into distribution operations. (Image courtesy of Schneider Electric.)

50 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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problem is to determine the generator set points so challenges of thousands, or even millions, of customers
that the overall cost of power generation is mini- that are both consumers and suppliers of energy.
mized, while respecting limits on generators capacity
and transmission power flow Conclusion
constraints. For most utilities, Although a framework can be envi-
the traditional unidirectional flow The microgrid fleet sioned of a net-zero energy distribu-
of electricity shapes system con- tion system based upon a fleet of
trols, analytics, energy markets,
that we propose is a microgrids for supply, it will take a
and operations. With the growth simple PV solar and considerable amount of effort to attach
of downstream demand-side hard numbers to each component of
management, distribution utili- combined heat and the system and determine its overall
ties are now looking to defer con- economic viability in the marketplace.
ventional T&D costs. Con Edison
power (CHP) hybrid Tradeoffs may be needed in the mar-
analyzed three years of historical system based on ketplace to balance supply, reliability,
data from a 7.5-MW CHP system efficiency, and economics. A fleet
at 4-s intervals before they would CERTS architecture microgrid-enabled distribution system
include the source in their long- may increase the short-term LCOE
term planning.
that embeds primary while at the same time bringing coun-
Distribution system management:
[ control in each ter-balancing local economic benefits.
When integrating large numbers In some markets with high retail rates,
of microgrids, the communica- distributed resource. a microgrid-enabled distribution sys-
tions, analytical, and operational tem may be received more favorably,
requirements are more complex especially in markets were power resil-
and time sensitive because of the narrower margins of iency has also become a high priority. Whatever happens,
relatively small supply resources (fewer than 10 MW) community power will never be the same again.
relative to traditional supply sources (hundreds of
MWs). The distribution system operator needs For Further Reading
advanced communications and distribution manage- Advanced Energy Economy Institute (AEEI). (2013, Apr.).
ment system (DMS) software to maintain a fleet of Accelerating advanced energy in America: Perspectives of
microgrids (Figure 6). advanced energy business leaders on U.S. Energy Policy. PA
Transactive local energy market structures and
[ Consulting Group, Inc., prepared for: Advanced Energy
operations: Even if the technical power management Economy Institute (AEEI). [Online]. Available: http://www.
challenges created by microgrid supply and distribu- aee.net/acceleratingAE
tion management can be overcome efficiently, the Agora Energiewende. (2013, Feb.). 12 Insights on Germanys
question remains as to whether this can be accom- Energiewende. [Online]. Available: http://www.agora-
_____________
plished economically and equitably for all participating energiewende.org/topics/the-energiewende/detail-view/
______________________________________
parties. Transactive energy market concepts have been article/12-insights-on-the-energiewende/
___________________________
developed to solve the participation and economic K. Beckman. (2013, Oct.). RWE sheds old business
model. Embraces energy transition. [Online]. Available:
http://www.energypost.eu/exclusive-rwe-sheds-old-
______________________________________
business-model-embraces-energy-transition/
______________________________
R. Binz. (2013, June 26). Utility sector disruptive changes
(in eleven pictures), Public Policy Consulting, Presentation
at: Electric Markets Impact Michigans Energy Decisions,
Ann Arbor, MI. [Online]. Available: http://erb.umich.edu/
SlidePresentations/Energy-Futures-Conference-2013/Binz-
_______________________________________
Michigan-Presentation062613.pdf
______________________
R. Binz and R. Lehr. (2013, Mar. 28). New utility business
models: Implications of a high-penetration renewable
energy future. Presented to the Western Governors Associ-
ation. [Online]. Available: http://www.westgov.org/wieb/
meetings/crepcsprg2013/briefing/Lehr-Binz.pdf
_______________________________
A. Bredenberg. (2011, June 27). German combined power
plant demonstrates real-time integration of renewables.
Thomasnet News, Green & Clean Journal. [Online]. Avail-
Figure 6. The distribution control room using ADMS. (Photo courtesy able: http://news.thomasnet.com/green_clean/2011/06/27/
of Schneider Electric.)

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german-combined-power-plant-demonstrates-real-time-
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integration-of-renewables/
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colorado.gov/pages/energy-future-consultant-reports ties, AD 2012. Oxford Energy Forum, p. 18. [Online]. Avail-
City of Boulder, Colorado. (2011, July 13). Boulders ener- able: http://www.oxfordenergy.org/wpcms/wp-content/
gy futureLocalization portfolio standardElectricity and uploads/2013/05/OEF_-91.pdf
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bouldercolorado.gov/docs/LPI_BoulderLPS_elecandgas_13J Utility business models in a load growth/high DG future:
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City of Boulder, Colorado. (2010, July 1). Valmont repowering Laboratory. [Online]. Available: http://www.westgov.org/
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https://www-static.bouldercolorado. wieb/meetings/crepcsprg2013/briefing/present/c_goldman.
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gov/docs/Valmont_Repowering_Study_2011-1-201306171457. pdf
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pdf
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City of Boulder, Colorado. (2013, July 23). Update on Boul- Panel presentation on transactive energy techniques for
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docs/Energy_Future_SS_Memo_07232013-1-201307241011.pdf M. Jolly. (2012). Capturing distributed benefits. Public
City of Boulder, Colorado. (2012, Dec. 11). Work plan Utilities Fortnightly. [Online]. Available: http://www.
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City of Denton, Texas. (2013). Denton Municipal Elec- P. Kind. (2013, Jan.). Disruptive challenges: Financial
tricWho we are. [Online]. Available: http://www. implications and strategic responses to a changing
cityofdenton.com/departments-services/departments-a-f/ retail electric business. Energy Infrastructure Associ-
denton-municipal-electric/company-overview/who-we-are
______________________________________ ates, Prepared for: Edison Electric Institute. [Online].

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Available: http://www.eei.org/ourissues/finance/Docu-
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By Tomislav Dragicevic, Juan C. Vasquez,


Josep M. Guerrero, and Davor krlec

A step toward a new generation


of power distribution networks.

URRENT TRENDS INDICATE THAT WORLD- of reduction of conversion steps but also for realizing
wide electricity distribution networks are power quality independence from the utility mains. These
experiencing a transformation toward kinds of systems generally provide improved reliability in
direct current (dc) at both the generation comparison to their alternating current (ac) counterparts
and consumption level. This tendency is since the number of active elements in dcdc power elec-
powered by the outburst of various electronic loads and, at tronic devices is smaller than in dc-ac converters. Control
the same time, the struggle to meet the lofty goals for the design in dc systems is also significantly simpler since
sharing of renewable energy sources (RESs) in satisfying there are no reactive and harmonic power flows or prob-
total demand. RESs operate either natively at dc or have a lems with synchronization.
dc link in the heart of their power electronic interface,
whereas the end-point connection of electronic loads, bat- Historical Perspective: Return to dc
teries, and fuel cells is exclusively dc. Therefore, merging The present electrical power supply systems are the
these devices into dedicated dc distribution architectures product of a long-term technological development that
through corresponding dcdc converters is an attractive started at the end of 19th century. The trigger for its rapid
option not only in terms of enhancing efficiency because uprising was the invention of the transformer, the first
device that was able to transform ac voltages to different
values and, hence, keep the line losses at low levels, even
Digital Object Identifier 10.1109/MELE.2013.2297033
Date of publication: 18 March 2014 when transmitting electric power at long distances. The

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TOWER COURTESY OF STOCK.XCHNG/DADITO.

transformer was the main reason for the victory of ac in foundation for the progress in computers and communica-
the famous Battle of the Currents, in which Thomas tions. However, as a by-product, it has also enabled the
Alva Edison and George Westinghouse publicly debated transformation of dc voltages, sparking a power electronics
the merits of their newly proposed dc and ac power sys- revolution. Now, some 50 years after its onset, power elec-
tems, respectively. The outcome of this industrial war was tronics is firmly established as an integral part of modern
strongly influenced by the work of Nikola Tesla, who industry, which strongly underpins the new tendencies in
invented a number of breakthrough ac-based devices and power systems, one of which is the return of dc in big style.
principles, maintaining the vital importance in industrial
applications up to the present. The final result was a glob- The Future of Integrated Power
al acceptance of ac as the fundamental architecture for Distribution Systems: Compliance
electricity generation, transmission, and distribution. with Smart Grid Objectives
Shortly thereafter, electricity became a publicly accessible It is a common belief that energy, control, and communi-
commodity around the globe, triggering the blossoming cations technologies have reached the level of maturity,
of an entire industry. which is sufficient to put forward a new power utility shift
This rapid development eventually brought another known as the smart grid. The concept of the smart grid
major technological milestone: the invention of the transis- was originally envisioned to stimulate the improvement
tor. Considered one of the greatest findings of the 20th cen- of electric power networks in accordance with certain
tury, the transistor was initially designed to lay the goals, such as:

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providing power quality for 21st-century needs


[ counterpart. With these facts in mind, we envision that
operating resiliently against physical and cyber-
[ these kinds of dc subsystems will constitute the core of
attacks future distribution networks and that they will be gradual-
accommodating all generation and storage options
[ ly adopted in applications such as dc homes, hybrid elec-
enabling new products, services, and markets
[ tric vehicle (HEV) charging stations, and commercial and
optimizing assets and operating efficiently.
[ industrial facilities.
The concrete measures that should be taken to accom- A next-generation distribution system that is in line
plish these objectives have been the subject of intensified with the aforementioned discussion is depicted in
research over the past decade. This article explores the Figure 1. It shows a number of dc-powered subsystems
strategy that deals with all of them at the same time: a connected to a single synchronous ac system that
fundamental turnaround at the grassroots levels of low- includes appliances in which dc has already been used
voltage distribution systems, from ac to dc architectures. for years, such as telecommunication systems, data cen-
In that sense, a particular dc subsystem connected to a ters, and dc renewable generation facilities. However, it is
supreme ac distribution through dedicated dcac convert- the extension of dc to future appliances and to those that
er automatically implies power quality independence were traditionally operating on ac backbone that will
from utility mains. Furthermore, it gives a natural inter- make a true difference. For instance, an HEV charging sta-
face for modern electronic loads as well as for most RESs tion formed around a common dc link has the ability of
and energy-storage systems (ESSs) like batteries. The pos- providing much faster recharging service to connected
sibility of islanded operation that makes the system fully vehicles than presently available ac chargers. Moreover,
resistant to major blackouts in the main grid is much since the grid connection may be realized by means of a
more simple to design on dc because of the lack of syn- dedicated dcac converter, the grid support and power
chronization problems and reactive power flows. More- exchange control at the associated point of common cou-
over, with proper selection of nominal operating voltage, pling (PCC) are straightforward. The substitution of tradi-
its efficiency will generally be higher than its ac tional ac architectures in favor of dc for the case of future

ac Transmission
48 Vdc System
Remote Telecom Station

380 Vdc VFD Industrial


Machinery
pHEV Charging Station
LED Street
Distribution
Lighting
System
+ Substation

Flywheel Bidirectional Grid
acdc Converters Inverter
Grid Rectifier
Grid-Tied Bidirectional Grid Rectifier dc Renewable
Inverter + Energy Park
+
+
Multistage
acdc
Converters
+

dcdc
380 Vdc 380 Vdc Converters
380 Vdc Data Center
Powered Home Commercial Building

Figure 1. A next-generation distribution system.

56 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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The battery is a life


vein of consumer electronic
devices such as MP3 players,
cell phones, tablets, digital
cameras, laptop computers,
and others.

households and commercial buildings is expected to overcharge/discharge operation. Therefore, a battery man-
remarkably enhance their energy efficiencies since the agement system (BMS) whose main function is recharge
major share of their consumption is formed by devices control, state of charge (SOC), and state-of-health monitor-
that require a dc link in the interface point or in one of ing has become a constituent part of modern gadgets. In
the conversion stages. In this regard, appliances such as relation to the required storage capacity, it is generally pos-
light-emitting diode (LED) lighting, consumer electronics, sible to achieve a sufficient storage capacity for smart-
and variable-frequency drive (VFD) machines (refrigera- phones by using a single 3.7-V Li-Po battery cell, whereas
tors, heaters, air conditioners, washing machines, etc.) two to three paralleled cells are needed for tablets and dig-
may contribute to overall efficiency improvement by ital cameras. On the other hand, it is a common practice to
omitting one or several dc/ac conversion stage(s). Another assemble series-parallel cell arrangements for supplying
example for the legitimate use of dc architecture is an more-demanding devices such as high-performance lap-
electrical power supply of a typical industrial factory tops. For these kinds of packs, commercial BMSs often
facility where a potential for improving the propulsion come with an integrated equalization circuit, which is nec-
efficiency stems from a possibility to run a group of VFD essary for balancing the charge among the respective cells.
motors from the common dc link. By referring back to Figure 2, one may observe that the
Today, residential dc architectures operating at 380 V dcac converter is the ultimate conversion step toward the
are in the development stage and are only a few steps grid. With the aim of increased energy efficiency, this con-
away from real-world implementation. Indeed, recent version stage may be avoided by using only a single stage
studies have roughly estimated their cost effectiveness, dcdc, given that there are readily accessible dc sockets
indicating up to 30% efficiency gain in comparison with
traditional low-voltage ac. Electrical distributions of some
of the applications mentioned here are addressed in more
detail in the following sections, which are sequenced in
line with their growing nominal voltage.
Wi-Fi
Low-Power Consumer Electronics Module
LCD
The battery is a life vein of consumer electronic devices Panel
such as MP3 players, cell phones, tablets, digital cameras, Touch
Screen
laptop computers, and others. Their entire electrical sys- dcdc Control
Camera
tems consist of a number of dcdc converter stages that dcdc
are connected to battery terminals. These converters 3.7
20 dcdc
transform the voltage to levels appropriate for fundamen- -Vd
Wall cB dcdc
tal loads such as displays, processors, cameras, wireless us
Socket,
modules, and other application adapted consumption (see ac Grid
Figure 2 for the electrical layout of a modern smartphone). Battery Optional Cell
Pack Charge
Today, lithium-ion polymer (Li-Po) battery cells are a
Equalization
common choice for consumer electronics because of their (for Series Cell
Adapter
particularly high energy density and a convenient property Connections)
Charge Control
that allows for a high degree of flexibility in the hardware
acdc dcdc
design. However, unlike batteries from the previous gener-
ations, a significant shortening of the lifetime or even haz-
ardous conditions may occur if lithium-based batteries are
exposed to mistreatments such as high temperature or Figure 2. The typical electrical layout of a smartphone.

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 57

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A distributed resolution of the


aforementioned control strategy
gained a lot of popularity in industry
since it enables the plug-and-play
feature for additional sources.

from dedicated dc power architecture. One example of such refueling with RESs as the main energy sources emerges
an architecture, i.e., the typical telecommunication power as an increasingly popular solution for modern installa-
supply system, is presented in the next section. tions. The battery stack then has a dual role:
1) Backup power and stabilization: The capacity of the
Telecommunication Industry battery is usually high enough to provide long-term
The 48 V telecommunication power supply station is backup power and to ensure stability.
likely the best-known example of a full-scale dc distribu- 2) Smoothing the common bus voltage : Voltage tran-
tion. A standard measure of reliability in this kind of sys- sients in the common bus that arise from fluctuating
tem is five nines (99.999%), whereas for comparison, the RES production and load profile are largely sup-
usual requirement for the ac bulk power systems is three pressed by the battery polarization dynamics. It is
nines (99.9%). There is a big difference in the permissible worth mentioning that another dc storage technology,
downtime between the two, i.e., 5 min and 9 h per year, i.e., the electrochemical double-layer capacitor, is also
respectively. The reason why such a high reliability may be often deployed for this short-term power-leveling pur-
achieved in dc systems is the possibility for a direct con- pose since it has an exceptionally high power density.
nection of the central battery stack to the common bus. The typical electrical layout of a remote telecom dc distri-
This kind of strategy is, as in the case of consumer elec- bution system based on RESs is shown in Figure 3. One may
tronics, also popular in the telecom industry. note that all components except secondary batteries are
To have high-quality signal coverage over a large area, connected to the main bus through power electronic inter-
telecom companies are putting more telecom stations faces. Therefore, the required voltage levels for electronic
into operation. Those that are built on remote locations loads are achieved by processing the battery voltage through
normally operate in islanded mode since they stand dedicated point-of-load converters. On the other hand, RESs
either too far from the ac utility mains or have a con- are connected through either single or double converter
sumption that is too low for performing cost-effective grid interfaces, depending on the type of the source. Neverthe-
expansion. In that sense, the replacement of conventional less, their last conversion stage is ordinarily based on a dc
diesel generators that require regular maintenance and dc converter with an integrated bus-signaling control

POL Converters dcdc dcdc dcdc acdc

Plug-in Load Sockets


Voltage Measurement Voltage Measurement Voltage Measurement

Current Current Current


Measurement Measurement Measurement

Local Local Local


dcdc dcdc dcdc
Control Control Control

PV Array Secondary
acdc acdc Small Wind Battery
Turbine
Flywheel

Figure 3. The electrical layout of a remote telecom dc distribution system.

58 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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scheme, which determines the appropriate operating mode, of road vehicles that supplied power for electrical starters.
depending on the battery voltage (dc sources such as photo- The voltage was eventually increased to 14 V to support
voltaic panels and fuel cells can be connected through single newer and stronger engines with high-performance start-
dcdc converter stage, whereas, in the case of ac sources ers, and it has been kept as the industry standard to date.
such as small wind turbines, an intermediate dc link needs Apart from ignition, the usage of electrical distribution
to be formed using an additional acdc converter). In gener- eventually spread also to power other appliances such as
al, there are two relevant modes in that sense: constant lighting, instrumentation, and electric motor drives. How-
power mode, which implies operation under MPPT algo- ever, the propulsion of these vehicles remained based
rithms, and voltage-regulation mode where part of the avail- exclusively on internal combustion engines (ICEs) until
able energy from RESs is dumped to regulate the charging of recent times.
the battery. A strong interest in EVs has been awakened again in
A distributed resolution of the aforementioned control the last few decades when concerns related to reduction
strategy gained a lot of popularity in industry since it of fossil fuel reserves and greenhouse gas emissions
enables the plug-and-play feature for additional sources. became the main driving factor. Much academic and
For this reason, but also because of the inherent stability industrial effort has been directed toward the develop-
of these kinds of systems, the construction of customized ment of a more-electric vehicle concept, giving birth to
dc renewable energy parks for telecom stations was made three main groups of vehicular technologies: EVs, HEVs,
possible in an ad hoc manner, by a simple buildup of the and fuel cell vehicles. The difference between them lies
system using commercially available modules. Neverthe- in the manner of power generation for vehicle propul-
less, this kind of approach may be considered useful only sion. The only source of power for EVs is an electro-
for small-scale electrical power supplies that do not chemical battery, while HEVs and fuel cell vehicles are
require precise control over the common bus voltage and driven by a combination of a battery and ICE or hydro-
are not anticipated for substantial future expansions. gen fuel cell, respectively. The battery is still the major
limiting factor for wider use of EVs because the power
Vehicular Technology: and energy density in even the best batteries are not
HEVs and Fast DC Charging Stations predicted to be competitive with those of liquid fuels
The concept of the electric car finds its roots at the end of anytime soon. On the other hand, the technology of
19th century, when the first vehicles
were developed largely relying on dc
motor technology that was invented pHEV Charging
by Thomas Davenport in 1834. The Station Socket
accompanying industrial buzz result-
ed in several successful applications,
such as electric-grid-powered trolley High-Voltage Storage
acdc dcdc
systems for public transportation and System
coal mining. On the other hand,
Air
motors in vehicles that required more Conditioning dcac s
Bu
freedom of movement, such as taxis d c
Steering System ge
and passenger cars, were powered by lta dcdc
o
electrochemical batteries. The electric -V
dcac igh s
vehicles (EVs) of that time had a H Bu
Electric d c
number of advantages over their gas- Bidirectional
Machine 1 ge ds
dcac ta oa
oline- and steam-powered rivals, Vol L
such as significantly quicker start w- na
l
Planetary Lo tio
n
time and no issues associated with Gear ve
Internal
C on
vibration, smell, and noise. However, Combustion Unit
the development of intercity road Engine Electric
Pr
infrastructure in the United States in op Machine 2
uls
the early 20th century highlighted the ion
Sy
problem of their limited range, while ste
m
the discovery of vast deposits of oil
greatly reduced the driving costs of
gasoline-powered cars, which soon
completely took over the market.
Nevertheless, auxiliary 6 Vdc elec-
trical systems remained a vital part Figure 4. The electrical layout of an HEV.

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 59

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The controllability of a
singular dc bus voltage also
results in the controllability
of tie-line current flows
toward other dc buses.

hydrogen fuel cell vehicles has still not matured enough, window lifters, consumer electronic chargers, or ventila-
and although it offers good efficiency and practically tion systems.
zero emissions, the challenges related to hydrogen pro- Another important prerequisite for the rapid increase in
duction and its storage within the vehicle keep restrain- the number of plug-in HEVs on the roads is the
ing its market penetration. construction of advanced EV charging infrastructure. A
Therefore, HEVs that use batteries only for power leveling highly desirable feature of EV charging stations is the ability
by maximizing the fuel economy of the associated ICE and to provide a recharging procedure that is as similar as pos-
using concepts such as regenerative braking, throttle actua- sible to conventional petrol stations, as seen from the per-
tion, and power steering, among others, have emerged as spective of the vehicle user. The main obstacle in achieving
the best alternative to conventional vehicles. The electrical this capability is the limitation of power extraction from
distribution of HEVs is conceptually similar to those that conventional ac plugs of up to 10 kW, which makes the
characterize consumer electronic devices and is shown in recharging process very slow and, hence, unattractive for
Figure 4. It can be seen that the output terminals of the car public locations. As a solution to this problem, fast charging
battery are extended to form the main electrical bus that directly from the stations dc link has emerged as a viable
has all the other electronic and conventional loads directly alternative. However, since it implies power extraction of up
connected to it. to 50 kW, there is a legitimate concern about the adverse
Since it is very likely that the electrical consumption in impact of large fleets of charging stations on utility mains.
modern cars will reach several tens of kW in the near Therefore, from our standpoint, it will be mandatory to use
future, an increase of the distribution voltage is inevitable some kind of dedicated ESS, at least for short-term power-
for having high power-distribution efficiency and restrain- leveling purposes. A diagram of an EV fast charging station
ing the wiring weight. In that sense, higher nominal volt- formed around a common dc link that uses a flywheel ESS
ages are used in the popular HEV models, i.e., 201.6 V in for the power-balancing task is shown in Figure 5. A fly-
the Toyota Prius or 355.2 V in the Chevrolet Volt. By deploy- wheel is selected here since it provides very high power
ing power electronic converters, buses with other voltages density and incomparably longer cycle-life than electro-
can be realized, including the classical 14-V bus, which chemical batteries and hence suits this kind of application
may serve for electrical supply of standard loads such as much better, despite a higher initial cost.

HEV

DSO
Commands
iBAT vBAT

va, b, c Local Grid vdc Flywheel


Control Fast- vdc
dcdc Control va, b, c
Charge
ia, b, c Controller ia, b, c

Grid dc Electric
acdc dcac
Link Machine

Grid Flywheel Flywheel


Converter Converter

Figure 5. An EV fast-charging station can use a flywheel ESS for power balancing.

60 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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Loads
Communication
Flow
Power Flow

Communication Bus
Common dc Bus

Measurements
Higher Control Level:
dcdc Local dcdc
) "y Control dcdc
dcdc Control
)%!"visor( $"   Level dcac
dcac
Power
Line

PV Array Wind Turbine


Battery Bank Flywheel
and Generator

Distributed Generation

Figure 6. A communication infrastructure coordinates converters.

Enhancement of Conventional communication infrastructure between converters is


dc Power Distribution Architectures often adopted to coordinate and synchronize their actions
The main factor contributing to the high reliability and in realizing functionalities such as secondary or supervi-
robustness of telecom systems, consumer electronics, and sory control, as depicted in Figure 6.
HEVs, i.e., the direct connection of the battery to the com- The controllability of a singular dc bus voltage also
mon bus, entails several major drawbacks that come results in the controllability of tie-line current flows
more into play in cases when more expandable and flexi- toward other dc buses. Consequently, by adapting the volt-
ble dc systems are required. The most prominent prob- ages of respective buses, it becomes possible to control
lems include mandatory rigid design of a battery pack, complex dc power distribution architectures. Functionally,
decentralized charging that causes circulating currents, such a structure can then be identified as a microgrid
and inability to directly control voltage of the common (MG), a concept that attracted considerable attention in the
bus. In this regard, it is the connection of battery stack to a academic community over the past decade. The following
common bus via dedicated dcdc converter what distin- section looks back at the origin of the MG and explores the
guishes fully flexible systems from the applications possibilities of tailoring the results from that research field
addressed in previous sections. This simple yet effective to advanced dc power distribution architectures.
topological change not only allows for complete control
over the battery recharging and common bus voltage but Changing the Energy Paradigm: Distributed
also greatly facilitates the systems extensibility. However, Generation and Microgrids
even though the battery can now have a dedicated charg- Since the very beginning of the introduction of distributed
er that cancels out the circulating current effect, it cannot generation, coordination among various distributed gen-
control the common bus and its own voltage at the same erators (DGs) was recognized as a key prerequisite not
time; hence, other converters need to take care over the only for the full exploitation of their potential benefits, but
common bus voltage regulation during the regulated also for avoiding negative impacts on utility. In that sense,
charging process. Moreover, the effective capacity of the a MG concept emerged as one of possible resolutions for
battery is no longer seen at the main terminals, as it is efficient integration of a growing number of DGs scattered
now replaced by the several orders of magnitude lower throughout the network. It is basically a small grid that
capacitance given only by the output filters of dcdc con- gathers local loads and DGs, and it may operate in both
verters. Therefore, the control design of bus-regulating grid-connected and islanded modes. Being an indepen-
converters now becomes a much more challenging prob- dent entity, which optimally coordinates local DGs and
lem from a stability point of view. Additionally, a loads, MG was envisioned to greatly reduce the number of

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 61

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nodes under the jurisdiction of distribution system opera- multiple buses with different voltages. In that sense, 380 V
tors and to simplify the top-level-communication infra- is used as a rule for the high-voltage bus since it is known
structure. This is so because the internal coordination of to match the industry standard for consumer electronics
groups of final consumers and small DGs consolidated with the power factor correction circuit at the input. More-
within the intelligent MGs could be done independently over, this voltage offers the best efficiency gains in com-
from the distribution system, and the operator may only parison to ac and is hence predicted to serve as the
consider power exchange with the MG at principal distribution bus that supplies
the PCC. high demanding loads such as HEV
Early MG efforts were largely Tie-line current chargers, washing machines, rotating
focused on ac so as to line up with ESSs, etc. A number of lower-voltage
the existing power system infrastruc-
between two MGs buses (48, 24, or 12 V) that power less-
ture. To that end, significant efforts can be regulated demanding loads such as electronic
focusing on improvement of current devices and LED lighting and ventila-
sharing, power quality, stability, ener- by imposing the tion are foreseen to be built upon it
gy management, and smooth mode using dedicated power electronic
transitions have been undertaken to
appropriate voltage interfaces. The structure that com-
perfect and standardize the operation drop between prises a single high-voltage bus and a
of inverter-based ac MGs. The topic number of low-voltage buses is
has further expanded, even to the their buses. depicted in Figure 7.
level of a hierarchical control classifi- Nevertheless, when one considers
cation. Hence, ac MGs began to be a number of mutually interconnected
perceived as full-scale distribution systems compatible dc subsystems, which is preferably done on high-voltage
with the main utility. However, the initial motivation has buses (i.e., 380 V), each one of them needs to have flexible
led to a somewhat misleading judgment that the stan- control over its internal voltage. This property may be
dardization of MG topology and control should be carried achieved by sources whose converters are designed for
out literally following the guidelines imposed by the large voltage support, i.e., voltagesource converters (VSCs). If
ac power systems. This is because of fundamental differ- VSCs are programmed in a nonstiff manner, a number of
ences between todays technology and that at the turn of sources may control the bus simultaneously. This voltage-
20th century, the time when solid-state power converters regulating strategy is commonly referred to as the voltage
did not yet exist. Indeed, the outcome of the famous Bat- droop (VD) and is used for primary control of dc buses
tle of the Currents, which decided the global direction of MGs. The corresponding control law may be expressed as
power system evolution in favor of ac architecture, could
have been different if they did exist. Now, inspired by new v dg = v ref,MG - R d i o, (1)
trends in electricity production and consumption as well
as remarkable technological improvements in power elec- where v dg and v ref,MG are the common bus and reference
tronics, the same ac versus dc debate is taking place voltage, respectively, i o is the output current, whereas R d is
again. However, this time, it appears that the odds are on the virtual resistance, which defines the steady-state
the side of dc, at least on the low-voltage level. Indeed, slope. As soon as it is ensured that at least one converter
merging local dc devices into fully controllable and flexi- operates in voltage-regulating mode, other kinds of units
ble dc MGs arises as an attractive possibility for this para- may be connected to the same bus. In that sense, it is
digm shift. desirable that the RESs exploit as much renewable energy
as possible and, hence, their converters are run by the
DC Microgrids: Full-Scale Electricity respective MPPT algorithms in normal operating mode.
Power Distribution Systems Adjusted This means that for given environmental conditions (sun
to Modern Trends and wind), the RES will follow the reference imposed by
Advanced low-voltage dc distribution systems for house- the algorithm, which is typically executed several orders of
hold and commercial appliances have been under consid- magnitude slower than inner loop controllers. Therefore,
eration for quite some time in both academia and the RES can be considered a constant power source in a
industry. Recent comparative analyses between perfor- dynamic sense. This point is depicted in Figure 8, where
mances of traditional ac systems and their dc counter- one may see the operational principle of three converters
parts have raised a question about the most appropriate connected to one common bus, with two converters being
dc voltage level, which is to be adopted as a future stan- operated in VD mode (with different slopes) and one con-
dard. However, as different types of modern consumer verter in MPPT mode.
electronic appliances are operated on distinctive voltage However, if the voltage of the bus is regulated exclu-
levels, it is generally agreed that future dc systems should sively by the law stated in (1), its deviation from the refer-
not be formed around one standardized bus, but of ence value is unavoidable. This feature does not represent

62 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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al
Centr ol
Contr
Communication Network

To Another dc Bus
dcdc dcdc

380 Vdc
dcac dcdc dcac

Washing dcdc
Machine
Electric Vehicles Flywheels
48 Vdc 48 Vdc
dcac dcdc dcdc

LED Lights
dcdc
Air
Conditioner Li-Ion
Refrigerators

24 Vdc

dcdc Ceiling
Fan

Consumer
Electronics

Figure 7. Cascaded converters in a multibus dc microgrid.

a significant problem in autonomous applications with a in Figure 9. It should be noted that exclusively 380-V volt-
single bus, but in case of multibus dc systems, voltage age buses are designed to participate in inter-MG current
deviations will be projected to uncontrolled tie-line cur- exchange, and, therefore, only they are represented in the
rent flows. To have full control over the MG, a higher con- figure. The tie-line current between two MGs can be regu-
trol level that is able to assign the correct voltage lated by imposing the appropriate voltage drop between
references to every bus with respect to the required cur- their buses. This voltage drop can be calculated by a sec-
rent exchanges between them needs to be installed on top ondary current flow controller, which will generate posi-
of the primary level. tive or negative value (depending whether the current is
regulated to enter or exit the bus) and consequently cause
Multi-dc Microgrid Clusters an increase or decrease of the respective common bus
A structure that incorporates both control levels, normally voltage. The extent to which units contribute can be
referred to as primary and secondary control, is depicted actively regulated with participation factors. Apart from

Vdc Vdc Vdc

Vref, MG

io, VD 1 io, VD 2 io, MPPT

iOP1 iOP2 iOP3

Figure 8. Three converters connected to a common bus: two operate in VD mode, and one operates in MPPT mode.

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 63

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IEEE

64

MAGAZINE
MAGAZINE

380 Vdc Buses


Iout, dcdc
1
MGi 1 To Low-
Voltage Bus

Previous Page
Previous Page

Communication

dc
MGi Primary Control
vMG Vdc1 Source 1
i
tiei, i 1

Participation Voltage Control Current Control

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4
Factor + Vdc1
vref + iref PWM
i 1 Gv (s ) Gc (s ) dcdc
+ Generator
Power Flow Control
Iout vt io
GPFC (s ) Droop Control
+ Rd1
+
Iout, 2
Iin
MGi Bus

To Low-
Voltage Secondary Control dc Voltage Bus

+
vMG i
Primary Control Source m dcdc

Supervisory Control
Gsec (s ) vs vMGi
Vdcm
+ Voltage Control Current Control
+ Vdcm
vMGs Vref + iref PWM
i m Gv (s ) Gc (s ) dcdc
+ Generator

io
Droop Control
tiei, i +1

Rdm

Communication

Iout, 3 To Low-
MGi + 1 Voltage Bus
dcdc

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Figure 9. The hierarchical control structure for multibus dc microgrids.

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enforced voltage drop, droop coefficient settings and load For Further Reading
variations also have an influence on steady-state voltage, P. Fairley. (2013, May 21). Edisons revenge: The rise of dc
which may then in total considerably deviate from the power. MIT Technol. Rev. [Online]. Available: http://www.
nominal value. For that purpose, a secondary voltage regu- technologyreview.com/news/427504/edisons-revenge-the-
______________________________________
lator can be deployed in parallel with current flow control- rise-of-dc-power/
___________
ler to restore the deviation. Naturally, not every bus can be M. Liserre, T. Sauter, and J. Y. Hung, Future energy sys-
operated at the nominal value, but the best that can be tems: integrating renewable energy sources into the smart
done is to restore the average voltage of all buses. There- power grid through industrial electronics, IEEE Ind. Elec-
fore, as depicted in Figure 9, two signals will form the outer tron. Mag., vol. 4, no. 1, pp. 1837, Mar. 2010.
voltage reference designated for primary control loop, i.e., S. Massoud Amin and B. F. Wollenberg, Toward a smart
dv t and dv s . grid: Power delivery for the 21st century, IEEE Power Ener-
It can be noted that the secondary control in Figure 9 is gy Mag., vol. 3, no. 5, pp. 3441, 2005.
designed in decentralized fashion so that every MG has a H. Farhangi, The path of the smart grid, IEEE Power
dedicated secondary controllers that are able to exchange Energy Mag., vol. 8, no. 1, pp. 1828, 2010.
information with its neighbors others using communica- B. T. Patterson, DC, come home: DC microgrids and the
tion infrastructure, which is normally referred to as the birth of the Enernet, IEEE Power Energy Mag., vol. 10, no. 6,
networked control system (NCS). Such an NCS may be pp. 6069, 2012.
realized by means of static averaging calculation or using G. AlLee and W. Tschudi, Edison Redux: 380 Vdc brings
dynamic consensus algorithms. Both of the aforemen- reliability and efficiency to sustainable data centers, IEEE
tioned variations are active areas of research. Power Energy Mag., vol. 10, no. 6, pp. 5059, 2012.
Another control layer, referred to as the supervisory D. Boroyevich, I. Cvetkovic, D. Dong, R. Burgos, F. Wang,
control or energy management system, may be incorpo- and F. Lee, Future electronic power distribution systems a
rated as well. Its functionalities are much more flexible contemplative view, in 2010 12th Int. Conf. Optimization
and normally comprise decision-making mechanisms of Electrical and Electronic Equipment, 2010, pp. 13691380.
that aim to enhance the operational efficiency or to gov- R. H. Lasseter, MicroGrids, in 2002 IEEE Power Engi-
ern the MG through different operational modes. One of neering Society Winter Meeting Conf. Proc. (Cat. No.
the roles under the jurisdiction of supervisory control is to 02CH37309), vol. 1, pp. 305308.
determine required current exchanges between different F. Katiraei, M. R. Iravani, and P. W. Lehn, Micro-grid
MGs depending on internal parameters such as SOCs of autonomous operation during and subsequent to island-
online ESS systems and/or energy available from RES. ing process, IEEE Trans. Power Delivery, vol. 20, no. 1,
pp. 248257, Jan. 2005.
Conclusion J. M. Guerrero, J. C. Vasquez, J. Matas, L. G. de Vicuna, and
Today, the world has to deal with a scenario where various M. Castilla, Hierarchical control of droop-controlled ac
electronic loads have started to dominate the overall con- and dc microgridsA general approach toward standard-
sumption profile. HEVs are emerging as a worthy oppo- ization, IEEE Trans. Ind. Electron., vol. 58, no. 1, pp. 158172,
nent to conventional vehicles, and there is no end in sight Jan. 2011.
for the rising share of RESs in total electricity production. H. Kakigano, Y. Miura, and T. Ise, Low-voltage bipolar-
Since dc electricity is an integral part of a large portion of type DC microgrid for super high quality distribution,
these modern technologies, there is a need for a reevalua- IEEE Trans. Power Electron., vol. 25, no. 12, pp. 30663075,
tion of the electrical distribution paradigm that was Dec. 2010.
thought to be resolved in favor of ac at the turn of 20th T. Dragicevic, J. Guerrero, J. Vasquez, and D. Skrlec,
century. In that sense, the introduction of dedicated low- Supervisory control of an adaptive-droop regulated DC
voltage dc electrical distribution systems that are able to microgrid with battery management capability, IEEE
bring the new technologies together and interface them Trans. Power Electronics, vol. 29, no. 2, pp. 695706, 2014.
with ac utility in a more efficient and reliable manner is
gradually becoming a reality. Biographies
This article examined the electrical distributions of sever- Tomislav Dragicevic (tdr@et.aau.dk)
_________ is a postdoctoral

al modern dc-based industrial appliances and outlined the researcher at Aalborg University, Denmark.
need for the modification of existing dc architectures to Juan C. Vasquez (juq@et.aau.dk)
_________ is an assistant profes-
enhance their controllability and flexibility. A roadmap for sor at Aalborg University, Denmark.
this shift was proposed through the application of dc MG Josep M. Guerrero (joz@et.aau.dk)
_________ is a full professor at
technology, where several control levels have been exam- Aalborg University, Denmark.
ined. In line with that, a layout of a multibus dc MG with an Davor krlec (davor.skrlec@fer.hr)
____________ is a full professor at
associated hierarchical control structure that is able to regu- the Faculty of Electrical Engineering and Computing, Uni-
late the current flows between different buses with respect versity of Zagreb, Croatia.
to nominal voltage levels has been presented.

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 65

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By Liang Che, Mohammad E. Khodayar,


and Mohammad Shahidehpour

Protection practices of a
functional microgrid system.

ISTRIBUTED ENERGY RESOURCES (DERs) OFFER ON-SITE


generation at consumption points, which are expected to
change the conventional concept of central power gener-
ation. DER integration reduces transmission losses and
enhances the operation reliability of distribution sys-
tems. However, distribution systems are traditionally designed as pas-
sive networks in which large DER penetrations representing
bidirectional power flows and topology-dependent fault currents could
affect protection devices, cause danger to the maintenance personnel,
and result in uncontrollable under-/overvoltage and frequency. IEEE
Standard 1547 requires DER units to stop energizing the distribution
system when the system is de-energized due to faults.
Microgrids are introduced to address the issues with the economics
and the resilience of power delivery systems. A microgrid is a small elec-
tric power system, which is connected to the utility grid through the point
of common coupling (PCC), and uses on-site DERs for supplying all or some
portions of local demands. When connected to the utility grid, microgrid loads
are supplied by both the utility grid and on-site generation. From the utility grid
side, a microgrid is seen as an aggregated controllable load. A key feature of the
microgrid operation includes its seamless islanding from the utility grid and ability to
be self-controlled in island mode. Once a fault affects a distribution network, local
microgrids can enhance the power system reliability by switching to island mode as local
DER units continue to supply the microgrid loads.

Digital Object Identifier 10.1109/MELE.2013.2297031


Date of publication: 18 March 2014 DOG CAN STOCK PHOTO/3DCLIPARTSDE. MICROGRID COURTESY OF MOHAMMAD SHAHIDEHPOUR.

66 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 2325-5987/14/$31.002014
2325-5987/14/$31.002014IEEE
IEEE

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Despite the numerous advantages of using microgrids, on unidirectional power flows from the feeder toward
there are technical challenges regarding the control and loads in radial distribution networks, in which fault cur-
protection of microgrids. One of the prominent challenges rents are lower as fault locations get farther from feeders.
in microgrid operations is the design of a proper protec- However, these unidirectional characteristics change in
tion scheme for microgrids. The integration of DERs and microgrids. DER units located in microgrids can increase
novel topologies embedded in microgrids would challenge fault currents, change fault current flow paths, result in
the characteristics of protection schemes in microgrids as bidirectional power flows, and affect PD operations. The
compared with those of conventional distribution sys- inclusion of DER units with power electronic interfaces,
tems. The conventional protection strategies in distribu- such as converters, would limit fault currents and desen-
tion systems rely on the radial topology of distribution sitize PDs to faults, especially in island mode. The large
networks with the supply located at one end. In this con- difference between fault currents in grid-connected and
figuration, the fault current is provided by the utility grid island modes presents new challenges in microgrid fault
with protective device (PD) settings adjusted accordingly protections. Moreover, the microgrid topology can be
to localize the impact of faults. PDs are coordinated based looped, meshed, or mixed networks, which could result in

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 67

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more complex fault current paths and affect protection networks, fault currents decrease as feeder impedances
strategies in microgrids. increase when fault points shift downward along feeder
In this article, protection system challenges in paths; however, microgrid DERs contribute to fault cur-
microgrids are discussed and protection practices in the rents along feeder paths. DER units, especially generators
context of a functional microgrid system at the Illinois with rotating prime movers, such as synchronous or
Institute of Technology (IIT) are presented. We address the induction generators, would have higher contributions to
structure and design of the IIT microgrid and analyze fault currents when compared with DERs with power elec-
technical approaches for protecting the IIT microgrid in tronic interfaces. As fault current paths could be different
grid-connected and island modes. in grid-connected and island modes, the two operation
modes would require different relay settings. As a result,
Challenges in Microgrid Protection Systems fixed settings for microgrid relays may become impractical
Conventional protection schemes for radial distribution as the dynamic behavior of DERs may also affect the coor-
networks cannot be applied to microgrids without major dinated settings of relays.
modifications. Such modifications would require address-
ing the impact of DER integration, microgrid topology, and Impact of DERs on the Operation of Protective Devices
fault current levels in grid-connected and island modes. In DER units have plug-and-play characteristics in microgrids,
this section, the challenges and possible solutions to which may require modifications to traditional relay set-
microgrid protection are discussed. tings. In such cases, DER locations and fault currents would
determine precise relay settings. The impact of DER
Challenges integration on PD operations is summarized in the follow-
The integration of DER units would impose major challenges ing two categories:
in microgrid protection schemes. The conventional distribu- [ Malfunction of PDs due to downstream faults: In a
tion system protection is designed for radial distribution net- downstream fault, shown in Figure 1(a), utility grid
works that include feeders at one end with high fault and DER unit currents (I g and I DER, respectively) con-
currents. In radial distribution networks, fault currents tribute to the total fault current. If I DER is large enough,
always flow downstream, i.e., from utility feeders toward I g will be reduced because of a higher voltage contrib-
fault locations. As a single source of power generation, utility uted by I DER at PCC. Thus, PD1 may not trip because of
feeders provide high fault currents, which trigger PDs along a lower fault current even though feeder 1 experienc-
feeder paths. However, traditional protection schemes face es a higher fault current.
the following fundamental challenges in microgrids. [ Sympathetic tripping: In Figure 1(b), PD3 should trip to
clear the fault. However, if the DER unit contribution
Fault Current-Level Modifications to the fault current is large, PD2 may trip in response
Fault currents depend on microgrid operation modes. In to high current I DER, which would disconnect feeder 2
grid-connected mode, utilities contribute to microgrid fault from the utility grid.
currents while, in islanded mode, microgrids potential
fault currents are lower. The fault current injection capabil- Impact of Microgrid Topology on
ity of DERs with power electronic interfaces is limited to the Coordination of Protective Devices
twice their rated currents, and lower fault currents would The looped or meshed networks in microgrids will affect
not trip overcurrent (OC) relays. In traditional distribution fault current magnitudes and directions. For example, the
fault current in a loop is divided between two parallel
paths. Hence, PDs on the upstream feeder may have cur-
rents that are twice as large as that in each fault path
Utility Missing Utility
Grid Grid within a loop. Accordingly, looped or meshed structures in
Operation
Sympathetic microgrids could impact the PD coordination.
Ig Ig Tripping
PD1 PD1
Possible Solutions for Relay Coordination
IDER PD2 IDER PD2
PD3 Balancing DER Technologies
DER
DER
for OC Protection
A possible solution to overcome low contributions of DER
units to fault currents in microgrids is to balance DER unit
Feeder 1 Feeder 1 Feeder 2 contributions with those of other generation technologies
(a) (b) by introducing generating units with higher fault currents
to increase total fault currents in microgrids to proper lev-
Figure 1. The impact of DER units on relay operation. (a) The
malfunction of PDs due to downstream faults and (b) the sympathetic els that could be detected by OC protection systems. Syn-
tripping of PD. chronous generators, including permanent magnet

68 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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synchronous generators (PMSGs), and fly wheels are suit- schemes in microgrids. Adaptive schemes would include
able choices for increasing fault currents in microgrids. two sets of relay settings, one for grid-connected and the
other for island mode. Relays would select proper settings
Differential Protection Schemes when microgrids switch their operation modes. In island
Differential protection schemes are based on coupled dif- mode, the time-OC (TOC) characteristic curve of relays will
ferential directional relays that can accurately locate and be shifted to instantaneous and/or definite-time OC set-
isolate faults without affecting other components in distri- tings to adapt to lower fault currents. Moreover, adaptive
bution systems. Differential protection schemes, which protection schemes would automatically adjust the relay
incorporate traditional protection technologies, are suited settings according to the network operating state. For
for microgrid protections in both grid-connected and island example, a voltage restraint OC protection scheme would
modes. Differential protection schemes are either central- reduce the time dials (tripping delays) of relays in cases of
ized (monitored and coordinated by central controllers) or large voltage depressions.
localized (based on local communications among relays). In
centralized schemes, central controllers monitor the Protection Schemes Based
microgrid network topology and operation settings of PDs on Other Parameter Measurements
and send tripping commands to PDs once faults are detect- Voltage- or harmonic-based detection techniques are con-
ed. Centralized schemes provide more accurate results with sidered as alternatives once low fault currents render tra-
rather unacceptable time delays for performing the compu- ditional OC protection schemes impractical in island
tations required by the central controllers. Localized mode. The voltage-based protection schemes would locate
schemes, which are more readily adopted for industry faults by detecting the d-q components of voltage distur-
applications, allow for direct communication among relays bances based on the Park transformation. However, the
with the fastest response to faults. voltage-based detection schemes may not provide accu-
rate fault detections, and undesirable time delays would
Adaptive Protection Schemes be introduced by additional computation and filtering.
The difference between fault currents in grid-connected Thus, this protection scheme is usually used in combina-
and island modes would necessitate adaptive protection tion with other fault-detection and protection schemes.

Utility Grid
12.47 kV
PCC
North South
Substation Substation

4.16 kV 4.16 kV

B A
Feeder
eeder Switch-B Feeder Switch-A
2 1
Vista-E

Vista-A

1 1
VanderCook

3 3
2 2 Gas-Turbine
Gas-Turbin
PV Synchronous
Synchronou
Loop 1 Loop 2 Loop 3 Loop 7 Generator
Eng. 1
CTA1
Vista-D

Vista-B

1 1
3 3
2 2
CTA2

Vista-C
Battery
attery 2
1
3 PV PV
LS

Wind
Wi d Stuart
St t PV

Load-Way and Load-Way PD Load-Feeder and Load-Feeder PD Substation Bus


Loop and Loop PD Substation PD

Figure 2. The IIT microgrid protection system.

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 69

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IIT Microgrid Topology and Components Adaptive Protection Schemes in the IIT Microgrid
IIT owns and operates its campus underground distribution
network. Figure 2 shows the topology of the 4.16-kV Hierarchical Protection Scheme for the Microgrid
microgrid, which is fed through two substations. The north The hierarchical protection scheme of the IIT microgrid is
substation (NS) and south substation (SS) are connected shown in Figure 3. The scheme is based on localized dif-
through a cable to facilitate seamless operation in case of a ferential protections in seven loops and four coordinated
failure in one of the utility feeders within the IIT substa- protection levels, which are implemented by communica-
tions. The IIT microgrid features a high-reliability distribu- tion-assisted digital directional relays and HRDS switches.
tion system (HRDS) with phasor measurement units to The fundamentals of the effective protection scheme at
enhance reliable operation of the campus microgrid. Seven the IIT microgrid are categorized in the following sections.
distribution loops are implemented by integrating HRDS
Vista switches, which connect DERs [gas turbines, solar Balancing the DER Technologies to Contribute
photovoltaic (PV), wind generation, and battery storage] Sufficient Fault Currents in Island Mode
with load entities (building loads and charging stations). In the IIT microgrid, the synchronous generator can pro-
The IIT microgrid is equipped with building automation vide sufficient fault currents in island mode. Two cases are
technologies (building controllers, subbuilding controllers, simulated in power system computer-aided design
and controllable loads) for energy efficiency and demand (PSCAD) to verify fault current contributions of the syn-
response throughout the microgrid. chronous generator. The first case considers island mode,
Vista-E in Figure 2 is a three-way switch in loop 1. Two in which the synchronous generator operates in conjunc-
ways, which are denoted as loop-ways of a Vista switch (Vis- tion with other DERs, while in the second case, the syn-
ta-E-1 and Vista-E-2), are equipped with loop PDs. The third chronous generator operates in parallel with the utility
way (Vista-E-3), denoted as a load-way, is equipped with a grid to serve the 8 MW of campus load. In each case, a sin-
load-way PD, which connects the loads or DER units to the gle-phase-to-ground fault is applied on different sections
microgrid distribution network. The individual loops are con- of the loops. The fault currents associated with fault loca-
nected to the substations via a pair of loop-feeder PDs (A and tions are listed in Table 1. Since the peak load supplied by a
B in Figure 2). The substation is supplied by the 12.47-kV/4.16- single loop is fewer than 3 MW, the maximum current in
kV delta-wye transformer via substation PDs. The natural normal operation that passes through the cables within
gas turbine synchronous generator is connected to the SS each loop is fewer than 0.25 kA when both loop-feeder
through generator PDs, and the NS and SS are connected by breakers A and B are closed (see Figure 2). Once a loop-
a cross-tie cable. feeder breaker opens, the maximum current in normal

Microgrid Protection Principle

Protection Multilevel Protection Protective


Scheme Protection Strategy Coordination Components

Microgrid Substation Protection and


Level Thermal Generation Protection

Nondirectional Loop-1 Loop-7 Non-


OC Scheme directional
Relays
Loop-Feeder Loop-Feeder Loop-Feeder
Level Protection Protection

Localized
Differential Loop Loop Loop
Protection Level Differential Differential Directional
Scheme Digital
Relays
Load-Way Load-Way Load-Way and HRDS
Directional Level Protection Protection Switches
OC Scheme

Figure 3. The hierarchical protection principle of the IIT microgrid.

70 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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operation flowing through the cables in each loop is fewer Protection Strategy
than 0.5 kA. Thus, the fault current magnitude in island In Figure 3, the microgrid protection is divided into four
mode (case 1 in Table 1) is adequate to trigger OC PDs. levels: the load-way level, loop level, loop-feeder level, and
Moreover, loops 13 are directly connected to NS while microgrid level. The protection devices and operation rules
loops 47 are connected to the SS, so the utility grid con- in each level are summarized in Table 2. The detailed
tributes more to fault currents through NS for faults locat- protection strategy of each level will be discussed next in
ed in loops 13 than those located in this section.
loops 47 as shown in Table 1. Similar-
ly, the utility grid would provide higher Microgrids are Load-Way Protection
currents through the SS to faults The green blocks in Figure 2 denote
located in loops 47 than those locat- introduced to load-way directional OC digital relays,
ed in loops 13. which clear load-way faults. Figure 4
address the issues shows a section of loop 1 with Vista
Localized Differential Protection with the economics switches B, C, and D. In this figure, the
Scheme Implemented by black dashed arrow indicates the posi-
Communication-Assisted and the resilience tive flow direction on each loop PD.
Directional OC Relays The red, bold arrow denotes the fault
The differential protection scheme can
of power delivery current direction. In this figure, the
be centralized or localized. The IIT systems. load-way protection and its backup
microgrid uses the localized differential protection are shown. In Figure 4(a),
protection scheme as the centralized once a fault at the load-way of Vista
control suffers from time delays. The switch C is cleared by the load-way PD
Vista switches installed within the loops are equipped with (C3), the campus building connected to the Vista switch C
communication-assisted directional OC relays. The two will be isolated. If the breaker at C3 fails, relay C3 will
relays at each end of a loop section are equipped with optical immediately send transfer trip signals to C1 and C2, which
fiber communication, which facilitates fast (2 ms) and highly are mounted on the same Vista switch. Figure 4(b) shows
reliable communication capability between them. the pair of loop PDs in Vista C (C1 and C2), which provide
backup protections for C3. Should this backup protection
Adaptive Relay Settings for Grid-Connected operate, the buildings connected to Vista C will be isolated.
and Island Modes The load-way PDs can be programmed up to four shots of
As the fault current level shown in Table 1 reduced in automatic reclosing. The load-shedding and other control
island mode, the communication-assisted OC relays in the schemes could also be implemented on the load-way pro-
IIT microgrid can change the settings upon receiving the tection level based on under/overvoltage and under/over-
islanding signal from the master controller (MC). The frequency functions of these relays.
relays switch to instantaneous/definite-time OC protec-
tion scheme, considering the fault current levels in island Loop Protection
mode, to ensure a fast response to lower fault currents. The communication-assisted digital directional relays
(blue blocks) in Figure 2 are implemented on the loop-way
Loop Structure to Facilitate Hierarchical of Vista switches to provide differential protections at loop
Protection and Increase Service Reliability levels. Figure 5 shows the same section shown in Figure 4
The loop structure provides an uninterrupted electricity sup- to present the loop protection schemes when faults occur
ply when one section of the loop is isolated because of a in a loop section between Vista switches C and D. In this
fault. The IIT microgrid features a hierarchical protection figure, there is a communication channel between cou-
structure to enhance the protection reliability. The loop PDs pled relays on both sides of each cable segment (C1 and
in Figure 2 not only clear the faults within
the loop without any interruption to loads
but also provide backup protection to the TABLE 1. The Fault Currents (rms) at the IIT Microgrid.
load-way PDs in case a load-way fault
occurs. If the load-way and loop-level pro- Fault Case 1 : Case 2 :
tection fails to clear the faults within a loop, Location Islanded Mode Grid-Connected Mode
the entire loop is isolated quickly by respec- PCC at NS PCC at SS
tive loop-feeder relays; thus, an uninter- Loops 13 a
3 kA ~ 4 kA b a
12 kA ~ 15 kA b 8 kAa ~ 9 kAb
rupted and reliable supply to other healthy Loops 47 8 kAa~ 9 kAb 12 kAa~ 15 kAb
loops is ensured. The hierarchical protec-
aFault current is lower when the fault is close to the middle point of the loop.
tion strategy at the IIT microgrid is present- bFault current is higher when the fault is close to the loop feeder. (All currents are calculated for single-phase to ground fault.)
ed in the Protection Strategy section.

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 71

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TABLE 2. The Protection Devices and Operation Rules at Each Protection Level.

Protection Level Protection Devices and Operation Rules in Grid-Connected and Island Modes

Load-way DOCa digital relay with adaptive relay setting (responding to lower fault current in island
protection mode):
Operates only in load-way faults (DOC and autoreclosing).
Loop DOCa digital relay with adaptive relay setting:
protection Operates in loop faults [primary and backup permissive overreach transfer trip (POTT)
schemes]
Backup protection for load-way protection.
Loop-feeder OCb relay:
protection Operates to isolate the faulted loop only when the load-way and loop protections have
failed within the loop.
Microgrid-level OCb relay and PCC switch:
protection
In grid-connected mode:
Unintentional islanding operation due to external fault or disturbance
based on the signal from the MC
OCb relay (backup protection for the entire microgrid)
Intentional islanding operation based on the islanding command from the MC.

In island mode:
Resynchronization initiated by a command from the MC.
aDOC: directional OC.
bOC: nondirectional OC.

D2) for facilitating the permissive overreaching transfer relays eliminate traditional coordination time intervals for
trip (POTT) protection scheme. primary protections and facilitate an accurate fault-locating
In Figure 5(a), when a fault occurs in a segment within scheme within a loop. The load-way and loop relays are
a loop, relays within the loop will sense the fault current. high-speed digital relays with an operating time of fewer
The relays sensing the positive directional fault current than 1 cycle (exclusive of the relays time delay and the
(D2, C1, and B1) will send permissive signals to their cou- breaker operating time). Thus, very high-speed and accu-
pled relays (C1, D2, and C2), respectively. In this case, only rate protections are implemented at the load-way and loop
the coupled relays D2 and C1 will clear the fault because protection levels of the IIT microgrid.
each would sense a positive fault current and receive
permissive signals. The tripping crite- Loop-Feeder Protection
rion is because both coupled relays Table 2 shows that the loop-feeder pro-
detect positive directional fault cur- A key feature tection is the upper level of the loop
rent, which indicates that the fault protection, which acts as a backup pro-
has occurred within the loop section
of the microgrid tection for the entire loop. When a
located between them. Figure 5(a) operation includes fault in the load-way or loop results in
shows that once D2 and C1 cleared the failure of load-way and loop pro-
the fault, the loop is converted into its seamless tection schemes (e.g., loss of commu-
two parallel feeders and the loop nication between PDs or any PD
structure is changed to a radial net-
islanding from the failure), the loop on outage will be iso-
work without any load interruptions. utility grid and ability lated by the backup protection provid-
The backup protection operates if a ed by loop-feeder PDs. Loop-feeder
POTT scheme fails (e.g., breaker at C1 to be self-controlled relays (purple blocks in Figure 2) are
fails). In Figure 5(b), once the breaker nondirectional OC relays, which are
failure is detected, C1 will send a
in island mode. set to be slower than load-way and
transfer trip signal to C2 to open the loop relays and faster than substation
breaker at C2. Here, an outage will relays. The proposed setting prevents
occur in buildings fed by Vista switch C while other load nuisance tripping and ensures that faulted loops are iso-
points in the same loop will not be affected. Directional lated before substation relays get to operate.

72 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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D C B D C B
1 2 1 2 1 2 1 2 1 2 1 2
3 3 3 3 Transfer 3 3
Trip Failed

Backup
D C B D C Tripped B
1 2 1 2 1 2 1 2 1 2 1 2
3 3 3 3 3 Failed 3
Tripped

Outage Outage

(a) (b)

Figure 4. The (a) load-way and (b) backup protection.

Transfer
Trip

D POTT C POTT B D POTT C B


1 2 1 2 1 2 1 2 1 2 1 2
3 3 3 3 Failed 3 3

Backup
D C B D C Tripped B
1 2 1 2 1 2 1 2 1 2 1 2
3 Tripped Tripped 3 3 3 Tripped Failed 3 3

Outage

(a) (b)

Figure 5. The (a) loop POTT and (b) backup scheme.

Microgrid-Level Protection
The microgrid-level protection includes PDs for substa- Utility PD
tions and synchronous generators, which are equipped
External Fault or
with nondirectional OC relays for backup protection. Disturbance on Utility
When the microgrid is in grid-connected mode, the OC
relay and the PCC switch located at the substation can
operate in one of the following scenarios: Microgrid
Unintentional islanding as a result of external disturbanc-
[
es: This operation is to protect the IIT microgrid against
utility network outages as shown in Figure 6. In the Substation Relay
and PCC Switch
case of external outages, the utility PD (PD1 in Figure 16)
would trip to isolate the fault, leading to an uninten- Signal
tional islanding of the IIT microgrid. Once any utility- from MC
side voltage and frequency deviations are detected, the
microgrid MC will send a command to open the PCC Figure 6. The unintentional islanding of the microgrid due to a utility
switch and isolate the microgrid. disturbance.

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 73

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In the IIT, two synchronous generators are directly con-


Vista-E nected to the SS. In island mode, a synchronous generator
Loop PD
should remain connected, at least for a short period, to
1 2 Loop 1
provide sufficient fault currents for PD operations at other
rip 3 Load-Way PD protection levels; hence, the OC relay of synchronous
ferT
ns generator has a longer time delay than that of the substa-
Tra
tion protection.
DER Eng. 1
PV Switch DER Switches
Figure 7 shows that renewable energy resources (PV and
Figure 7. The DER switches control. wind) are connected via a controlled DER switch to the
load-way PD of Vista switches. In this figure, once the relay
E3 detects the microgrid isolation, it will send a transfer
Grid-Connected Mode Island Mode
100 100 trip signal to the DER switch to open. This function
Substation Substation prevents an uncontrollable under-/overvoltage or frequen-
cy according to IEEE Standard 1547, which requires DER
10 10 units to be disconnected when the microgrid is de-
energized. Unlike renewable energy resources, the battery
Time (s)

Time (s)

1 Feeder 1 Feeder storage supplies the campus load when there is a loop
fault. If a campus building or loop connected to the
battery storage is isolated, the MC will send signals to dis-
0.1 0.1
Loop Loop charge the battery storage in the building or loop. The
Load Load duration of battery storage discharge is dependent on the
0.01 0.01 available energy at the isolation instant.
0.1 1 10 0.1 1 10
Current (kA) Current (kA)
Protection Coordination in the IIT Microgrid
(a) (b)

Figure 8. The TOC characteristics of relays in (a) grid-connected and Coordination Based on Operation Curves of Relays
(b) island mode.
Figure 8 shows the TOC curves of relays in grid-connected
and island modes. In this figure, load and loop curves
denote the TOC curves for load-way and loop relays, which
B A I 2a clear the load-way and loop faults, respectively. The feeder
Fault
F2 F1 I 2b and substation curves denote the TOC curve for the nondi-
Fault
rectional OC relays at the loop-feeders and substation.
2
1 Based on the adaptive protection scheme discussed in the
Vista-E

Vista-A

2
3 I 1b 3 Hierarchical Protection Scheme for the Microgrid section,
Fault I 1a
Fault
1 2
Vista-D Vista-C Vista-B once the microgrid changes its operation to island mode,
2 1 2 1 2 1 the MC would send a signal to the load-way and loop relays
3 3 1 3
to switch to the instantaneous/definite-time OC scheme as
Load-Way PD shown in Figure 8(b). This enables the load-way and loop
Loop PD relays to respond to lower fault currents in the island mode.
Loop-Feeder PD (OC Relay)
Coordination Considering Special Cases in Loops
Figure 9. The equidistance and weak-infeed faults in loop 1.
Since the fault on a closed-loop IIT microgrid system will
always be fed through two paths from substations, the
Nondirectional OC relay: If the primary protection fails
[ relay coordination for a looped distribution network dif-
to clear a microgrid fault or the PCC switch does not fers from that of a radial network. To evaluate the protec-
respond to the MCs command to isolate a utility fault, tion coordination in a loop, two extreme cases are
the PCC switch will ultimately open in response to investigated in loop 1, as shown in Figure 9.
the substation OC relay. This relay should have a suffi- 1) Equidistance loop fault: The equidistance loop faults
cient time-delay for the operation of all protection occur half-way between the loop-feeder breakers (e.g.,
schemes in the load-way, loop, and loop-feeder levels. at point 1 in Figure 9). In this case, as the fault current
Intentional islanding and resynchronization initiated
[ is split equally between the two paths in the loop (I 1fault
a

by the MC: This operation is controlled by the MC for 1b


and I fault), the loop and loop-feeder relays will detect
intentional islanding of the microgrid and does not approximately 50% of the total fault current and the
apply to any faults. substation relays will detect the entire fault current.

74 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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v_vista-C
4.0

(kV)
0.0
4.0 Fault Is
Fault Is
i_fault Cleared
Applied 30
by C1

(kA)
0 and C2
30
v_vista-C i_relay-C1
4.0 30
(kV)

(kA)
0.0 0
4.0 Fault Is 30
Fault Is i_fault Cleared
30 i_relay-C2
Applied by C3 30
(kA)

(kA)
0 0
30 30
x 0.90 1.00 1.10 1.20 1.30 x 0.90 1.00 1.10 1.20 1.30
(a) (b)

Figure 10. The simulation results when the synchronous generator is disconnected in Case A1. (a) The fault is cleared by the load-way PD. (b)
The load-way PD has failed to clear the fault, which was cleared by the backup protection provided by loop PDs.

Therefore, the loop and loop-feeder relays must clear the IIT microgrid. In this section, the following cases are pre-
50% of the fault current when coordinated with the sented to simulate the protection schemes discussed in the
substation relay. Adaptive Protection Schemes in the IIT Microgrid and Pro-
2) Weak-infeed loop fault: The weak-infeed loop faults tection Coordination in the IIT Microgrid sections.
occur immediately downstream of the loop-feeder Case A: Protection in grid-connected mode
[
breakers along the loop (e.g., at point 2 in Figure 9). In A1: load-way fault
this case, the substation relay, loop-feeder relay A, and A2: loop fault.
loop relay F1 will sense nearly the entire fault current Case B: Protection in island mode
[
(I 2fault
a
), while loop-feeder relay B and other loop relays B1: load-way fault
will sense only a small portion of the fault current B2: loop fault.
(I 2fault
b
) . In this extreme case, the loop-level POTT scheme, Case C: Protection in weak-infeed loop fault.
[
provided by coupled loop relays A1 and F1, may fail
because of the low fault current flowing through A1 and Case A: Protection in Grid-Connected Mode
the loop-feeder relay A will trip to provide the backup
protection (nondirectional OC protection). Once the A1: Load-Way Fault
loop-feeder relay A has tripped, loop-feeder relay B will This case shows how the protection schemes clear a load-
detect the fault current and trip subsequently to isolate way fault in grid-connected mode. Here, the IIT microgrid is
the entire loop. This procedure for clearing the fault connected to the utility grid through the NS, and the syn-
would take twice as much time as that of the loop-feed- chronous generators are disconnected according to the ter-
er-level protection. The substation relay always detects tiary control signal provided by the MC. A single-phase to
the fault current. However, it is important to make sure ground fault occurs at t = 1 s on the load-way at Vista C in
that the loop-feeder-level time delays are less than half
of that of the substation relays. This procedure is shown
in a simulation in the Adaptive Protection Schemes in TABLE 3. The Operating Time of Key Protection
the IIT Microgrid section.
Devices Applied at the IIT Microgrid.
Cycles Seconds
Simulation Results for Microgrid Protection
The IIT microgrid is modeled in Figure 2, and single-phase to Operating time of load-way <1 0.01
and loop relays
ground faults are applied in loop 1. All faults are bolted (low-
impedance) faults. Here, OC (directional and nondirectional) Dropout time of load-way 1 0.017
and loop relays
protection schemes are only considered. Figures 1016 show
the instantaneous voltage and current curves. Table 3 shows Operating time of medium- 3 0.05
voltage circuit breakers
the typical operating times for the key protection devices in

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 75

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v_vista-C
4.0

(kV)
0.0

4.0 Fault Is
Fault Is i_fault Cleared
Applied 30
by C1

(kA)
and C2

30
v_vista-C
4.0 i_relay-C1
20
(kV)

10

(kA)
0.0 0
10
4.0 Fault Is 20
Fault Is i_fault
30 Cleared i_relay-C2
Applied 20
by C3
10
(kA)

(kA)
0
10
30 20
i_grid i_grid
20 20
10 10
(kA)

(kA)
0 0
10 10
20 20
i_gen i_gen
20 20
10 10
(kA)

(kA)

0 0
10 10
20 20
x x
2.90 3.00 3.10 3.20 3.30 2.90 3.00 3.10 3.20 3.30
(a) (b)

Figure 11. The simulation results when P SG = 4 MW in case A1. (a) The fault is cleared by the load-way PD. (b) The load-way PD failed to clear
the fault, which was cleared by the backup protection provided by loop PDs.

v_vista-C v_vista-C
4.0 4.0
(kV)

(kV)

0.0
4.0 4.0
v_vista-D v_vista-D
4.0 4.0
(kV)

(kV)

Fault Is 0.0
4.0 Cleared 4.0 Fault Is
Fault Is i_fault by Fault Is i_fault
30 30 Isolated
Applied POTT Applied
by
(kA)

(kA)

(D2-C1)
Backup
(D2-C2)
30 30
Fault Is
i_relay-C1 i_relay-C1
20 20 Fed
10 10 Through
(kA)

(kA)

0 0
10 10 Vista C
20 20
D2 Tripped;
i_relay-D2 i_relay-D2
20 20 C1 Failed
10 10
(kA)

(kA)

0 0
10 10
20 20
x x
0.90 1.00 1.10 1.20 1.30 0.90 1.00 1.10 1.20 1.30
(a) (b)

Figure 12. The simulation results when the synchronous generator is disconnected in case A2. (a) The fault is cleared by the POTT scheme.
(b) The fault is isolated by the backup loop PDs once the POTT scheme has failed.

76 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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v_vista-C v_vista-C
4.0 4.0

(kV)
(kV)

0.0
4.0 4.0
v_vista-D v_vista-D
4.0 4.0
(kV)

(kV)
0.0 Fault Is
Cleared 4.0 Fault Is
4.0
Fault Is by Fault Is i_fault Isolated
i_fault 30
Applied 30 POTT Applied by Backup
(D2-C1)

(kA)
(D2-C2)
(kA)

0
Fault Is Fed
30 30
Through
i_relay-C1 i_relay-C1 Vista C
20 20
10 10

(kA)
(kA)

0 0
10 10
20 20
D2 Tripped;
i_relay-D2 i_relay-D2
20 20 C1 Failed
10 10
(kA)

(kA)
0 0
10 10
20 20
i_grid i_grid
20 20
10 10
(kA)

(kA)

0 0
10 10
20 20
i_gen i_gen
20 20
10 10
(kA)

(kA)

0 0
10 10
20 20
x x
2.90 3.00 3.10 3.20 3.30 2.90 3.00 3.10 3.20 3.30
(a) (b)

Figure 13. The simulation results when P SG = 4 MW in case A2. (a) The fault is cleared by the POTT scheme. (b) The fault is isolated by the
backup loop PDs once the POTT scheme has failed.

loop 1 (see Figure 2). Figure 10 shows the instantaneous however, the duration of the fault is much shorter when
simulation results for the faulted phase. Here, v_vista-C is the fault is cleared by the load-way PD.
the voltage at Vista C, and i_fault, i_relay- Figure 11 shows the results when
C1 and i_relay-C2 are the fault current the same fault has occurred at t = 3 s
and relay C1 and relay C2 currents. In and the synchronous generator sup-
Figure 10(a), the fault is cleared by the Differential plied 4 MW of the campus load
load-way PD installed at Vista C. In this according to the tertiary control sig-
figure, the fault current of the load-way
protection schemes nal. The synchronous generator will
of Vista C is about 13 kA (rms), which are based on also contribute to the fault current.
triggers the load-way relay to clear the Here, i_grid and i_gen are the cur-
fault in less than 0.1 s. This time includes coupled differential rents of the utility grid and the syn-
the time-OC delay and operating times chronous generator. Figure 11(a) and
directional relays (b) shows the scenarios in which the
of the relay and breaker. In Figure 10(b), it
is assumed that the load-way PD has that can accurately faults are cleared by load-way PD
failed to clear the fault and the fault is and the backup loop PDs. In these
cleared by the backup protection provid- locate and isolate figures, the utility grid contributes
ed by the two loop PDs at Vista C. In this about 12kA (rms), and the synchro-
faults without
figure, the fault clearing time is about nous generator contributes 3 kA
0.16 s, which is the total operating time affecting other (rms) to the total fault current.
of the primary and backup protections.
Figure 10(b) shows the current for the components in A2: Loop Fault
two loop PDs (C1 and C2). Both scenarios distribution systems. This case shows how the POTT
result in building outages at Vista C; scheme and its backup protection

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 77

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v_vista-C
4.0

0.0

(kV)
4.0
Fault Is
Fault Is i_fault
10.0 Cleared
Applied
5.0 by C1

(kA)
0.0 and C2
5.0
10.0
v_vista-C i_relay-C1
4.0 10.0
5.0

(kA)
(kV)

0.0 0.0
5.0
4.0 10.0
Fault Is
Fault Is i_fault i_relay-C2
10.0 Cleared 10.0
Applied
5.0 by C3 5.0

(kA)
(kA)

0.0 0.0
5.0 5.0
10.0 10.0
i_gen i_gen
10.0 10.0
5.0 5.0
(kA)

(kA)
0.0 0.0
5.0 5.0
10.0 10.0
x x
2.90 3.00 3.10 3.20 3.30 2.90 3.00 3.10 3.20 3.30
(a) (b)

Figure 14. The simulation results in case B1. (a) The fault is cleared by the load-way PD. (b) The load-way PD failed to clear the fault, which is
cleared by the backup protection provided by loop PDs.

v_vista-C v_vista-C
4.0 4.0
(kV)
(kV)

0.0 0.0
4.0 4.0
v_vista-D v_vista-D
4.0 4.0
(kV)

(kV)

0.0 0.0
Fault Is Fault Is
4.0 4.0
Fault Is Cleared Fault Is Isolated
i_fault i_fault
Applied 10.0 by Applied 10.0 by Backup
5.0 POTT 5.0
(kA)

(kA)

0.0 0.0 (D2-C2)


5.0 (D2-C1) 5.0
10.0 10.0 Fault Is Fed
i_relay-C1 i_relay-C1 Through
10.0 10.0 Vista C
5.0 5.0
(kA)
(kA)

0.0 0.0
5.0 5.0
10.0 10.0
D2 Tripped;
i_relay-D2 i_relay-D2
10.0 10.0 C1 Failed
5.0 5.0
(kA)
(kA)

0.0 0.0
5.0 5.0
10.0 10.0
i_gen i_gen
10.0 10.0
5.0 5.0
(kA)

(kA)

0.0 0.0
5.0 5.0
10.0 10.0
x x
2.90 3.00 3.10 3.20 3.30 2.90 3.00 3.10 3.20 3.30

(a) (b)

Figure 15. The simulation results in case B2. (a) The fault is cleared by the POTT scheme. (b) The fault is isolated by the backup loop PDs once
the POTT scheme has failed.

78 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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scheme clear a loop fault in grid-connected mode. Here,


we assume that the IIT microgrid is connected to the utili- Fault Is
Fault Is i_fault Isolated
30
ty through the NS and that the synchronous generator is Applied by

(kA)
disconnected according to the tertiary control signal. A Feeders
A and B
single-phase to ground fault occurs at t = 1 s in the loop 30
i_feederA Feeder A
section between Vista C and Vista D (see Figure 2). Figure 30 Tripped

(kA)
12(a) shows that the fault is cleared by the POTT scheme
of coupled PDs within this section. Since the fault location Low 30
is close to the middle of the loop, both D2 and C1 detect Current i_feederB
30 Feeder B
Through
about 7 kA (rms) fault current, so the fault is cleared in

(kA)
Tripped
Loop
fewer than 0.1 s without any interruption to the electricity PD A1 30
supply of the campus buildings. Figure 12(b) shows that x
0.80 1.20 1.60 2.00 2.40
once the POTT scheme fails, the back protection scheme
isolates the fault. In this figure, D2 has operated success-
Figure 16. The simulation result in case C (weak-infeed loop fault).
fully; however, C1 has failed and its backup PD (C2) has
been triggered to clear the fault. In Figure 12(b), only one
side of the loop (Vista C) supplies the fault current breaker operating time. In Figure 14(b), it is assumed
between t = 1.09 s and t = 1.17 s; therefore, during this that the load-way PD has failed to clear the fault and
period, the current flowing through relay D2 is reduced to the fault is cleared by the backup protection provided by
zero while the current in relay C1 is increased, and the the two loop PDs at Vista C. In this figure, the fault is
total fault current is reduced from 14 kA (rms) to 12 kA cleared by the backup protection after about 0.16 s,
(rms). At 1.17 s, the fault is isolated by D2 and C2, and which is the total operating time of the primary and
there is an outage in the building connected to the Vista C. backup protections. Both scenarios result in building
In Figure 13, we assume the same fault occurs at t = 3 s outages connected to Vista C. Compared to Case A1, the
with the synchronous generator fault current in Figure 14 is signifi-
supplying 4 MW of campus load cantly reduced in the island mode.
according to the tertiary control sig-
nal. In this case, the synchronous
The difference B2: Loop Fault
generator will also contribute to the between fault This case shows how the POTT and its
fault current. Figure 13(a) and (b) backup protection schemes clear a loop
shows the fault being cleared by the currents in grid- fault in the island mode. A single-phase
POTT scheme and its backup protec- to ground fault occurs at t = 3 s on the
tion, respectively. In these figures,
connected and loop section between Vista C and Vista
the utility grid contributes about island modes would D (see Figure 2), and the fault current is
12 kA (rms) and the synchronous mainly provided by the synchronous
generator contributes 3 kA (rms) to necessitate adaptive generator. In Figure 15(a), the fault is
the total fault current. cleared by the POTT scheme of coupled
protection schemes PDs (C1 and D2) in this loop section.
Case B: Protection in Island Mode in microgrids. Since the fault location is close to the
Here, the island mode protection is middle of the loop, both D2 and C1
discussed. In this case, since the fault detected about 2 kA (rms) fault current
current level is reduced, the MC and the fault is cleared in fewer than
sends signals to the load-way and loop PDs to change 0.1 s without any supply interruption to the campus build-
their relay settings to island mode. ings. Figure 15(b) shows the case in which the fault is isolated
by the backup loop PDs once the POTT scheme has failed. In
B1: Load-Way Fault this figure, breaker D2 successfully operated while C1 failed.
This case shows how the protection scheme clears a The backup breaker at C2 is triggered to isolate the fault
load-way fault in island mode. A single-phase to ground about 0.18 s after the fault is applied. As shown in Figure
fault occurs at t = 3 s on the load-way at Vista C in loop 15(b), between 3.09 s and 3.18 s, only one side of the loop
1 (see Figure 2), and the fault current is mainly provided (Vista C) still supplies the fault current, so during this period,
by synchronous generator. In Figure 14(a), the fault is the current passing through relay D2 reduces to zero while
cleared by the load-way PD installed at Vista C. The fault the current passes through C1 increases, and the total fault
current on the load-way of Vista C is about 3.2 kA (rms) current is reduced from about 4 kA (rms) to 3.1 kA (rms). In
as shown in this figure, and the load-way relay clears Figure 15(b), there is an outage in the loads connected to
the fault in less than 0.1 s. This time delay includes the Vista C as it is isolated from the loop. Compared to Case A2,
instantaneous/definite time delay of relay and the the fault current is significantly reduced in island mode.

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 79

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Case C: Protection in The IIT microgrid M. Shahidehpour and M. E. Kho-


Weak-Infeed Loop Fault dayar, Cutting campus energy costs
In this case, we assume that the uses the localized with hierarchical control: The eco-
microgrid operates in grid-connected nomical and reliable operation of a
mode and a single-phase-to-ground differential microgrid, IEEE Electrification
fault occurs at t = 1 s on loop 1 immedi- protection scheme Mag., vol. 1, no. 1, pp. 4056, Sept.
ately after loop-feeder A (see Figure 9). 2013.
The total fault current and fault cur- as the centralized M. E. Khodayar, M. Barati, and M.
rents through loop-feeders A and B are Shahidehpour, Integration of high
shown as i_fault, i_feederA, and i_feederB control suffers from reliability distribution system in
in Figure 16, The loop POTT protection time delays. microgrid operation, IEEE Trans.
scheme failed because of low-fault cur- Smart Grid, vol. 3, no. 4, pp. 19772006,
rent sensed by loop PD A1. This small Dec. 2012.
fault current is shown by i_feederB from Perfect power prototype at Illi-
1 s to about 1.6 s as marked in Figure 16. As a backup pro- nois Institute of Technology. [Online]. Available: http:// ____
tection for loop 1, the nondirectional OC relay at loop- www.iitmicrogrid.net
feeder A trips at 1.6 s after 0.6 s delay. This time delay A. Flueck and Z. Li, Destination: Perfection, IEEE
includes the relay and breaker operating time and time- Power Energy Mag., vol. 6, no. 6, pp. 3647, Nov. 2008.
OC delay of relay A. The entire fault current flows through T. Horan, J. K. Niemira, and J. F. Clair. (2010). Detailed
loop-feeder B in 1.62.2 s, which triggers the nondirection- functional specification and analytical studies results for
al relay at loop-feeder B after 0.6 s delay at 2.2 s. The total high reliability distribution system (HRDS) of Illinois Insti-
fault current is lower in 1.62.2 s compared to 11.6 s, tute of Technology, S&C Electric Company, Project No. 3568
because of the higher loop impedance in the latter period. and 3953. [Online]. Available: http://www.sandc.com
G. Tsai. (2011). Perfect power systemDesign of the
Conclusion SCADA system for the high reliability distribution system
It is shown that the hierarchical protection strategy based on at Illinois Institute of Technology, S&C Electric Company.
the communication-assisted directional OC relays and the [Online]. Available: http://www.ieeechicago.org/LinkClick.
localized differential scheme would provide efficient protec- aspx?fileticket=NDa3t6rGHig%3D&tabid=1559
______________________________
tion schemes for the IIT microgrid in both grid-connected SEL-351 optimize protection, automation, and breaker
and island modes. The communication-assisted relays adopt control. [Online]. Available: https://www.selinc.com/workarea/
_____________________
adaptive settings for their operation to respond to the higher downloadasset.aspx?id=5527
____________________
fault currents in grid-connected mode and lower fault IEEE Standard for Interconnecting Distributed Resources with
currents in island mode. The synchronous generator in the Electric Power Systems, IEEE Standard 15472003, pp. 7, 2003.
microgrid provides sufficient fault current for the implemen-
tation of the OC-based protection strategy. The simulation Biographies
results for grid-connected and island modes demonstrated Liang Che (lche@hawk.iit.edu)
____________ is with the Electrical and

the effectiveness of the proposed protection scheme. Computer Engineering Department, Illinois Institute of
Technology, Chicago.
Acknowledgments Mohammad E. Khodayar (mkhodayar@smu.edu)
_______________ is
This project was partially supported by the U.S. Depart- with Department of Electrical Engineering, Southern
ment of Energy under grant DE-FC26-08NT02875. Methodist University, Dallas, Texas.
Mohammad Shahidehpour (ms@iit.edu)
_______ is with the
For Further Reading Electrical and Computer Engineering Department, Illinois
M. Shahidehpour, M. E. Khodayar, and M. Barati, Campus Institute of Technology, Chicago.
microgrid: High reliability for active distribution systems,
in Proc. IEEE Power Energy Society General Meeting, July
2012, pp. 12.

80 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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By Aris Dimeas, Stefan Drenkard, Nikos Hatziargyriou,


Stamatis Karnouskos, Koen Kok, Jan Ringelstein,
and Anke Weidlich

IMAGE COURTESY OF STOCK.XCHNG/SVILEN001.

RIVATE HOUSEHOLDS CONSTITUTE A CONSIDERABLE SHARE OF


Europes electricity consumption. The current electricity distribution sys-
tem treats them as effectively passive individual units. In the future, how-
Developing ever, users of the electricity grid will be involved more actively in the grid
operation and can become part of intelligent networked collaborations.
an interactive They can then contribute the demand and supply flexibility that they dispose of and, as
network. a result, help to better integrate renewable energy in-feed into the distribution grids.
To achieve energy efficiency and sustainability, a novel smart grid information and commu-
nication technologies (ICTs) architecture based on smart houses intelligently interacting with

Digital Object Identifier 10.1109/MELE.2013.2297032


Date of publication: 18 March 2014

2325-5987/14/$31.002014IEEE I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 81

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smart grids is needed. Along these lines, the European Com- aggregation software architecture based on agent
[
mission cofunded the research project SmartHouse/Smart- technology for service delivery by clusters of smart
Grid (SH/SG) (see www.smarthouse-smartgrid.eu), a houses to wholesale market parties and grid operators
consortium of leading parties in ICT for energy, has adopted [ usage of service-oriented architecture (SOA) and
an innovative approach. The ICT architecture developed by strong bidirectional coupling with the enterprise sys-
the consortium introduces a holistic concept and technology tems for system-level coordination goals and han-
for smart houses as they are situated and intelligently man- dling of real-time tariff metering data, etc.
aged within their broader environment (see Figure 1). The The project capitalizes on several smart grid concepts
approach treats smart homes and buildings as proactive cus- developed at different research institutes:
tomers (prosumers) that negotiate and collaborate as an [ The bidirectional energy management interface
intelligent network in close interaction with their external (BEMI) was developed at the Fraunhofer Institute for
environment. Context is king here: the smart home and Wind Energy and Energy System Technology (IWES),
building environment includes a diversity of other units: Germany.
neighboring local energy consumers (other smart houses), [ The multiagent intelligent control (MAGIC) system
the local energy grid, associated available power and service was developed at the Power System Laboratory of the
trading markets, as well as local producers [local environ- National Technical University of Athens, Greece.
mentally friendly energy resources such as solar and (micro) [ PowerMatcher was developed at the Energy Research
combined heat and power (CHP)]. Center of The Netherlands (ECN). [The PowerMatcher
The architecture is based on a mixture of innovations team at ECN was recently taken over by The Nether-
from recent R&D projects in the forefront of European lands Organization for Applied Scientific Research
smart grids research. These innovations include: (TNO).]
[ in-house energy management based on user feed- These three technologies were further developed
back, real-time tariffs, intelligent control of appliances, within the project, and synergies between the approach-
and provision of (technical and commercial) services es were identified. They all share one control paradigm,
to grid operators and energy suppliers which can be summarized as:

Optimization Service

Internet Legacy Providers

Auctions Marketplace

Transaction Platform

Buy and Sell


Future Service-Based
Business
Energy Infrastructure
Intelligence

Internet Smart Meters Internet

Internet Alternative
Energy
Providers

Home Appliances
Management

Figure 1. The service-based ecosystem based on smart houses and smart grids.

82 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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TABLE 1. SH/SG Business Cases.

Number Name Brief Description


1 Aggregation of houses When smart houses are able to communicate, interact, and negotiate with both
as intelligently net- customers and energy devices in the local grid, the electricity system can be operated
worked collaborations more efficiently because consumption can be better adapted to the available energy
supply, even when the proportion of variable renewable generation is high. A commer-
cial aggregator could exercise the task of jointly coordinating the energy use of the
smart houses or commercial consumers that have a contract with him (either via direct
control of one or several participating devices or through providing incentives to the
participating devices so that they will behave in the desired way with a high probability
but not with certainty).
2 Real-time imbalance This business case is rooted in the balancing mechanism as applied in Europe
reduction of a retail and defined by the European Network of Transmission System Operators for Electric-
portfolio ity (ENTSO-E) Scheduling System. It focuses on the balancing actions by a balance
responsible party (BRP) during the balancing settlement period. The key idea of
this business case is the utilization of real-time flexibility of end-user customers to
balance the BRP portfolio instead of using traditional power plants. For each control
zone, the BRP aggregates all of its contracted flexible distributed generation (DG) and
responsive loads in a virtual power plant (VPP). The BRP uses the VPP for its real-time
balancing actions.
3 Offering (secondary) This business case is rooted in the ancillary services as initiated by TSOs
reserve capacity to the throughout the world. In this business case, the BRP should be able to offer
transmission system its flexible demand and supply on the reserve market. To enable BRPs to offer
operator (TSO) flexible demand and supply on the reserve market, their bids have to fit into the
above market structure. The key idea of this business case is the utilization of
real-time flexibility of end users (prosumers) in balancing a control zone. For each
control zone, market parties aggregate these flexible DG and responsive loads in
a VPP. The TSO contracts in real time part of these flexible loads for its real-time
balancing actions.
4 Distribution system con- This business case aims at deferral of grid reinforcements and enhancement of
gestion management network utilization. The need clearly arises in areas with a large amount of DG near
one location. Noncoordinated control of (new) electric devices (e.g., heat pumps and
electric cars) may lead to a sharp rise in needed capacity on lines and transform-
ers. By coordination of these devices, there can be allocated timeslots for operation
that are spread out over time. Furthermore, coordination can increase the simul-
taneousness of local supply and demand in case local generation is integrated.
Congestion management as a service can be used to better match own generation
and consumption for prosumers; also, distribution system operators (DSOs) may be
interested in improving the quality of supply in areas with restricted capacity in lines
and transformers.
5 Variable tariff-based load In well-functioning and liquid markets, the expectations of all market participants
and generation shifting about the generation and consumption situation of the next day are well reflected in
day-ahead power exchange prices. If these wholesale prices are passed over to the
end users, these have an incentive to shift loads from high-price times to times of
lower prices. The key idea of the business case is, thus, to provide the customer with
a variable price profile on the day before power delivery. At the customers premise,
an energy management system should receive the price signal and determine the
optimal timing for the energy consumption (or generation, for prosumers) of those
appliances that can be shifted in time or that have a storage characteristic. The main
value driver from the customers perspectives is to receive a tariff and a technology
that reduces their energy bills. The value driver from the retailers perspectives is the
opportunity to reduce his procurement.
6 Energy usage monitoring Awareness of ones energy use can stimulate behavioral changes toward energy
and optimization ser- savings. Personalized and well-targeted advice on how to save energy can help further
vices for end consumers exploit the savings potential. This business case, therefore, suggests providing
customers with detailed and comprehensible information about their own energy con-
sumption. The additional value to the customer provided by the described information
services can either be remunerated through additional fees or through enhanced
customer loyalty. A combination of both is also conceivable.
(Continued)

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 83

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TABLE 1. SH/SG Business Cases (Continued).

Number Name Brief Description


7 Distribution grid cell The key idea of this business case is to allow the operation of a grid cell in island
islanding in case of mode in case of higher system instability in a market environment. This business
higher system instability case considers that the islanding procedure is performed automatically. Technically,
it involves monitoring and forecasting the available DG and loads and creating a load
shedding schedule based on to the criticality of the consumption loads and on the
customers willingness to pay for running the appliance during island mode. During
an event, decisions are taken how many and which loads must be shed to maintain
island mode steadily. Grid cell islanding is of value to the DSO. Islanding helps him to
quickly restore system stability within his grid area.
8 Black-start support from The key idea of this business case is to support the black-start operation of the main
smart houses grid. It considers that after a blackout, the local grid is also out of operation and the
main goal is to start up quickly in island mode and then to reconnect with the upstream
network to provide energy to the system. Black-start support is of value both to the DSO
and the consumer. Flexible demand helps the DSO restore system stability.
9 Integration of forecast- The volatility of the production level of distributed energy resources (DERs) makes
ing techniques and tools forecasting a necessary tool for market participation. The actor with the lowest fore-
for convenient participa- casting error will have the most efficient market participation. This business case pro-
tion in a common energy vides benefit for both the consumer and the aggregator. The aggregator has the ability
market platform to participate accurately in the wholesale market and gain by reducing the uncertain-
ties. The consumer benefits from lower prices. However, it requires the participation
of the consumers since an accurate forecast requires online monitoring of the DERs
and not simply reading from the smart meter. The business case comprises the data
collection, which is the most critical part that may lead to a correct forecast. The
second part is the data evaluation and processing, e.g., for extracting a wind power
prediction valid for a certain region.

TABLE 2. An Overview of the SH/SG Technologies.

PowerMatcher BEMI MAGIC


Basic concepts
 Decentralized decision making about  Decentralized decision making about  Decentralized decision making about
consumption and production consumption and production consumption and production
 Decision making based on central-  Decision making based on central-  Decision making based on central-
ized market equilibrium of all bids ized tariff decision ized negotiation of requests
 Real-time mapping of demand and  Mapping demand to available supply  Mapping of demand and supply
supply  Automated control of consumption  Automated control of production and

 Automated control of production units consumption units


and consumption units  User information for manual control

 Scalable architecture of consumption behavior

Methodology
 Market-based concept for demand  BEMI enables decentralized  Multi-agent system (MAS) based
and supply management decisions based on tariff information using Java Agent Development Frame-
 General equilibrium theory  Decision consists of local information work (JADE) (negotiation based)
 Market is distributed in a tree about devices and central informa-  Grid announces selling price/buying
structure tion about variable prices price
 Participants: devices, concentrators,  Pool-BEMI sends price profiles  Microgrid tries to agree on better
objective agents, and auctioneer  Avalanching can be avoided by giv- prices
 Device agents submit bids/demand ing different price profiles to different  Maximum of internal benefit
and supply functions customer groups  Auction algorithm such as the sym-

 Auctioneer determines prices  Day-ahead announcement of price metric assignment problem


 Round-based marketplace profiles  Agents also may use reinforcement
learning (Adapted MAS Q-Learning)
 Number of involved agents differs
with the action to take

84 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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The concept of the project is to combine central- of automated on and off switching features for CHP pro-
ized and decentralized control approaches with the ducers, as an example.
following philosophy: Let the end-customer decide Each of the concepts includes a centralized negotiation
as much as possible within his or her private grid. or calculation mechanism that tries to map the producible
Therefore, offer the end customer the online tools energy to the consumable energy for all actors (smart
with appropriate boundary conditions and incen- houses and production sites) within the smart grid. Exter-
tives to optimize his or her energy interface to the nal production sites producing and providing a certain
outside world according to actual (dynamic) prices amount of energy can be included in the negotiation pro-
and energy efficiency considerations that reflect the cess as a fixed and uncontrollable amount of energy.
real-time needs of the public grid. To this end, pro- Therefore, the architecture of all three setups contains a
vide centralized information but allow for decen- central coordination mechanism.
tralized decisions. The way the three coordination mechanisms are
designed is similar from a high-level perspective, but differs
Business Cases in the details. Each tool either collects information or fore-
The technological developments in the SH/SG project casts the desired amount of energy to be consumed or
have been based on nine business cases that describe produced from all participating smart houses and produc-
how smart grid approaches could be applied by single tion sites. Each tool is able to understand not only the
stakeholders in the electricity supply business. As desired energy amounts but also some indicators about the
shown in Figure 1, not all business cases are applicable conditions energy will be consumed or produced, namely,
to all stakeholders, but each stakeholder can apply price incentives to shift demand. Based on all offers and
more than one business case. Table 1 summarizes the requests, the tool analyses how the equilibrium can be
nine business cases. reached under the given conditions.
One major difference between the negotiation proce-
The Overall Architecture dures is the time cycle of the negotiations and, therefore,
The SH/SG architecture has to account for the heterogene- the consideration of unforeseeable changes. PowerMatcher
ity of concepts adapted and tested within the project. One and the MAGIC system work in (near) real time. The advan-
major overarching paradigm that has to be reflected is the tage is that for unforeseeable demand or production
distributed control paradigm. Following this, there needs to requests, a short reaction time can be expected to map the
be some distributed decision making at the house level, complementary production or demand requests. The BEMI
which is facilitated through an appropriate in-house archi- technology, in contrast, works on a time scale of a day,
tecture in combination with global coordination. The latter, where day-ahead production and consumption patterns
in turn, facilitates a business case of some involved enter- are considered to define the price levels that are used as
prise. Table 2 summarizes the main characteristics of the decision-guiding signals.
three technologies employed in the project: PowerMatcher, The field trials described in next few sections aim to
BEMI, and MAGIC. investigate the appropriate time scale of equilibrium cal-
There are some important commonalities between these culations. The near real-time negotiation demands a high
technologies. As already depicted in Table 2, it can be recog- degree of scalability and performance requirements. The
nized that the common idea of the SH/SG implementation PowerMatcher tool performs real-time negotiation using a
follows a unified approach: PowerMatcher, BEMI, and MAGIC multilevel approach realized by the use of agents, cluster-
manage demand and supply on the basis of a centralized ing several smart houses or concentrator levels stepwise.
optimization tool that works with decentralized decision For a small number of smart houses, the concept of real
making. This is highly important for the acceptability of time could scale easily, but for a higher number of smart
these technologies since each participant keeps full control houses, the concept has yet to be proven.
over his devices but has incentives to align the device opera- Decentralized decisions about consumption and pro-
tion with the global status of the overall system. duction decisions are decentralized, i.e., the control of
Each of the three technologies is based on the concept switching on or off of a certain producing or consuming
of mapping the demand to the producible or produced device is always done within the smart house itself. Even
energy. It is possible to adjust the amount of energy to be when for the smart houses a central control is established,
consumed by deploying features like automatically the decision remains within the house. Of course, the
switching on and off consuming devices or indirectly decision is guided by a centrally determined and provided
influencing the consumers behavior via price incentives. signal (e.g., virtual price signal or a real-time tariff/price
These features are part of all three trials (which are based structure or direct control signals).
on three different technology approaches), and the auto- Because of the difference between the technologies
mated switching of the controllable devices in the house- employed, SH/SG does not have a common architecture
holds plays a significant part. The control of the shiftable in the classical notion, but an amalgamation of heteroge-
production of energy is in a similar way possible by means neous approaches that are glued together by an SOA, as

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 85

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based on a tariff profile received one


day ahead via a broadband power
Wholesale
Market Energy Trade line used for communication with
the DSO. Automatically switched
Balancing devices include dishwashers, wash-
BC 1, 5, 9 Energy BC 2, 3, 4 Energy ing machines, refrigerators, freezers,
Retailer and clothes dryers (with a maximum
Commodity
of two devices switched per custom-
Subsystem er). In addition, other devices could
DG Consumer/ Large Power
TSO be started or stopped by the custom-
Operator Prosumer Producer Technical
er any time according to price incen-
Subsystem
tives by a simple click on the Web
interface. Consumer interaction with
DSO Physical the Energy Butler and the communi-
BC 6, 7, 8 Energy Flow
cation among all elements of the
smart house is presented in Figure 4.
Figure 2. Mapping the business cases to the market participants. The energy management system
tested in this field trial uses two main
shown in Figure 3. This is compatible with the future units together with supporting additional equipment:
smart grid vision as it is not expected that a single archi- 1) a smart meter to measure the electricity consumption
tecture will prevail but several heterogeneous approaches digitally
will be applied. All of them will exchange information at a 2) the Energy Butler together with switchboxes to start/stop
higher level via common standardized approaches, such connected household devices and primary equipment.
as those enabled by Web services. In addition to these units, the energy management sys-
tem comprises supporting technical infrastructure involv-
Field Trials ing many rather complex processes and equipment within
a single household. To keep high customer satisfaction and
Win-Win Situations: Trial in Manheim considering interaction between various stakeholders
between the customer and the local Utility at Mannheim,
Trial Setup and Objectives Germany, Mannheimer Versorgungs- und Verkehrsgesell-
The main objective of the trial in Manheim is to test the schaft Energie AG (MVV) Energie between MVV and the
automated response of household devices and the cus- equipment developer, hardware manufacturer and other
tomers behavior on variable electricity prices within a third parties involveda failure management system was
real utility environment. Participants are located in introduced. The field trial installations were conducted in
Mannheims ecologically oriented suburbs of Wallstadt several phases, starting with a small group of households in
and Feudenheim with a large number of customers act- the first phase and with further replication to a larger num-
ing as consumers and photovoltaic (PV)-based electricity ber of the customers in the subsequent phase. The two
generators, i.e., prosumers. Part of the solution proposed main phases were:
by the field trial in Manheim is to integrate a demand- [ elaboration and installation of the smart meters
side energy management system as an active part of the according to suitability and price and their testing
grid by offering incentives to use electric devices at speci- afterwards
fied times. This energy management system should be [ testing and checking the functioning of the newly
flexible so that it can be extended by control functions for developed hardware and software for the Energy Butler
electricity generators, e.g., micro-CHP in combination energy management system, including briefing, train-
with thermal storage devices to allow electricity genera- ing, customer care, and installation teams, as well as
tion when needed, while also supplying heat or warm implementation of a new billing procedure.
water when requested. Therefore, decentralised energy Four preferred tariffs were introduced for weekends
management in households for balancing local consump- and working days with two different profiles for each of
tion and local supply of electricity is investigated in them. Each tariff profile used for the field trial had two
100 households. price levels: low and high tariff with a minimum duration
The core of the energy management system used is a of one hour. The tariff profiles were static, which means
newly developed device called the Energy Butler. that the same sequence (high and low tariff) applied for
Together with a broadband power line modem and every working day and every weekend day and holiday,
peripheral additional modules (e.g., smart meter, data respectively.
storage/data aggregator, and switchboxes), the Energy The field trial measurements were implemented in
Butler serves to optimize selected household appliances three phases adding step-by-step tariff incentives and

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Smart Retailer/Service Provider


External Services
Centralized
Sending Load
Signals/ Forecasting Meter Data Smart Grid Product
Prices, Analysis Development
Receiving
RES Generation
Preferences/
Forecasting HEM Signal Energy Feedback Rating and
Bids
Optimization for Customers Billing
Price
Forecasting

Aggregation Level
DSL
PLC, BPLC HEM Metering Data
GSM Concentrator Concentrator
IP

Smart House
Decentralized
HEM User Consumption
Receiving Interface Monitor Interface
Signals/
Prices,
Delivering ZigBee
Preferences/ PLC,
Bids Z-Wave Concentrator Devices and Device
Smart Meter
IP Home Gateway Control

RES: Renewable Energy Sources PLC: Power Line Communication


HEM: Home Energy Management BPLC: Broadband Power Line Communication
GSM: Global System for Mobile Communications

Figure 3. The architecture of loose coupling via services.

Energy Butler devices from October 2010 to August 2011, The third phase started in May 2011 and lasted until
[
with further ongoing data acquisition and documentation: August 2011 when activating the Energy Butler soft-
[ The first phase with new energy management/vari- ware allowing the customer to use it not only for
able tariffs started in October 2010. The customers manual but also for automated load shift.
received a first variable tariff on a monthly basis
and access to the MVV metering portal. The custom- Key Findings and Lessons Learned
ers could shift their loads according to this variable Quantitative assessment of the load shift potential requires
tariff manually. comparison between the load curve when variable tariffs
[ The second phase started in December 2010. Since the (electricity prices) are applied and the normal reference
Energy Butler was still not available to all customers, a case with fixed tariffs. Since it is impossible to measure
new tariff model was introduced to get a better statis- concurrently the load curve with the two options for any
tical basis for the evaluation of the load shift potential. customer, it was decided to use as the reference case modi-
In parallel, the Energy Butler was installed and tested, fied standard load profiles considering seasonal effects.
first at up to ten selected friendly customers followed A representative load shift together with the applied, as
by the installation of the other 90 Energy Butler devic- obtained for February 2011, is shown in Figure 5. There are
es with all peripheral devices (e.g., switchboxes, gate- several effects that need to be considered with respect to
way/modems, and temperature sensors) starting in the load shift. Besides the seasonal and price effects,
spring 2011. This included constant software improve- changes in consumer awareness, saturation, or habitual
ments and installation of the most recent software effects can be important when tariffs are constant for sev-
updates on the Energy Butler via remote access. eral months.

I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4 87

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MAGAZINE

THE WORLDS NEWSSTAND

Intelligent Devices
and Systems
Energy Butler
Energy Management
Network
Display for Monitoring
and Control

www Router Energy Management Gateway

Multitariff Metering

Micro-CHP

Meter Gateway

Figure 4. The smart house as envisioned in the Mannheim trial.

Customer feedback showed that during the test, the consortium would have to be replaced by a trusted
majority of the participants used devices at times conve- cross-partner organization for mediation between con-
nient for them. The most commonly used flexible appli- flicting partner interests, which otherwise would hinder
ances were dishwashers, washing machines, and clothes technical implementation. For example, giving the cus-
dryers. Two thirds of the customers indicated that they tomer a tariff bonus to motivate a load shift for better
changed their electricity consumption behavior during the utilization of the DSOs grid resources may be an advan-
field test. The participants also indicated that they had tage for the DSO, but it is unattractive for the energy pro-
adapted their electricity consumption to the tariffs and it vider as of today. This is due to the introduction of
was estimated that they could save about 5 per month variable tariffs that raise costs for establishing new bill-
compared to flat tariffs. Participants also reported that ing procedures but do not yield direct income. However,
they were motivated to reduce consumption by acknowl- without technical services provided by the DSO and
edgment of their contribution to climate protection. In energy provider, the smart grid cannot prevail, which is
summary, two conclusions can be drawn, as assessed by a disadvantage for both.
the participating consumers: 1) power consumption was
reduced in absolute terms and 2) the power consumption Support in Critical Grid Operation: Trial in Meltemi
of white goods (e.g., household devices) has been shifted
to off-peak hours. Trial Setup and Objectives
Finally, a unique feature of the field trial in Manheim The aim of the field trial in Meltemi is to demonstrate
is that it involves many profit-oriented stakeholders. An the ability of a decentralized system to handle critical sit-
important lesson learned is that the emergence of these uations, such as the transition to island mode or black
stakeholders, who were once single vertically integrated start. Furthermore, it aims to demonstrate the capability
utilities, greatly increased mediation issues when imple- of decentralized resources to provide ancillary services,
menting smart grids. Within the project context, this is i.e., load shedding to alleviate network congestions. Melt-
resolved by project management and common consor- emi offers seaside camping near the Athens coast, con-
tium decisions. However, if considering implementation sisting of 170 cottages used mostly for summer holidays.
of smart grids in todays unbundled market, such a Because of the small size of each cottage, its electrical

88 I E E E E l e c t r i f i c a t i o n M a ga z i n e / M A R C H 2 0 1 4

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MAGAZINE

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MAGAZINE

THE WORLDS NEWSSTAND

Electric Load Shift Within the Field Trial


1,000 26

900 24
Electricity Consumption (W)

Electricity Price (cts/kWh)


800 22

700 20

600 18

500 16

400 14

300 12

200 10
00:00
01:00
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Day Time (hh:mm)
Actual Electricity Tariff
Real Load Measured
Predicted Load w/o Bonus Tariff

Figure 5. The load shift in the field test achieved by variable tariffs (February 2011).

consumption is lower than an ordinary house in Greece. Measurements and Results


However, the ecological awareness of its habitants and Congestion management is based on the monitoring of
the electrical structure [all houses are connected to the the transformer that feeds the camping site. The idea is
same medium voltage/low voltage (MV/LV) transformer] that when the transformer is close to its critical level of
of the settlement make it ideal for use as a test bed for overloading, the DSO requests that the aggregator proceed
functions related to emergency and critical grid situa- with load shedding.
tions. The installation of distributed generation (DGs), The MAGIC system deals with this request in two
including a 40-kVA diesel generator, 4.5-kW PV panels, steps. During the first step, the agents monitor the system
and small residential wind turbines, can partially sup- and provide to the other agents and the aggregator infor-
port the Meltemi campground in a microgrid operation. mation about its status, i.e., production, consumption, and
The MAGIC system installed allows the DGs and the voltage measurements. T