Distributed Energy Resources

and Microgrids for Resiliency-------------------------------------------------------------------------------------

Considerations for State Energy Officers on

Technology and Program Design

Chris Lotspeich

NASEO Conference

September 19th, 2017 1

• The Rhode Island Office of Energy Resources (OER) hired Celtic Energy Inc. (CEI) team to make program recommendations

• CEI team included Arup and Rocky Mountain Institute

• Report delivered March 2017, available at:

http://www.energy.ri.gov/reports-publications/past-projects/resilient-microgrids-for-critical-services.php

Rhode Island Microgrid Program Design

• USDOE Microgrid Exchange Group: “A microgrid is a group of interconnected loads and distributed energy resources within clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid. A microgrid can connect and disconnect from the grid to enable it to operate in both grid-connected or island-mode.”

• NJ BPU report taxonomy (slightly modified):

Microgrid type DERs Facilities Meters Facility owners

Level 1 single facility 1–2+ 1 1 1

Level 2 campus 1–2+ 2+ 1–2+ 1

Level 3 multi-user

community

1–2+ 2+ 2+ 2+

Microgrid Definitions

Energy assurance planning factors

• What are your mission critical loads?

• How long do you want to operate off grid?

• What Distributed Energy Resources (DERs)?

– Efficiency, back up generators, PV, storage, CHP

• Assess feasibility, costs and benefits

• What procurement “business model”?

– Cash, bond, PPA, ESPC, ESA, C-PACE, …

Energy efficiency and passive design

Advantages:

• Universal, economical, uninterruptible

• Passive features enhance no-power functionality

• Load reduction reduces DER capacity requirements

Limitations:

• Easier in new design, but most facilities needs retrofits

• Business case less compelling with low energy costs

Aggressive passive

Donald Watson FAIA 2011. Used by permission.

Hancock County, MS Emergency Operations Center & community safe room

Passive ventilation strategies

SOURCE: Dean Sakamoto HURRIPLAN

Image Courtesy of Unabridged Architects

Donald Watson FAIA 2011.

Used by permission.

Image by Jeff Goldberg/Esto. From EDC magazine, 12/16/13.

320,000 SF, $80 million facility completed in 2013

• Designed to withstand 7.5 Richter scale seismic event

• Critical facility sustained operations during power outages

• 350 kW rooftop solar power array, solar thermal hot water

• 35 kW PV canopy is public device charging station

Image by Jeff Goldberg/Esto. From EDC magazine, 12/16/13.

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Photo: Russell Carr

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Back Up Generators (BUGs)

Advantages:

• Vernacular tech, wide size range, mobile units

• Good load following, partial load efficiency

• Diesel, gasoline, propane, natural gas, dual fuel

Limitations:

• Standby depreciating asset

• Poor maintenance & testing = poor availability

• Onsite fuel storage, supply disruption risks

• High emissions

Solar photovoltaic (PV) power

Advantages:

• Clean, quiet power anywhere with no fuel cost

• Innovative financing, competitive business models

Limitations:

• Low energy density for facility-scale loads

• Requires energy storage for 24/7 applications

• Public sector can’t use tax credits

• PPA-funded arrays disconnect during grid outages

Energy storage

Advantages:

• Rapidly maturing technologies, mobile & stationary

• Can firm up intermittent renewables, support grid ops

• Rapid response, power- or energy-intensive discharge

• Wide capacity range, can be modular and scalable

Limitations:

• High costs falling rapidly, typically not yet economical

• Challenges of monetizing benefits and services

• Low energy density and capacity for facility-scale loads

• Limited useful life, degradation rates vary by application

• Variety of types and chemistries, siting challenges

FL SunSmart Schools E-Shelters program

Photo: Florida Solar Energy Center

FL SunSmart Schools E-Shelters program

• FL Energy Office, FL Solar Energy Center, DOE

– 2009 ARRA funds to expand shelter program

– Goals: save energy costs, shelter, educational tool

• 115 schools totaling ~1 MW PV

– Goals: save energy costs, shelter, educational tool

– Total shelter capacity of 10,000–50,000 people

• Teachers, school facilities staff training

FL SunSmart Schools E-Shelter program

• 10 kW PV, 48 kW / 25 kWh lead acid batteries

– 150 mph wind loading requirement

– $74,000–$90,000 installed, savings $1,500+/yr

• 1 kW critical loads defined by local committee

– American Red Cross, Emergency Management, school facility personnel and FSEC

• Lighting, plug loads for device charging

– Enhanced Hurricane Protected Area in each school

– Typically gyms, cafeterias, classrooms

Stafford Hill, Rutland, VT

Photo: Green Mountain Power

Stafford Hill, Rutland, VT• Green Mountain Power with Dynapower,

GroSolar, DOE, ESTAP, State of VT

• 1st 100% solar microgrid,1st on brownfield

– ES provides ancillary services to the grid

– Island mode energy support for HS shelter

• 2.5 MW PV panels, 4 MW ES

– 2 MW / 1 MWh Lithium ion

– 2 MW / 2.4 MWh lead acid batteries

• ~$10.8 million cost, ~ 10 year payback

Combined Heat and Power (CHP) Advantages:

• Onsite generation of electricity, heating and cooling

• Baseload energy output, relatively clean

• Economical with conducive conditions and loads

• Modular systems available

Limitations:

• Constant fuel supply: gas pipeline, site storage capacity

• Challenge: economical use for heat in critical facilities

• The smaller the CHP system, the longer the payback

• Business case less compelling with low electricity costs

FDA White Oak campus microgrid, MD

Multi-user community microgrids are coming…

Barriers to Microgrid Development• Organizational risk

– Many stakeholders with veto power, lack of specialized knowledge

• Technical risk– Complexity, challenge of safe operation, interoperability of proprietary equipment

• Economic risk– Potentially high first and operating costs, no standard cost/benefit analysis

method, challenge of business models for Level 3 multi-user microgrid

• Technical/economic risk– Highly case-specific feasibility, smaller scale constrains third-party development

• Administrative/economic risk– Public agency procurement constraints, interconnection approval, utility rate risk

• Legal risk– Potential challenge to utility franchise, distributing power across public Right Of

Way (ROW) or utility easement, selling power as a non-utility entity

• Regulatory risk– Rules might change, uncertain status of some microgrid types

Suggested Program Design Principles• Take an “All hazards” approach

• Multi-stakeholder program design

• Align with existing programs and goals

• Prioritize public benefits, protection of vulnerable populations

• Focus on support for state and local agencies

• Prioritize energy efficiency, renewable energy

• Deploy funds cost-effectively

• Leverage market forces & private investment

• Educate the marketplace with outreach, template documentation

• Balance simplicity with enough detail to foster successful projects

• Enable projects to have choice, foster flexibility & creativity

Program Design: Measure Types

• Administrative

– Measures that state agencies can implement without changes to current law or the regulatory environment

• Legislative

– Measures that legislatures can enact to support program development, typically focused and relatively limited

• Regulatory

– Changes to the regulatory regime regarding regulated entities (utilities) and other actors in the energy marketplace

Sample Administrative Measures

• Competitive solicitation with scoring for preferred aspects

• Detailed template RFP and feasibility analysis to guide design

• Define minimum performance requirements

• Provide funds and technical support for feasibility analysis

• Fund microgrid equipment: electric infrastructure, controls, storage

• Allow time for public procurement processes, rolling deadlines

• Design/construction schedule flexibility for marketplace learning

• Streamlined or preferential permitting and administrative processes

• Disburse funds at project milestones, and/or after commissioning

• Require microgrid performance data to be made public

Sample Legislative Measures

• Define microgrid types that are eligible for special measures, exemptions, and funding

• Expand DER support and incentives

• Allow public sector microgrids to distribute power across ROW

• Create Energy Improvement Districts or similar entities to facilitate microgrid development by municipalities and public agencies

• Enable Green Banks / PACE / Resilience Banks to support microgrids

Regulatory Measures and Caveats

• CAUTION: Consider big regulatory changes only as part of a comprehensive process, don’t revise regime for microgrids alone

• Exempt microgrids of defined type /size from (some) regulation

• Require utilities to provide information on cost/benefit impacts of microgrids on local Electric Power System (EPS)

• Enable microgrids to lock in utility rates for long term contracts

• Custom tariffs and/or on-bill financing for microgrid development, EPS benefit monetization and utility cost recovery

• BIG: Require/incent utilities to buy energy/services from microgrids?

• BIG: Require/incent utilities to develop microgrids?

• BIG: Enable third party competition with utilities to create microgrids?

Thank you for your time!For more information, please contact:

Chris Lotspeich, MBA, MES, CEMDirector of Sustainability Services

Celtic Energy Inc. 437 Naubuc Avenue, Suite 106

Glastonbury, CT 06033(860) 882-1515 x311

clotspeich@celticenergy.comwww.celticenergy.com

For a brief overview of CEI, see:

CEI Overview - 2 minute video31