Innovation LAB 2014

Master MAINS

A.A. 2013/2014

BOZZA

Lab goals

To understand the present and future impact of microgrids, it ought to understand

the current regulatory, market and business structure of the power industry and

project with reasonable certainty its future. While we will not be able to predict

exactly how the future would look like, we must develop strategies that would allow

us to migrate from where we are today.

Starting from a generic Business models definition, this lab theme is aimed at

finding the more appealing and sustainable business model for the proposition of

microgrid.

– It will start with a complete assessment of the current Italian regulations

finding the more effective tools and models to address innovative project

with the Public Administration and private customers.

– Finally the resulting models might be “mapped” to the sponsor industries

solutions and might steer their strategy in successive roadmaps

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What is a microgrid

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A large number of microgrid definitions exist from industry, government, and academia. The closest to a U.S.

Government–approved microgrid definition is that developed by the Department of Energy (DOE) 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 and island-mode[*].”

We got three major messages delivered from this definition:

• Integration platform for supply-side (micro-generators) and demand-side resources (storage units and

(controllable) loads) located in the same local distribution grid.

• Capability of handling both normal state (grid-connected) and emergency state (islanded) operations

• Capability of handling conflicting interests of different stakeholders so as to arrive at a globally optimal

operation decision for all players involved

[*] Office of Electricity Deliver and Energy Reliability, Smart Grid R&D Program. 2011. DOE Microgrid Workshop Report, San

Diego, CA

EU extension of the NIST Model

for the microgrid

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Microgrid value chain

5

HA

N

Enterprise s/s Energy Market s/s

AMI s/s

Distribution Automation s/s

Field Force s/s

Electric system operation s/s

Distributed

Energy s/s

Industrial s/s E-mobility s/s Commercial s/s

Ba

ckb

on

e B

ack

ha

ul

AN

Distribution DER Customer

Mark

et E

nterp

rise O

pera

tion

Sta

tion

F

ield P

rocess

Microgrid Use Cases

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uc People & Organizations

Microgrid Operator

Ov erlay Grid Operator

Prosumer

Serv ice Prov ider

DER Owner Consumer Storage Owner Retailer Aggregator System Operator

DSO Operator TSO Operator Retail Market Operator

Microgrid Use Cases

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uc Business UC

Microgrid Boundary

Sells balancing and

ancillary serv ices

Prov ides island mode

Microgrid

Operator(from

People &

Organizations)

Selling/Buying energy

Ov erlay Grid

Operator(from

People &

Organizations)

Prosumer

(from

People &

Organizations)

uc C&M UC

Microgrid Boundary

Balancing supply and

demand

Storage Management

Autoconfiguration

Black Start

DER Owner

(from

People &

Organizations)

Microgrid

Operator(from

People &

Organizations)

Serv ice

Prov ider(from

People &

Organizations)

Storage Owner

(from

People &

Organizations)

Consumer

(from

People &

Organizations)

Ov erlay Grid

Operator(from

People &

Organizations)

Demand side

Management

Supply side

management

«include» «include»«include»

Benefits for the stakeholders

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Category Benefit Receiving Benefit

Economic

Reduced Energy Purchased Cost • Microgrid Owner,

• Microgrid Consumer

Technical

Reduced System Loading • Microgrid Owner,

• Microgrid Consumer,

• Overlay Grid Operator

Improved Reliability • Microgrid Consumer,

• Microgrid Owner,

• Overlay Grid Operator

Ancillary Service Provision • Microgrid Owner,

• Microgrid Consumer,

• Overlay Grid Operator

Social

Reduced Pollutant Emissions • Microgrid Owner,

• Overlay Grid Operator

Microgrids Business models

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Utility Non utility

Owns wires Own use

Own use with some

merchant sales Merchant only

Owns generation Non utility generation

One owner Multiple

owner Manage

controls

May/may

not manage controls

Vertically integrated Unbundled Landlord Cooperative Model Customer-generator

Utility Aggregator Non Utility Aggregator

• Utility model – the distribution utility owns and manages the microgrid to reduce customer costs and provide

special services (e.g. high power quality and reliability) to customers on the system.

• Non-Utility model .

• Landlord model – a single landlord installs a microgrid on-site and provides power and/or heat to

tenants under a contractual lease agreement (e.g. smart building use case).

• Cooperative model – multiple individuals or firms cooperatively own and manage a microgrid to serve

their own electric and/or heating needs. Customers voluntarily join the microgrid and are served under

contract.

• Customer-generator model – a single individual or firm owns and manages the system, serving the

electric and/or heating needs of itself and its neighbors. Neighbors voluntarily join the microgrid and

are served under contract.

• Aggregation model – power and/or thermal energy is produced and sold among different users using the

existing utility distribution infrastructures

Potential activities

• Study of Italian regulatory framework

• Identification of the most suitable business model for the Italian market (if any)

• Choice of business model

• Business model definition for stakeholders

• Simulation

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