Are Microgrids the Answer to the Increasing Complexity of Electricity Markets?

by J. David Erickson Originally appearing in ourenergypolicy.org The state of California is faced with the challenge of reaching its carbon emissions reduction and renewable portfolio standard goals while maintaining the safety and reliability of the electric supply and protecting the economic interests of the ratepayers. In addition to AB 32 , which calls for reducing greenhouse gas emissions to 1990 levels by 2020, the state also has a Renewable Portfolio Standard goal of 33% renewables by 2020. The California Public Utilities Commission (CPUC), the California Independent System Operator (CAISO) and many stakeholders have been working on policies, technologies and market mechanisms to reach these goals. Managing the effect of intermittent renewables on the grid is one of the critical challenges we address in making the transition to renewables. One of the primary goals of grid modernization (aka “Smart Grid”) is to adapt grid management to account for the effects of intermittency in real time. Smart grid technologies can aid in solving both the technical problems and the market integration problems of decentralized generation. This is critical, as the grid-scale picture is getting increasingly complicated and expensive to monitor and control, due to the rapid growth of distributed generation of all types and scales. Microgrids are one possible solution to these challenges. Microgrids, part of the Smart Grid toolbox, are autonomously managed and powered sections of the distribution grid that can be as small as a single building, or as large as a downtown area or neighborhood. Automation and digital communications are used to manage rooftop solar, small scale combined heat and power systems and storage systems, along with matching supply to demand. Heating or cooling may also be a part of a microgrid. Microgrids can efficiently manage smaller sections of the grid, according to the local demand patterns and availability of renewable resources. They can also disconnect, or “island” from the larger grid to provide higher reliability. Can microgrids reduce complexity and increase options for electricity market participants? What are the major barriers to microgrid implementation, and how might they be overcome? Are there other approaches, besides the microgrid, that might be employed as well? *Views and opinions in this discussion are my own, do not reflect any position or policy of the CPUC and are not related to any ongoing proceedings. David Erickson is a Public Utilities Regulatory Analyst with the California Public Utilities Commission

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Are Microgrids the Answer to the Increasing Complexity of Electricity Markets?

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