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The Promise (and Perils) of the Government Microgrid

Government funding has played a key role in launching the microgrid market, especially at the federal government level. Yet there is, at present, few “microgrid” line items in most federal, state or local government budgets. In the Obama Administration’s ARRA stimulus package, there are categories for “customer-owned systems” and even “microgrids,” but these were never funded!

An exception to this generalization about government comes from the military. As microgrids are proven to be both reliable and cost-effective resource options, the federal Department of Defense (DOD) will continue in its historical role as a key early adopter of new technology, as was the case with aviation, electronics, the Internet, and GPS. DOD markets will be driven by “net zero energy” mandates for military bases. The Navy and Marines have the most aggressive goals: 50 percent net zero facilities by 2020. Under the best case scenario, 10 percent to 20 percent of all DOD bases in the United States will deploy microgrids by 2020 according to one reliable military source.

Why is the military so interested in microgrids? Consider these startling facts: In May 2002, a forest fire took out the two feeder distribution lines serving an Army base in the Southwest, resulting in a 16 hour outage, costing $3 million and a loss of critical mission capability. Some DOD sites report loss of power events as many as 300 times per year! The DOD has identified the vulnerability links back to backup diesel generators that are frequently oversized, poorly maintained, are dedicated to only one building or facility, and cannot share power with other buildings. On top of all that, experience has shown a low probability of being able to start immediately when called upon in times of emergency.

One of the most advanced “energy surety” microgrid projects (a concept developed by Sandia Labs) is being developed at Fort Sill, Oklahoma. The goal of this prototype is to develop the hardware, software, and controls to perform field testing of microgrids with a subset of buildings that could provide reliable power in islanded mode for a minimum of 30 days. In addition, this microgrid pilot project, expected to total 5 MW in size, is also designed to prove the ability of microgrids to shave peak demand as well as to integrate existing and new renewable energy resources into the generation mix at the military base.

The federal Department of Energy (DOE) is also funding microgrids to the tune of $55 million for eight different projects validating microgrid technologies, though only a few of these – such as California’s Santa Rita Jail (Alameda County) and Beach Cities project (San Diego County) – are bona fide microgrids. The map below highlights the variety of microgrid research and pilot projects receiving some form of federal funding.

The General Services Administration (GSA) serves as a conduit for funding infrastructure for federal facilities throughout the country. Though GSA has no specific budget for microgrids, the agency late last year announced funding for a 25 MW microgrid expected to come on-line in 2016 for the Department of Homeland Security’s (DHS) new headquarters at the former St. Elizabeth’s Hospital in Washington, D.C. GSA has earmarked $215 million in federal funding for this project that incorporates several other federal government buildings. The total price tag is $3.4 billion, showing the value of public/private partnerships. Nevertheless, recent federal budget talks may introduce delays for this showcase project, underscoring risks linked to a sole focus on the federal microgrid opportunity.

Further down the food chain, government support is rare. The only two states investing in microgrids in any substantial way are California and New York. Municipal utilities scattered throughout the country are pushing forward with microgrid-like projects, but political uncertainty can also wreck havoc with these plans at the local level. One of the leading private microgrid developers just had to delay its lead showcase project in the Northeast due to last November’s election results changing priorities at the local government level. At last count, over 25 different microgrids under development by this same single developer have been canceled, some with signed power purchase agreements in hand!

Despite these perils, large players such as GE, Lockheed Martin, Honeywell, and Eaton are now active in the government microgrid opportunity, but mostly at the federal level. In order for microgrids to offer a truly compelling alternative to the top-down smart grid programs being pushed by investor-owned utilities, these monopolies must too play a role. To date, only a handful (San Diego Gas & Electric and American Electric Power being the best examples) see the light. Rather than viewing microgrids as a threat, they see them serving as valuable demand response resources and complementary to efforts to integrate better storage options into our grids.

Smart, investor-owned utilities will offer a wide range of smart grid options, including distributed microgrid networks.

Photo by Rosa y Dani/flickr/Creative Commons

Article by Peter Asmus