Surveying equipment as part of a microgrid demonstration and competition.

U.S. Department of Energy / Creative Commons

Surveying equipment as part of a microgrid demonstration and competition.

Q&A: How political changes will impact the market for microgrids

Minnesota-based consultant Michael Burr helps communities across the country build resilience by developing microgrids and local energy projects.

But as director of the Microgrid Institute, which is based in central Minnesota, Burr still finds most of his work outside of the region due to market limitations and regulatory barriers in the Midwest.

Michael Burr

Michael Burr is director of the Minnesota-based Microgrid Institute.

Additionally, climate change is among the forces driving interest in microgrids, Burr said. The Microgrid Institute’s clients include cities in the Northeast that have seen, or are likely to experience, hurricanes and other severe weather-related events. They want to improve their resiliency, he said, and exploit local energy sources.

But that’s not to say the Midwest lacks a budding microgrid market. Several projects have sprouted in Minnesota and elsewhere, among them at a winery north of St. Paul and at an environmental retreat and conference center founded by climate activist and former Arctic explorer Will Steger.

In Illinois, ComEd wants to build as many as six microgrids, including a large system at the Illinois Institute of Technology. And the idea of using renewable energy, especially solar, to power the local electric grid is gaining a foothold in the region.

Burr comes from a communications background, having worked at Public Utilities Reports for 13 years and, before that, at several trade publications, including Electric Light & Power.

He spoke with Midwest Energy News about how the recent election could impact research and development, the microgrid market and regional differences in their deployment.

Midwest Energy News: What’s your view of the election and the impact on microgrid development?

Burr: The election won’t cause any dramatic shifts in microgrid markets. The need for resiliency, cost savings and self-reliance will continue growing no matter who’s in power in Washington. But (President-elect) Trump’s appointments to agencies like the Department of Energy and the Environmental Protection Agency could have a negative effect.

How so?

We have heard Trump might nominate a climate-change denier to lead the EPA. That would be unfortunate for the planet, and it would have an impact on environmental regulations that drive some decisions.

But for microgrids, DOE is more important than EPA. Some analysts expect Trump and the Republican Congress will eliminate research and development funding for advanced energy development. I doubt R&D will be cut entirely, but we can expect declining renewable energy support and easing on environmental regulation. That changes the picture a bit, and maybe a lot when it comes to integrating renewable energy into microgrids.

Will it impact your business?

It will affect the types of projects we can do. We’re working on a project funded by the DOE, the Olney Town Center Project in Maryland. We led the design and we’re into testing now. Communities are not able to fully fund advanced technology deployment and commercialization, so the DOE money is needed for those types of projects.

What about private financing?

The commercial financing sector is interested in financing microgrids, but they tend to be small and complex, with more technology and regulatory risk than investors prefer. That means government backing is still important. One silver lining is reduced federal support may force the industry to accelerate commercialization and focus on providing immediate benefit for customers and communities.

What might be the impact at the state level?

It could force state energy offices and commissions to look hard at ways to value the services provided by microgrids, so they aren’t expected to compete on an apples-to-oranges basis (with grid-based power).

How would that work?

Microgrids don’t just supply electricity. Microgrids offer resilience and protection against long-term outages. That value must have some sort of price attached to it, there has to be a way to monetize it. Some states, like New York, are working on pricing for services based on a range of values including things like resiliency and sustainability. Minnesota pioneered this concept with value-of-solar pricing.

Does the U.S. risk falling behind other countries when it comes to microgrid technology and deployment?

The United States has already fallen behind in solar energy and battery technology, and we face tough global competition in smart grid and microgrid technologies. We see strong support for advanced energy in Japan, China and Germany, and globally the market definitely is growing.

It is just a matter of time before alternative energy supply options are the better choice in many situations. Changes in U.S. politics don’t diminish the importance of advanced research, which will continue in other countries. If the federal government disregards energy R&D, then the U.S. will fall behind even further than we already have.

Where do you see microgrids thriving?

In the U.S., we see the strongest interest in states with high population density and that face threats from long-term outages — hurricane zones, like the Northeast, where Hurricane Sandy hit, for example. We see strong interest on the West Coast, too, especially in typhoon and tsunami zones, and areas where the electric grid is fragile.

What about regulatory factors?

Microgrids have gained more traction in deregulated markets, which allow development and innovation by a variety of players. They generally don’t fit into the traditional utility service model, so we don’t see utilities aggressively pursuing them. Microgrids are most accessible in deregulated states where utility services are unbundled and competition is allowed. In many Eastern states, utilities provide delivery service but other companies compete to provide the energy. Consumers can choose their power suppliers, and that can include microgrids.

Do electricity prices have an impact?

Absolutely. High electric prices in the Northeast, California, and Hawaii have created a demand for alternative supplies. Microgrids can compete purely on a price basis when the price of electricity is high.

Any Midwest states moving forward on microgrids?

To my knowledge Minnesota is the only Midwestern state to have commissioned a microgrid study, which we performed in 2013. We looked at market potential and challenges, and created a regulatory roadmap for the state. Some cities and counties are asking if they should build community microgrids. But most Midwestern states have vertically integrated electricity markets, and policy and market support is still in the future.

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