Last summer, the call “Every end node is a microgrid” focused smart energy standards activities. Like the regional grids, a microgrid is responsible for running its own operations, and for supporting its own needs. Like the regional grids, a microgrid uses market operations to acquire what it cannot make itself, and what it can buy more economically than it can make itself. Like the regional grids, a microgrid can contain microgrids that are responsible for their own operations.

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Last week during a talk, a board member of NAESB asked me to define microgrids. I was surprised that an idea so central to national smart grid efforts was not yet well known to one of the most significant energy market and business practices groups. There is so much going on so fast right now, and the pressures to accelerate are so strong, that some of us get used to ideas before we ever have to explain them.

The list of end nodes that might be microgrids starts with homes, commercial buildings, and industrial sites. Within an end node, different subsystems can interact much as they do within the larger grid. Building systems could bid for access to site-based power. Microgrid events can trigger demand response (DR) behaviors from the building systems or building zones. Microgrids can contain and be contained by other microgrids.

Buildings and sites can participate in local area microgrids. Campuses, and military bases present existing business models for microgrids. These grids can be managed as a collection of autonomous entities rather than as over-integrated control systems. Each building/microgrid could then bid for and obtain energy supply and reliability from a larger microgrid.

The models propagated by the District Energy Association can inform microgrid thinking. District energy is characterized by cogeneration, in which a single plant may make electricity, steam and hot water. Because steam can be used to power cooling, cogeneration systems often produce chilled water as well. Each of these products can be sold within the microgrid. The district energy plant then becomes the market maker, shifting modes of energy delivery to match the bids from the autonomous buildings it contains.

The models propagated by the District Energy Association can inform microgrid thinking. The defining characteristic of District Energy is cogeneration, in which a single plant may make electricity, steam, and hot water. Because steam can be used to power cooling, cogeneration systems often produce chilled water was well. Each of these products can find a market within the microgrid. The district energy plant then becomes the market maker, shifting modes of energy delivery to match the bids from the autonomous buildings it contains.

Microgrids can opt to be more intimate, and to communicate more frequently than does the larger grid today. Buildings may choose to negotiate available load shapes, sharing planned energy use and backing-off of planned energy-using processes to maintain overall market conditions within the local microgrid. Microgrids can maintain their own cybersecurity regimes, tighter or looser than those in the wider grid as befits their needs.

[an error occurred while processing this directive] These local area microgrids will require regulatory reform to flourish. Retail resale of electricity is often limited to regulated utilities. In many states, an energy supplier becomes a regulated utility when the energy delivery crosses a public road. Possible energy producers avoid markets to avoid regulation.

Industrial parks avoid these business models today lest they become susceptible to regulation. Commodity home builders are exploring providing turnkey district energy. Such systems, with energy management contracts in place, could be turned over to the turnkey homeowner’s association (HOA) that home builders create today. When combined with the new package solar thermal systems, shipped in a single container, and installed on-site, neighborhood microgrids may be the future of distributed energy.

In new neighborhoods, the homebuilder finishes a neighborhood and turns the roads over to the city. Green builders are already considering turning title for the roads over to the HOA instead, to avoid such regulation. Future regulatory changes could open the way for existing neighborhoods to participate also in this kind of energy production and management.

Microgrids can extend down as well. Each tenant in a commercial building could operate its own microgrid, existing within the environment of the buildings microgrid. One could argue that green leases are beginning to move in this direction. I find it fascinating to think of intra-building market opportunities. Can we use intra-building markets to re-use what is today waste energy? Does the data center in the basement defray costs by selling its waste heat to the other tenants? Would some tenants pay a premium for site-generated energy? By hiding the complexity of interoperation behind an economic veneer, can we improve performance and reduce integration costs?

Microgrids, whether virtual or real, are an important organizing concept of smart energy.

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