Artwork by Mina Lee
As summer approaches, I have extreme weather and resilience on my mind. So for this Gist, we’ve dug into microgrids and how they can help us keep the lights on.
I also spoke to The Washington Post on how rising anti-China sentiment in Congress will complicate the energy transition.
Our new website got a shiny makeover so check it out at: www.theadhocgroup.com/!
And we’re hiring for a new Principal role. Want to join us?
- Jim Kapsis, CEO
The Ad Hoc Group
Hot Microgrid Summer
Memorial Day is nearly here and with it, the start of summer. That means beach time, school vacations, and (sorry to be a killjoy) the arrival of heatwaves, hurricanes, and wildfires. The Pacific Northwest is already sweltering – again – under record-breaking temperatures.
Extreme weather disrupts every facet of daily life, starting with our access to electricity. Weather-induced outages have increased rapidly in recent years and are far more than an inconvenience – losing power in severe heat or cold can be deadly.
As we electrify necessities like transportation, heating, and cooking to achieve our climate goals, reliable electricity will become more critical than ever. At the same time, extreme weather events are rising, meaning resilience will only be harder to achieve.
Keep It Local
Enter microgrids. There is oddly no standard definition of a microgrid, but we’re calling it: multiple sources of power generation (i.e. solar) and/or energy storage (i.e batteries) serving more than one home or building. In short, microgrids are localized, autonomous power grids that are separate from the main grid, though typically connected to it.
Microgrids can boost resilience in a few key ways.
First, by keeping the source of power generation close to the demand, they remove the need for miles and miles of wires. Second, they can disconnect from the larger grid and “island” themselves with the flip of a switch. Third, when the grid is strained on a super hot or cold day, utilities can instantly relieve stress by paying a microgrid owner to temporarily disconnect.
This capability could be life saving. The University of Texas’s microgrid kept the lights and heat on during the deadly 2021 freeze, while Princeton’s did the same during Hurricane Sandy. If another catastrophic storm hits Puerto Rico, a community-led microgrid will help.
Regulating Like It’s 1999
So if microgrids are so great, then why aren’t there more of them?
They’ve been held back by a couple of important barriers.
First, on the technology side, microgrid development has historically been a bespoke process from design all the way through to operation. That’s expensive and doesn’t scale.
Second, regulation of resilience and microgrids is outdated and murky, which discourages investment. For instance, regulators and utilities often judge reliability performance with numbers that exclude larger power outages, arguing that those are extreme and infrequent. That’s a disservice to the public. It’s like a hospital being judged on its ability to treat strep throat, but not on its ability to treat gunshot wounds.
There’s also no clear definition of resilience, which makes it hard to quantify risks and evaluate potential solutions, like microgrids. And when it isn’t clear who can own or operate a microgrid, what the conditions are, or how they might be compensated, you’re left with a market that cannot get off the ground.
Startups To The Rescue
Two types of startups have emerged to address some of the cost and complexity issues:
- Modularity: Sesame Solar manufactures portable solar “nanogrids” for emergency response, cutting emissions with green hydrogen backup. BoxPower designs and develops modular, utility-owned remote grids as cost-effective alternatives to hardening measures. Scale Microgrids installs their modular, industrial-scale campus microgrids two to three times faster than similar custom systems.
- Remote controls: New Sun Road and Xendee have developed remote microgrid monitoring and operations tools, critical for anyone deploying and utilizing a fleet of microgrids across their service territory. Enchanted Rock’s platform has extended from demand charge management and reliability to islanding and optimization.
Add the declining cost of solar and storage and new tax credits in the Inflation Reduction Act and microgrids are becoming increasingly cost competitive.
Update The Rules of The Microgrid Road
Here’s what we think regulators need to do:
- Define resilience: Regulators should adopt new resilience metrics that define good risk mitigation and recovery performance. We need to put a value on resilience and then use it to judge the costs and benefits of investments. This is starting to happen in a few places: Portland General Electric in Oregon includes a Risk-Spend Framework in its Wildfire Mitigation Plan and California's open microgrid proceeding includes a track on the topic. Regulators then need to hold utilities accountable for executing these plans and meeting these performance standards.
- Clarify roles and responsibilities: Regulators need to clarify when it is appropriate for utilities to own and operate microgrids, and when it is not.
- Utilities should be able to own and operate microgrids where they address a demonstrated resilience concern, particularly if the microgrid is cheaper than the alternatives.
- Commercial customers should have the option to work with an unregulated microgrid developer or with a regulated utility via a microgrid service tariff. Regulators in California, Hawaii, Minnesota, and Wisconsin have all recently adopted microgrid tariffs, which enable customers to leverage the utility’s balance sheet to pay for the microgrid over time.
- Commercial microgrid owners should be compensated when they island themselves or export power during an extreme event so they are benefiting the grid, not just themselves.
If you want to dig deeper, DOE released a white paper series recently on the future of microgrids here. Their conclusion? We need more microgrids.
News from Our Network
From our clients:
Charm Industrial received a whopping $53 million in commitments from Frontier buyers.
Michael Liebrich of BNEF showcases Rondo as one of the startups working on industrial heat.
Google Nest and The Brattle Group released a new report on DERs and VPPs, and how they can replace natural gas plants.
The Carbon Removal Alliance and Charm Industrial joined Climeworks asking for a clear distinction between carbon removals and reductions.
Singularity’s Greg Miller talks to the Carbon Herald about the importance of tracking carbon emissions hourly.
From friends and colleagues:
Michael Sachse of Dandelion Energy is named an Ernst and Young Entrepreneur Of The Year finalist.
Kelvin, formerly Radiator Labs, raised a $30 million Series A.
Pete Rochelle of Breakthrough Energy Ventures on the need for public and private partnerships to make fusion a reality.
Google's climate tech accelerator featured Voltpost for improving EV infrastructure.
Jobs in our network:
Send us your job openings in cleantech policy, startups, and utilities, and we'll put them in next month's Gist.
ConnectDER: Vice President, Engineering
Gridware: Senior Data Scientist
Rondo Energy: Patent Attorney
SWTCH: Director of Customer Success
Rhodium Group: Director – US Energy Projects
Environmental Defense Fund: Vice President, Build to Zero
The Ad Hoc team joins Josh Earnest, Chief Communications Officer at United HQ in Chicago to discuss sustainable aviation fuel.