Microgrids: The New Shape of Electricity at Greentown Labs
What’s the prognosis for the growth of the market for microgrids? That is a pertinent question for entrepreneurial types in Cleantech. There’s a slew of new ideas developed by creative scientists and engineers, but the timing might not be right from a business perspective. There are even some old ideas that previously didn’t fly, but conditions have changed. Analysts are busy forecasting the market size and growth, but it is good to hear from companies that are on the ground, working it out.
Greentown Labs recently put on a standing room only event on the topic, drawing from panel of leaders at diverse innovative companies. Richard Stuebi of NextWave Energy organized and moderated the panel that included battery provider Sparkplug Power; major equipment and systems provider Schneider Electric (Schneider also sponsored the event); transmission and microgrid developer Anbaric; DC power electronics manufacturer Pika Energy and a commissioner of an island utility. Add to that the bright, (mostly) young engineers and scientists that reside at Greentown Labs and you have an animated discussion.
A few take-aways:
- As battery life has increased and the cost of solar has dropped, storage is becoming a microgrid enabler. Storage doesn’t necessarily have to mean a lithium ion battery, but must be able to meet the requirements of the market in the specific geo-location.
- Motivations for investment vary – resilience, independence, cost savings – but a disciplined and quantifiable valuation of the benefits of the microgrid for the geo-location is a must. Local tariffs and market rules will play a significant role in determining benefits. For example, where utility demand charges are high, a microgrid can deliver cost reductions by flattening demand for utility-supplied electricity.
- The industry needs to develop a common language to describe value. The cost of implementation will go down with common standards and protocols that support plug and play of energy equipment, on-site supply resources (renewables, fossil), building energy management systems, storage and electric vehicles.
- Where there is one “owner” – the utility (where regulations permit), university campus, military base – optimization is complex but straightforward. Where there are multiple building owners and lessors with mixed end uses involved, the question becomes who “owns” decision-making for the microgrid. An island is a good example. The parties involved need to reach consensus on objectives that will be reflected in the optimization models that balance the microgrid. There needs to be pricing/rate structures to incentivize behavior in place. The microgrid will also require systems to control equipment, measure production/consumption and to bill and settle accounts.
- Security is a consideration. One company on the panel is looking to incorporate financial-grade security. That said, security is bound to evolve over time.
- Lessons for start-ups:
- The industry is conservative, so partner with established companies. These companies may not be as flexible and innovative as start-ups, so you have something to offer.
- There is plenty “white space” out there that you can fill.
- Pursue funding opportunities with corporate partners, a model which is encouraged and when possible, facilitated by Greentown Labs. The energy industry may not be as attractive to venture capitalists as less capital intensive industries such as high tech.
A final note: It was a real treat for newcomers to get to see Greentown Labs. It’s the country’s largest sized innovation center and offers prototyping facilities, machine and electronics shops and co-located office space. In these times of uncertain government funding, Greentown is supported by its occupants/members and corporate entities that find value in following start-ups as they grow and evolve to commercialization. It’s definitely worth a trip to one of Greentown’s on-site events.