The Role of Microgrids in Grid Modernization Initiatives Sima Seidi Principal Consultant, Microgrids and Distributed Energy Resources Tetra Tech

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1 The Role of Microgrids in Grid Modernization Initiatives Sima Seidi Principal Consultant, Microgrids and Distributed Energy Resources Tetra Tech September 2017

2 Contents Necessity of Grid Modernization Why Microgrids? Technical Drivers Economic Drivers Challenges Microgrid Market Successful Microgrid Projects Tetra Tech and Microgrids

3 Necessity of Grid Modernization

4 Traditional Utility Challenges Manage aging infrastructure and improve efficiency and resilience. In Canada: most of the existing infrastructure or grid was built before 1980 Manage costs. In Canada: 20% retail electricity price increase from 2013 to 2035 Slowed economic growth. In Canada (National Energy Board, 2016): 1% per year generation growth 2014 to 2040 Real GDP growth of ~1.7% per year 2014 to 2040 Primary demand increase at an average annual rate of 0.7 per cent over the projection period Integrate renewables, reduce GHGs Enable customer participation

5 Canadian Grid Upgrade Requirements Distribution: ~ $ 70 billion This is where Smart Grid technologies offer most value Source: NRCan, 2014

6 Smart Grid Benefits in Ontario Navigant Consulting: Smart Grid investments in Ontario, if continue to be made through 2035, can deliver a net benefit of $6.3 B Source: Ontario Smart Grid Assessment and Roadmap, 2015

7 Source: CanmetENERGY Smart Grid Deployment in Canada, 2016

8 Smart Grid Investment in Canada ( ) 90% of the government funding of Smart Grid projects in Canada has gone towards: Energy Storage Demand Management Microgrids Grid Monitoring and Automation Source: CanmetENERGY

9 Why Microgrids?

10 Microgrids Next market iteration of solar Microgrid market: grown eight-fold from 2010 to 2015 In 2014, Navigant Research predicted $20 B annual microgrid market revenue globally by 2020

11 Microgrids: Technical Drivers Distributed Generation Energy Bill Saving Power Quality and Reliability Islanding for Higher Resilience Renewables and Energy Storage Coupling Cope with variable nature of renewables Cope with technical challenges of high renewable penetration Advanced Local Control Cost minimization Asset utilization

12 Microgrids: Technical Drivers Higher Efficiency: Combined Heat and Power (CHP) Grid Expansion Deferral Ancillary Services and Grid Support Demand Response Self Healing and Cyber Security Enabling Smart Grid Technologies Promoting Local Economies

13 Economic Drivers: Falling Renewable Energy Costs Bloomberg Energy Finance (2017): Solar already rivals the cost of new coal power plants in Germany and U.S. and by 2021 will do so in quickgrowing markets such as China and India. By 2040 the cost of offshore wind farms will slide 71% By 2040, wind and solar will make up almost half of the world s installed generation capacity (12% now), and 34% of all the power generated (5% now). By 2040, 72% of global power generation investment will be in new wind and solar PV plants.

14 Economic Drivers: Falling Battery Storage Cost Battery costs have declined 40 percent since 2014 Bloomberg Energy Finance: utility scale battery storage prices will fall below $500 per kwh by 2021

15 Economic Drivers: Power Quality and Reliability BC Hydro (from Canadian Electricity Association): Poor power quality is estimated to cost Canadian businesses about $1.2 billion annually in lost production Economic Cost of Power Interruptions to US Consumers Source: Lawrence Berkeley National Laboratory Lawrence Berkeley National Laboratory (2006): Economic cost of power interruptions to U.S. electricity consumers is $79 billion annually.

16 Economic Drivers: Energy Resiliency Avoided Costs of Major Power Outages Hurricane Sandy Blackout: More than 8 million homes (even rooftop PV owners) lost power for more than 2 weeks and up to 60% of backup diesel generators failed for critical facilities. Princeton University Microgrid (CHP and solar PV) energized the campus for three days South Oaks Hospital Microgrid (CHP and solar PV) operational for two weeks Cost: $65 billion in damage in the U.S. Powerless New York During Hurricane Sandy

17 Economic Drivers Grid Upgrade Deferral US grid: $2.1 trillion to modernize and prepare for renewable energy systems by 2035 (IEA) Other Revenue Streams Ancillary Services Demand Response Peak Shaving and Load Shifting Government Incentives NY Prize, Connecticut Microgrid Program, CHP Incentives etc.

18 Challenges Government Policy Regulation Business Models Contracting and Back-Feeding Financing Interconnection

19 Microgrid Market Navigant Research: As of 2Q 2017, 1842 project entries globally, representing 19,279.4 MW of operating, under development, and proposed microgrid capacity. Remote projects lead North America No. 1 in operational capacity Operational US Microgrid Capacity, 2016, GTM Asia Pacific leads the market for under development and proposed capacity GTM: US Installed Microgrid Capacity to Grow 115% and Reach 4.3GW Over the Next 5 Years

20 Successful Microgrid Projects

21 Co-op City Community Microgrid Bronx, New York One of the largest co-operative housing projects worldwide: 35 high-rise buildings 60,000 residents 40 MW Steam Turbine (CHP) provides electricity, heating and cooling since 2007 Estimates savings of $ 15 M per year: payback in 5 years Powered residents during Sandy while neighboring areas sat in darkness

22 Princeton University Campus Microgrid Serves electricity, heating and cooling to 180 buildings Participates in ancillary markets including voltage and frequency regulation, and Demand Response Acts as a place of refuge during disasters Natural Gas CHP Plant: 15 MW Gas Turbine and 4.5 MW Solar Farm Annual energy savings of $ 5.7 M combined with energy efficiency programs since 2008 Remained operational during Sandy

23 Kauai Island Microgrid, Hawaii Nearly 95% of the island s daytime load is supplied by utility-scale and rooftop solar on sunniest days PPA between Tesla and Kauai Island Utility Cooperative (KIUC) contracted in 2017: Solar Power System: 13 MW Utility Scale Battery System: 13 MW, 52 MWh Generation shifting and ramp control Reduce fossil fuel usage by 1.6 million gallons per year.

24 Remote Microgrids in Underdeveloped Areas Community level solar microgrids from Nepal and India to Africa USAID Power Africa Program, 2013-present World Bank s Lighting Africa Program, present Indonesia Clean Energy Development Project, USAID program in Indonesia and Vietnam,

25 Brooklyn Microgrid: Blockchain TransActive Grid: LO3 Energy and ConsenSys Goal: 1,000 participants (prosumers) by 2018 Residential solar/storage systems with peer-to-peer trading system built on blockchain Offers the chance to bypass utility Those without solar panels can purchase power credits from neighbors Local DER and energy generation: benefits going back to the community

26 Tetra Tech and Microgrids Canada and United States: NY Prize Community Microgrid Competition: technical advisory to New York Governor s Office of Strom Recovery (GOSR), ongoing Community Microgrid project in Ontario, ongoing Dugway Proving Ground Microgrid, Utah, 2016

27 Tetra Tech and Microgrids International: Power Africa Transactions and Reforms Program, USAID Power Africa Initiative, Solar PV Microgrid for Rural Households, USAID, Cacahuatepec Village in Mexico, Preparing the Rural Renewable Energy Development Project, Asian Development Bank, Bhutan, Indonesia Clean Energy Development Project, USAID program in Indonesia and Vietnam, Improving Health Facility Infrastructure, USAID program in Haiti and Guyana,

28 THANK YOU Contact: Sima Seidi, Ph.D., Principal Consultant, Microgrids and Distributed Energy Resources Tetra Tech, Toronto, Ontario