Economic Viability of Residential Microgrids in Ontario

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1 Economic Viability of Residential Microgrids in Ontario Aaron Barter Program Manager, Buildings & Community Energy Advanced Energy Centre 5 th Canadian German Smart Grid & Energy Storage Series Combined Solar PV and Energy Storage for Residential Installations December 7 th 2016

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6 #FUTUREOFMICROGRIDS WHAT IS THE FUTURE OF MICROGRIDS IN ONTARIO?

7 ADVANCED ENERGY CENTRE FUTURE OF MICROGRIDS SERIES & SEMINAR Considerable discourse in this space but Ontario yet to make the leap to wide spread commercial deployment Minimal investment seen past public grants and specialized funding Important questions still remain around the business case in Ontario Recognized benefits, but can these be monetized? Much of the available market data is not Ontario or even Canadian specific Value streams vary across different use cases and accrue to multiple stakeholders, with market specific factors impacting commercial viability 1. Examine the commercial viability of four microgrid use cases in Ontario 2. Forecasting if/when these systems can be deployed on fully commercial terms within the province s grid. 3. Examine factors (economic and non-economic) which will affect the business case for each microgrid use case. 7

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9 ADVANCED ENERGY CENTRE ECONOMIC VIABILITY OF RESIDENTIAL MICROGRIDS IN ONTARIO ASSUMPTIONS: 1,500kWh average monthly electricity consumption (18,000 kwh annual) Solar used to offset electricity consumption, and for net metering Battery used for Time of Use (TOU) arbitrage Battery capacity bid into DR auctions and OR market Battery, controller, and switchgear provide run-through resiliency Desired payback: 8 years Battery warranty: 10 years Storage 3 kw (6 kwh) Solar 5 kw Avg. Load 2 kw Peak Load 8 kw Hourly Energy (kwh) Base Usage Grid Purchased Solar Battery Battery Chg Off-Peak Mid- On-Peak 9

10 ADVANCED ENERGY CENTRE ECONOMIC VIABILITY OF RESIDENTIAL MICROGRIDS IN ONTARIO ASSUMPTIONS: This analysis focuses on targeted, high benefit microgrid opportunities that would be first-movers in the Ontario market Low-value opportunities such as low-consumption residential customers, small C&I customers, or lightly-loaded distribution feeders Niche-opportunities for microgrid deployment may be identified High-Value Opportunities Microgrids opportunities with strong business cases can include: High-consumption, large-home residential customers (>18,000 kwh per year) Large industrial users requiring uninterrupted power supply Highly-loaded feeders and substations requiring upgrades (80-90% loaded), and worst-performing feeders POOR VIABILITY MEDIAN VIABILITY HIGH VIABILITY 10

11 ADVANCED ENERGY CENTRE ECONOMIC VIABILITY OF RESIDENTIAL MICROGRIDS IN ONTARIO Based on a desired payback of 8 years, residential microgrids are not expected to be economic in the near term, but will become economic in the long term Residential microgrids may be cost effective if other non-economic factors are taken into account - the value gap to make microgrids economic today is $1,900 per year The value gap may be filled by other economic and non-economic benefits: Reliability (willingness to pay) Utility or grid services Virtual Power Plants (VPP) EV integration Technology attractiveness $per year Costs and Benefits 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Value gap = $1,900 per year ,460 Value gap = $300 per year ,810 Net Benefit = $400 per year ,130 Today Energy Ancillary Arbitrage 11

12 ADVANCED ENERGY CENTRE ECONOMIC VIABILITY OF RESIDENTIAL MICROGRIDS IN ONTARIO 12

13 ADVANCED ENERGY CENTRE ECONOMIC VIABILITY OF RESIDENTIAL MICROGRIDS IN ONTARIO Looking forward Impact of Tesla Powerwall 2.0: 13.5 kwh, 5kW (continuous) / 7kW (peak), integrated inverter Slightly higher cost (est. $10,000 USD installed) Highly applicable to larger residential consumers (50 kwh+ daily) Conservative technology cost-reduction projections? $170/month for resiliency, or about $6/day Cool factor (early adopters) Increasing Time of Use spread 13

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15 Thank you! Aaron Barter Program Manager, Buildings & Community Energy Advanced Energy Centre MaRS Discovery District DISCLAIMER: Navigant has provided the information in this publication for informational purposes only. The information has been obtained from sources believed to be reliable; however, Navigant does not make any express or implied warranty or representation concerning such information. Any market forecasts or predictions contained in the publication reflect Navigant s current expectations based on market data and trend analysis. Market predictions and expectations are inherently uncertain and actual results may differ materially from those contained in the publication. Navigant, and its subsidiaries and affiliates hereby disclaim liability for any loss or damage caused by errors or omissions in this publication.