Microgrids unleash true power of dispersed energy

20 August 2001

Pilot projects in the USA will aim to demonstrate the concept of the microgrid and the virtues of the virtual utility. Edward M Petrie and Danny E Julian, ABB Inc, ETI, Raleigh, North Carolina, USA

With the commercial availability of distributed energy technologies along with competition in the electric industry, distributed energy is providing an alternative way to supply electricity. By placing energy generation and storage as close to the point of consumption as possible, distributed energy is also enabling energy suppliers to minimise investment, improve reliability and lower costs, and to do so with higher conversion efficiency and minimal environmental impact. Therefore, with distributed energy technologies becoming more prevalent in the current electric network structure, the power distribution structure is being transformed into a network of distributed resources.

Figure 1 shows the current structure, with its three major components: large, centralised generating stations; high-voltage transmission from centralised stations to customer areas; and distribution systems which step down the voltage and deliver it to the end customer. Figure 2 shows the future distributed utility.

The value of distributed energy technologies can be greatly increased when they are connected together in an intelligent fashion. This leads to the concept of microgrids: small electrical distribution systems connecting multiple customers to multiple distributed energy sites, independent of, or interconnected with, the utility grid.

When electronically controlled, these ‘smart’ electricity networks can be operated as a single, aggregated supply of energy and are able to handle increasingly complex issues of scale, transactional complexity and power quality. The primary advantage of the microgrid is that reliability is greatly improved by having multiple sources of generation connected to the user. The primary drawback of course is the cost of the distribution or interconnection system and the need for control and dispatch on a system level.

Evolution of the microgrid

As the concentration of distributed resources (DR) grows in the electric supply portfolio, microgrid development is expected to evolve through three phases: first independent, then interconnected, and finally integrated with transmission and distribution systems (Figure 3).

The independent microgrid scenario consists of end use customers who will meet their needs (energy, power quality, power back up, peak shaving, cogeneration, etc) with the use of on-site distributed resources. Initially, these independent microgrids will operate in an island configuration without interconnections with utility grids.

The need to satisfy common energy, reliability, quality and efficiency needs and to allow sharing of resources within a safer infrastructure will encourage independent microgrids to interconnect. Independent, connected microgrids consist of multiple installed microgrids connected together to meet the needs of groups of customers.

Finally, the integration of the independent microgrids with transmission and distribution grids will occur to allow microgrids to participate in central and wholesale (energy, ancillary services, etc) markets. In this scenario, utility grids will remain to maintain customers’ energy, reliability, and power quality needs.

To get to this poin, one of the major hurdles and possible barriers which must be overcome is interconnection. How will distributed resources and microgrids be interconnected to ensure that safety and reliability are maintained? The proliferation of distributed resources will require national interconnection standards to be adopted in each country to provide uniform standards for interconnection of distributed resources with electric power systems. These standards should also provide requirements relevant to the performance, operation, testing, safety considerations, and maintenance of the interconnection.

The main components of a microgrid are shown in Figure 4. The device layer consists of the actual distributed resource devices themselves. The next layer to be installed for microgrid deployment is the data collection layer. As stated before, this could be a drawback to microgrid development if the cost is relatively high for this layer. Finally, the highest layer is the so-called application layer. This layer will provide the instruments that allow distributed resource owners/operators to take advantage of a portfolio of distributed resources.

Technologies for distributed energy

Although there is no formal definition widely accepted, distributed resources are small-scale generation typically sized at the capacity level of 20 MW or less and are flexible, mobile, and in some cases, environmentally friendly. They are placed at or near load centres and therefore are revolutionary in that they provide the antithesis to the past electric power generation paradigm that “bigger is better”.

Distributed resources can include a wide variety of generation sources, such as fuel cells, microturbines, photovoltaics, and hybrid power plants, as well as more traditional sources, such as diesel engines and steam turbines. However, distributed resources can also include electricity storage technologies such as batteries, flywheels, ultra capacitors and superconducting magnetic energy storage. Finally, end-use load controls that manage demand are also considered as a part of distributed resources.

To illustrate the breadth of the definition of distributed resources , here are two examples from CIGRE and IEEE. The definition given by Working Group 37-23 of CIGRE is that distributed resources are not centrally planned and today not centrally dispatched. They are usually connected to the distributed network and are smaller than 50-100 MW. IEEE SCC21-P1547 defines distributed resources as single generating units not directly connected to the bulk power transmission system with the maximum DR unit rating that may be practical to be interconnected suggested by the guideline, shown in the table on the left.

Distributed resources are regarded as a way of providing power in developing countries. However, from the traditional utility perspective, distributed resources are also attractive because they offer the option of tailoring the energy solution to the location:

• Generator can be sited close to the end-user for lower T&D costs and electrical losses.

• Sites for small generators are easier to find.

• Distributed generators are more quickly planned and installed.

• Energy can be ‘stored’ as fuel (eg, gas) and easily ‘released’ at peak times.

• The network can ‘close ranks’ if one generator is taken off-line, resulting in higher reliability.

• Newer technologies are environmentally clean and not noisy.

• Newer distributed generators can run on multiple types of fuels, even biogas, thus increasing flexibility and reducing fuel transportation costs.

From the end-user perspective, distributed resources are attractive for several other reasons:

• Power is readily available and offers better quality and reliability.

• Depending on the fuel used, electricity prices are often lower.

• Since the generators can be operated on command, peak shaving is possible, which reduces demand charges.

• Cogeneration of heat and electricity improves the overall energy efficiency of the installation.

Newly developed distributed generators typically range from 5 kW to 500 kW, have a footprint of between 0.01 and 59 kW/m2, and involve capital costs ranging from US$200 to US$6000/kW. They are capable of producing electricity in the 3 - 20¢/kWh range. The table below shows typical distributed resource technologies available in the current market.

Among the distributed resource technologies shown above, the most promising currently now are microturbines and fuel cells, including hybrid technologies. Microturbines are used for dependable power, for relieving distribution bottlenecks, for load peak shaving, to consume low cost or waste fuel, etc. The following are the expectations for them in near future: better efficiency with improved combustion and materials, prices in the range $400 - $600/kW, conversion to catalytic combustion, low BTU gases, and other waste fuels.

Managing the microgrid

By putting energy generation and storage as close to the point of consumption as possible, distributed resources have the potential to reshape the future structure of electricity production and delivery. Therefore, ABB is applying its network management and control systems, power transmission systems and distribution systems to create microgrids and virtual utilities. By linking distributed resources, ABB can make small-scale power even more efficient, trading electricity within the local grid or transmitting it into larger regional or national grids.

A virtual utility provides a coherent structure within which a distributed power generation system can operate. It will link and intelligently control and manage widely distributed generation assets. The virtual utility builds on the many ABB technologies which are suitable for distributed power generation and can take full advantage of ABB experience and products in control and distribution. The main challenges in this area lie in providing intelligent control systems, and in creating a power distribution network that has the flexibility to react quickly to changing demand conditions. Power must be provided affordably, with the most efficient use of resources.

ABB has technologies which are able to provide, as part of its virtual utility concept, the control, automation and optimisation capability needed to aggregate distributed generators or clusters. Skilful integration of distributed assets with targeted performance and load management can have benefits for utilities and consumers alike. A virtual utility will provide a scalable energy resource that can assist utilities in short/medium-term energy planning. It is ‘technology-neutral’ with regard to the generation or storage components, and is being designed to provide the optimal solution for the application regardless of any specific technology. This technology-neutral strategy gives ABB the opportunity to make use of advanced and developing generators and technologies both within and outside ABB. A fully automated control system that requires little or no human intervention is desirable to optimise the energy distribution for a consumer or utility.

At the hub of ABB’s virtual utility (Figure 5) is the control centre. Here the demand for and supply of energy is monitored and power switched from the main grid to the microgrid as needed. The business centre unit takes care of administration, energy trading and sales on behalf of the operator, while another provides dedicated maintenance services.

Once operational, the virtual utility will contain the necessary instruments, as shown in the application layer of Figure 4, allowing distributed resource owners/operators to take advantage of a portfolio of distributed resources. The virtual utility will take into account the technical, business, information technology and regulatory aspects of the interconnection, thereby alleviating the supply/demand imbalances. It will maximise potential earnings from dispatchable surplus generation, as well as load curtailment opportunities, and deliver the energy in a safe secure way in co-ordination with network operations. Therefore, the virtual utility offers a value that is greater than the sum of the individual distributed generation units.

A virtual utility owner focuses on running distributed generation units to ensure quality of supply and profitability of operation by injecting power intelligently into the microgrid. The grid owner can use this combination of assets to allow optimal leverage of the system in different ways. Many other benefits will be realised as a result of adopting the virtual utility concept. Some regulatory influences will tend to restrict the benefits, and ‘cutting the wires’ may be an attractive solution for certain consumers.

To show how a virtual utility would operate, consider a hypothetical energy service company, World Electric Service Co (WESCo), which owns 500 distributed generation units of 100 kV each installed at customer sites all over a given geographical area. Connected by a communications system that allows a single control centre to monitor and dispatch all 500 units, this group could be operated as a single body of generation. The owners could schedule their output to any required level from zero megawatts (during times when the going price for power is very low) to 50 MW (when the spot price is high), simply by turning on and ramping up various combinations of units from the control centre. The owner could also operate these units to maximise the power quality and availability that might be demanded by certain customers.

To support implementation of the virtual utility, ABB is offering a service bureau to customers. Rather than just sell hardware and software, ABB will offer the benefit of controlling and monitoring various resources related to distributed generation via an automated service bureau. These sources include but are not limited to distributed generation, storage, curtailable loads, etc. The service bureau maintains the database, specifies the communications protocol and interconnection devices and provides and maintains control, monitoring and applications software for the clients to use. The clients are charged a fee based either on elapsed time, connect time, or data points, etc. All communications are performed using the Internet and the database is maintained on a local web server.

Once clients decide to become a member of the virtual utility, the sites, which are to be connected, are identified and surveyed for availability of communications. As previously stated, all communications are performed using the Internet, but if private networks are available, these can be used also. DR communication devices are then connected to the distributed resource and are configured to connect with the virtual utility server. The DR communication devices encompass all the needed functionality to interact with the virtual utility web server. Once this is complete, the users then can interact (ie monitor/control) with their assets using the service bureau.

Pilot projects

There are two virtual utility pilot projects currently underway in the US. ABB also has in-house virtual utility pilots in the US, as well as Europe, where building control systems and on-site distributed resources are monitored and dispatched. ABB is also planning on implementing more virtual utility pilot projects in 2002, in conjunction with interested customers in Europe as well as the US.

In one of the US pilots, ABB, Carolina Power & Light (CP&L) and Florida Power, both Progress Energy companies, are implementing a virtual utility.

The pilot project enables CP&L and Florida Power to monitor distributed generation from a single location, including 11 MW of generation located on-site at dispersed customer locations as part of CP&L’s Premier Power Tariff in North Carolina. Under this tariff, the distributed generation is provided to customers – such as data processing centres, printing facilities and extrusion companies – that require a guaranteed and uninterrupted supply of power. ABB’s virtual utility solution will enable CP&L and Florida Power to manage the distributed generation resources more efficiently than was previously possible.

The second US pilot project currently underway is with a US university. This university has multiple gas turbines, reciprocating engines and microturbines and uses them to provide peak shaving relief to the university’s 12 kV distribution system. The university’s monthly energy costs are determined based on their load with the coincidental utility system peak load which they are connected with. Therefore, to reduce the total energy cost, they forecast the utility system load to determine when the monthly peak will occur and try to reduce total electric demand at that time. Estimates suggest that if the utility system load can be accurately forecast and the university can dispatch its units to reduce demand for as little as a couple of minutes a month, savings could about $100 000/year.

Interface issues

Today, distributed resources are emerging as a promising electricity-generating technology for a number of reasons. Three independent trends – utility industry restructuring, increasing system capacity needs, and technology advances – are concurrently laying the groundwork for the possible widespread adoption of distributed resources. Thus, distributed resources have the potential to completely reshape the production and delivery of electricity. It could also significantly change how power generation and distribution systems are planned in the future.

Distributed power generation differs fundamentally from the traditional model of central generation and delivery insofar as it can be located near end-users within an industrial area, inside a building, or in a community. The downstream location of distributed resources in the power distribution network provides benefits for both customers and electric distribution systems.

With the help of modern communications and control technology, microgrids can be operated as individual power plants. This offers numerous advantages to both the end-user of electricity and to the grid operator:

In the future, the communications and market interfaces will undergo major changes. The communications interface may require the development of systems and appropriate standards and protocols to allow distributed resource to be controlled and dispatched, to respond to more complex price signals, and/or otherwise participate in the power market.

To realise the full potential and maximise the benefits of distributed resource, the market interfaces will need to be refined as well through strategies such as expanded tariffs, greater access to markets, and the creation of distribution-level power markets.

Future research efforts should also be focused on overcoming these barriers and facilitating the greatest penetration of distributed resources. Particular research efforts are needed in the areas of control systems, real time power and voltage regulation, real time dispatch and control, high power quality, co-ordination among distributed generation resources and utility distribution systems.

Distributed resources have the potential to significantly alter the design and operation of the interconnected power delivery system and the nature of the electric utility industry. However, for this to occur, the challenge of providing reliable and cost-effective distributed resource interfaces must be met. If these interface issues are not resolved, distributed resources may just become another interesting, but impractical, technology. If the industry does meet the challenges, distributed resources may become a key part of the restructuring of the electric utility industry.

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