John Kelly - Microgrid Briefing on Capitol Hill - 5.20.2010
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Presentation by John Kelly, Deputy Director of the Galvin Electricity Initiative, given at the House Select Committee on Energy Independence and Global Warming briefing, "Microgrids: A Critical Component to U.S. Energy Policy," held on May 20, 2010.
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John Kelly - Microgrid Briefing on Capitol Hill - 5.20.2010
- 1. Microgrids: A Critical Component of U.S. Energy Policy May 20, 2010
- 4. Investment Paid for by Eliminating Waste Waste Type Wasted $, Billions Wasted, $/MWh Fuel Cost ~ $140 ~ $40 Outages/Repair ~ $100 ~ $25 Wasted Capital ~ $40 ~ $10 Emissions Cost ~ $65 ~ $15 Water Cost ~ $5 ~ $1 Total Waste ~$350 ~ $90
- 5. Microgrid Transformation Area Substation Local Substation Central Power Transmission Area Substation Smart Switch Renewable, waste heat, no carbon Natural Gas Smart Switch Microgrid
- 6. Microgrids Concept Backup, CHP, Solar, UPS Rapid Prototyping IIT Smart Distribution Prototype Smart Switch Smart Loop Smart Meter 10 MW
- 7. Naperville Microgrid Outage Duration (minutes) per Customer, 1996 - Present
- 9. Investment and Impacts Estimates Metric Investment $ millions Source Energy, mmbtu Carbon, Tons , Delta Cost, ~$/MWh Grid Reliability Improvements 100 70% improvement 12 Community Aggregation -29% -38% Wind, 30MW 60 -13% -9% 2 CCCT, 20 MW 60 -6% -20% 8 Bio-energy, 5MW 30 -10% -9% 2 Lower cost and revenue -15 Clean Energy Financing, PACE -26% -31% Solar PV, 7.5 MW 60 -2% -2% 9 Efficiency/DR/Home Automation 50 -20% -16% -8 Cogeneration , 15MW 30 -4% -9% 0 Storage/DG, 10MW 20 0% -4% 0 Total 410 -55% -69% 10
Editor's Notes
- The Galvin Electricity Initiative advocates that the smart microgrid approach is the way to get smart grid done to maximize value for consumers, unleash innovation, and produce measurable performance improvements, The nonprofit Initiative was started by Bob Galvin, former CEO of Motorola, in reaction to the northeast blackout of 2003. As someone who had built his business to create local jobs – including launching the cell phone market and beating the Japanese at their own game, quality – Mr. Galvin understands the impact of today’s outdated and unreliable U.S. power system on America’s economy and competitiveness. Costing the nation hundreds of billions annually in waste and thousands of jobs. The purpose of the nonprofit, public interest Galvin Electricity Initiative is to catalyze the transformation of the electricity system to one that that will best serve and adapt to the changing needs of consumers and businesses. We see the so called smart grid as a means to accomplish specific measurable outcomes that provide real value to consumers .
- This requires federal and state policy reform that empowers and enables consumer and communities to achieve their goals - cost, efficiency, reliability, and the environment. The Initiative is promoting the following basic consumer Principles or rights: Transparency in pricing and spending Markets that value consumer action Accountability through performance metrics Empower consumers to act Access and choice Market boundaries/standards What we are seeing in our work in Illinois and other states is that engaging communities is key to developing smart grids . Local governments are motivated by their constituents to get into the fight. Local governments are forced to deal with the aftermath of frequent local outages. When the power goes out, they are helpless to fix it, yet responsible for recovery and the well-being of the citizens who suffer. They describe the injuries, damaged property, safety concerns, business interruption, and lost tax revenue. In addition, their citizens want the grid moved underground for aesthetics and to protect trees. They also want access to green power. Imagine if our Country had no local governments nor a House of Representatives. What would are local roads, sewers, water systems look like? What would our cities look like today without local planning and governance? Well the U.S. electricity system is an example of a system with no local governance - out of date, exposed, and unreliable. Power goes out continuously and we pay an enormous price.
- This slide summarize the enormous waste caused by the nation’s electricity system. Investments that eliminate this waste save money, reducing overall costs to consumers if these investments are spent wisely. 1) 32 quadrillion btus or 30% of all the energy consumed by our nation 2) out of power almost two hours on average, most of Kentucky lost power for several days last year, not prepared for Hurricanes, tornados, ice, high wind, 3) 50 % of the assets are only used 10% of the year, 4) highest carbon, sulfur, and mercury emissions of all sectors, 5) consumers significant amounts of water (NREL reports 50%). Wastes total more than what the average American pays.
- View in presentation mode for interactive display - Microgrids are modern, small-scale versions of the centralized electricity system. They achieve specific local goals established by the community being served. Smart microgrids leverage the bulk power system to take advantage of lower cost baseload power and remote renewable resources. Smart microgrids connect with the larger grid and provide valuable services benefiting both utilities and their customers. Smart microgrids hold the distribution operator accountable. Let me explain.
- - IIT and Princeton are examples of how a microgrid provides valuable grid services. IIT recently signed a three-year procurement deal with 75% of its supply from zero carbon sources for $40/MWh compared to utility charges of $73/MWh on average. Princeton operates in real time with the grid taking its entire load off the grid when prices are high or the utility/ISO call for relief. This is done by shifting to local gas cooling and generation. Microgrids are aggregators that buy power for all of the local constituents. As new markets continue to evolve and users gain experience, more and more people participate and earn revenue from providing market services. New capacity is not needed as peak demand slowly declines. The term “microgrid” reflects a new way of thinking about designing and building smart grids. The microgrid approach focuses on creating a design and plan for local energy delivery that meets the exact needs of the constituents being served. At the local level, smart microgrids most efficiently and economically integrate electricity system upgrades with other infrastructure projects, thereby lower costs. Such as moving the overhead electric system safely underground when installing new roads, sewers, or water systems.
- Naperville has moved 90% of its electricity system underground over the past 15 years, coordinating this with large infrastructure projects, thereby averaging a cost of only $50,000 a mile. While many utilities report that undergrounding cables costs of $1 million or more a mile. Microgrids are hotbeds for investment and entrepreneurial innovation. Investment paid for by eliminating waste.
- So how do communities and developers get into the microgrid game? When they own their own infrastructure, as with a municipality like Naperville, it is easier – the ownership issue is not a barrier. They are accountable to local residents. They can make improvements as they see fit, and can finance them any number of ways. When communities do not own their infrastructure, they are left in the dark. However, that is beginning to change with the help of several thoughtful and innovative legislators. The Initiative has benchmarked best practices around the country and found a quit microgrid revolution underway. New federal and state policies are creating new opportunities for investment and innovation: Several restructured states have passed community aggregation laws, which allow a community to aggregate all of its customers and procure power on their behalf. The utility still operates the grid but the town has taken a big step toward addressing its residents’ power needs. It can innovate by promoting demand-response, purchasing power from cleaner sources, and generate revenue from providing services to the grid. Community aggregation is a state policy and it is only possible in restructured states that allow retail choice. So we need to protect restructuring and facilitate competitive markets . Federal legislation encouraged states and cities to take advantage of community financing mechanisms to fund microgrid development (e.g. PACE). New rules allow local governments to offer long-term low interest property assessed financing. This has changed the game, consumers were not willing to pay out of pocket for improvements to homes that pay back over 10 to 15 years. Now efficiency and clean energy can compete with grid expansion.
- Take the Village of Oak Park with 50,000 residents. This table reveals that Oak Park if armed with effective tools can attract up to $400 million in investment into innovative technology and programs that will reduce carbon emissions by up to 70% and increase reliability by 70%. Investments paid for by eliminating waste. The microgrid approach is a Jobs engine. Microgrid policy reforms could generate up to $3 trillion in clean energy financing paid for by eliminating waste.
- Develop federal reliability standards and grid performance metrics that recognize that a reliable U.S. electricity system is critical to life safety and economic development for our nation’s cities. Local distribution systems are plagued with recurrent power outages and power quality events that cost the economy over 100 billion a year according to EPRI and DOE reports. Policymakers can leverage stringent European Union reliability standards, which have evolved over the past decade. Make the consumer protection requirements of the Energy Independence and Security Act of 2007 (e.g. Section 16 U.S.C. § 2621(d)(19)) mandatory, and consider additional consumer protections. These consumer protections should include requiring that consumers have access to dynamic pricing and secure wireless home area networks from AMI (per NIST standards). Without consumer protections at the federal level, the benefits for consumers of smart meters and smart grid programs will be limited and utility deployed technology will not provide plug and play capability for suppliers. Create a federal, PACE-type financing program for distribution system improvements at the local level (e.g. cities). This program approach will provide communities with the ability to drive performance-based grid improvements. This will attract private investment and innovation while ensuring a focus on consumer needs. Encourage FERC to expand consumer choice and Independent System Operator (ISO) markets that value consumer participation and support community aggregation. This will dramatically increase investment and innovation in clean energy and energy efficiency by creating markets that value consumer participation. Community aggregation helps cities take a big step toward addressing residents’ power needs collectively. This approach also promotes use of demand-response and renewable sources at the local level. Ensure that the climate bill includes and empowers consumers to act by allowing them to participate in cap and trade when they adopt clean, local power generation. In current legislation, cap and trade involves the large generators —not the consumer. The federal government should follow the lead of the Northeast Regional Greenhouse Gas Initiative, which provides consumers with retirement allowances. Consumers receive allowances, which they can sell when they employ energy efficiency and clean local generation that reduces carbon emissions. The overall cap is then reduced for each allowance awarded.