Energy is becoming a central issue in business strategy. Rising power costs and increasingly unreliable utility grids may constrain your organization’s ability to achieve business results and long-term sustainability. A microgrid can play an important role in overcoming these challenges by increasing your self-reliance and introducing renewable energy sources that generate ongoing cost savings. In this blog post, I explore how the benefits of microgrids can fit into long-term energy and business plans and give examples of microgrid projects that are helping real-world organizations make progress toward their goals.
A microgrid offers a wide range of capabilities that may advance specific energy or business strategies: It allows you to generate electricity onsite, use it when needed, sell excess power back to the main grid, or even become independent of the local utility. It can be a game-changer for environmental and social commitments, green branding, energy resilience, cost control, and other objectives.
How microgrids can address your energy pain points
Despite environmental concerns, microgrid initiatives are typically motivated by practical considerations. By examining current and future pain points in your business and energy strategies, you can better understand whether – and how – to move forward with developing a microgrid.
Economic benefits of microgrids
Energy cost is one of the most common reasons for establishing a microgrid. The rising and unpredictable cost of fossil fuels is a significant business concern for enterprises that rely solely on the utility grid.
Onsite renewable energy resources, such as wind farms, arrays of solar panels, and battery storage systems, take fuel costs out of the equation. That helps to make your price per kWh predictable and most likely lower over the life of the microgrid. The more the cost of fossil fuels increases, the faster the return on your microgrid investment. A microgrid could be a cost-effective alternative or addition to your energy mix if your current power purchase agreements (PPAs) cannot guarantee a competitive rate per kWh for the next 20 years.
Enterprises that establish their own on-site energy resources are able to become more self-reliant and less vulnerable to the unpredictable forces affecting wholesale energy prices. Increased self-reliance also addresses another common pain point: the need for energy resilience.
Many utility grids are becoming less reliable due to rising demand, aging infrastructure, cybersecurity issues, and more extreme weather events due to climate change. An increasing focus on decarbonization is also propelling the switch to electrifying operations – which may not be fully supported by existing utilities (or even economically feasible). This can put organizations without adequate backup power and distributed energy resources in a precarious situation when grid failures and outages cause expensive disruptions.
For example, in pharmaceutical manufacturing and 3D printing operations, stopping and starting production for power outages wastes valuable materials. Shutdowns that cut production can also damage a company’s reputation by creating questions about its reliability.
A community’s need for power grid resilience
Energy resilience was a major concern for Montgomery County, Maryland. To address the needs of that community, Schneider Electric is building, operating, and expanding a microgrid for the county government under an energy-as-a-service (EaaS) agreement with AlphaStruxure.
One of the first facilities served by this grid is the county’s public safety headquarters – which houses critical services, including police, fire, and emergency management. In addition, the county’s animal shelter will get microgrid service next year. During extreme weather and other events that disrupt utility power, Montgomery County’s microgrid can operate in “island mode” and help to keep these services running.
David Dice, director of the county’s Department of General Services, has shared his thoughts on how this project advances multiple long-term strategies.
“The microgrid demonstrates the county’s commitment to both sustainability and resilience,” he said. “Citizens can rely on the county to control its long-term energy costs and environmental impact while reliably delivering essential services.”
Defining how microgrids will serve your sustainability goals
While most organizations look to bottom-line considerations such as cost control and business continuity to justify a microgrid investment, the sustainability benefits can be significant. Microgrids offer direct control over energy production for organizations with decarbonization targets (whether for compliance or to demonstrate a commitment to social goals). How the project contributes to those goals, and over what time period, should align with your overall sustainability strategy.
To decide on your best mix of sources, consider what kind of sustainability goals you are pursuing. For example, a net-zero carbon emissions goal with an approaching deadline might dictate a microgrid of wind and solar facilities and battery storage. In contrast, a more gradual decarbonization commitment might include more grid power or onsite fossil-fuel generators.
Case study: Developing a microgrid system for Bimbo Bakeries USA
Bimbo Bakeries USA, a national food producer, plans to switch on microgrids built and operated by Schneider next year at six bakeries in California. The project is part of Bimbo’s strategy to cut its carbon emissions in half by 2030 and achieve net-zero carbon emissions by 2050. The goal is that microgrids will supply 25 percent of energy needs and reduce carbon emissions by 25 percent at each site. In addition, they will allow Bimbo to convert natural gas ovens to electricity, a major step in decarbonization.
Local utility grids do not have the resources to provide energy for the resulting increase in electricity demand. However, integrating the microgrids, including solar arrays and energy storage, will cover the additional power load and create a more sustainable energy mix than the local utilities can provide.
David Yavari, the senior regional manager of environmental sustainability for the western U.S. at Bimbo, expressed that the microgrids would have social and economic benefits.
“Utility rates in California keep rising, and there are many incentive programs to help get projects like this off the ground,” he said. “With that combination of factors, microgrids can be profitable and also improve the communities where we live and work.”
Designing the right microgrid structure for your business
Whether a microgrid can be a powerful solution to your needs depends on the mix of economic, operational, and environmental concerns your business needs to address.
Once you’ve identified those issues and their relative priority, it’s time to explore options to determine how to design, build, finance, and operate the kind of microgrid best suited to your energy concerns. In future blog posts, I’ll look at the factors to consider as you do so, such as energy load and existing infrastructure, and the phases of a typical microgrid project, from proof of concept to production and scaling.
Learn more about how to consider the economic feasibility of incorporating a microgrid into your enterprise by viewing the white page we’ve created on Smart Microgrid Feasibility Studies.