Microgrids and Batteries: A Partnership for a More Resilient and Sustainable Future

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Volatile energy markets, utility grid disruptions, and the rising awareness of climate change have created new energy challenges that require innovative answers. As a result, many organizations are embracing microgrids as a solution to the mounting problems. By deploying distributed energy resources (DERs) such as solar panels at their facilities, enterprises can pursue three critical objectives: energy cost optimization, resilience, and decarbonization.

On-site battery energy storage systems (BESS) are essential to this strategy.

Battery energy storage systems maximize the impact of microgrids using the transformative power of energy storage. By decoupling production and consumption, storage allows consumers to use energy whenever and wherever it is most needed.

Two smiling businessmen leaning on a railing, looking out over an atrium.
Coupling battery storage with microgrid installations can revolutionize the impact of these distributed energy resources, allowing the stored energy to be used wherever or whenever it is needed.

Timely benefits

A microgrid must produce cost optimization, resilience, and decarbonization. These results justify the cost of a microgrid. Deployments that achieve all three also lead to a much faster ROI. Two examples of use cases illustrate the potential benefits of energy storage for microgrid owners and utility grid operators.

1) Enterprise: Making microgrids do more

To reduce energy costs, a facility with a microgrid can leverage a BESS to store power from variable renewable energy (VRE) sources, such as solar or wind, and then substitute the stored energy for utility power when utility rates are highest in an attempt to arbitrage. Selling excess VRE to a utility in some areas can also reduce overall energy costs. (A BESS investment may be eligible for federal or state incentives for renewable energy investments, making the cost equation even more attractive.)

A BESS can also make a microgrid more resilient. In a utility outage or a temporary drop in energy generated by the microgrid, the BESS can come online almost instantly to support critical loads. Finally, storage advances decarbonization initiatives by helping the organization maximize the self-consumption of renewable energy. This also accelerates the ROI from a microgrid.

2) Grid: Increasing stability

Another use case for battery storage on microgrids is aggregating BESS as a virtual power plant (VPP) to correct imbalances in the utility grid.

At the grid level, when the supply of power from renewables temporarily drops, utilities need to respond quickly to maintain equilibrium between supply and demand and stabilize the grid frequency. Stabilization is necessary to avoid cascading plant failures, shutdowns, and blackouts. Keeping fossil-fuel power plants on standby for these events, known as peaker plants, (a common way of mitigating risk today), comes with a significant and increasing cost premium.

In response to rapid changes in supply or demand, BESS can start discharging energy to a grid in approximately two seconds. This fast frequency response capability is unavailable from diesel or natural gas generators. It allows aggregated BESS on multiple microgrids to act as buffers, smoothing the load on the grid around the clock and restoring equilibrium in real-time.

Regulators are beginning to accept and encourage battery storage as a solution to fluctuating energy supply and demand. The U.S. Federal Energy Regulatory Commission (FERC) now allows the aggregation of power from batteries distributed across the grid and requires utilities to create marketplaces for battery power. The Inflation Reduction Act incentivizes large-scale battery storage projects. And California regulations now require energy storage for newly constructed commercial buildings.

The same microgrid-based BESS can serve either or both of these use cases. The microgrid owner’s on-site needs and the terms utilities and other partners offer are determining factors.

Diagram depicting 1) Utility connection, 2) Controls panel, 3) Onsite generation, 4) Loads that are using power, and 5) Battery Energy Storage System

Technology options

Energy storage options span many technologies, including:

  • electromagnetic (supercapacitors and superconducting coils),
  • thermodynamic (including compressed air and thermoelectric),
  • mechanical (flywheels and pumped hydroelectric power), and
  • electrochemical (hydrogen fuel cells and numerous types of batteries, at different stages of commercialization).

Lithium-ion (Li-ion) batteries are the most highly developed option in size, performance, and cost.

A broad ecosystem of manufacturers, system integrators, and complete system providers supports Li-ion technology. However, the vendors best equipped to bring value to microgrids bring the right components to each project. BESS are not yet standardized enough for a single BESS platform to serve all markets because regulations are evolving separately to meet regional needs.

Scalable, comprehensive solutions

The most effective vendors can deliver a complete BESS, supply selected components, or source the battery chemistry and inverters from third parties and assemble a customized BESS. The vendors best positioned to serve each enterprise’s needs can integrate all these offerings with automated, real-time microgrid management.

Including a BESS in microgrid system design and architectures maximizes their value—an approach Schneider Electric delivers on, ensuring organizations worldwide can fully maximize the benefits of microgrids.

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