This audio was created using Microsoft Azure Speech Services
The energy landscape is rapidly evolving. Change is driven by increasing adoption of renewable energy sources, rising concerns about climate change, and rapid technological advancements. In this blog, I’ll delve into the key trends for microgrids that are shaping the future of microgrids. 2024 promises to be another transformative year, and I eagerly anticipate leading and seeing even more innovation in these top theme areas and how they are shaping the future trajectory of microgrids.
Here are the top trends we expect to see in demand-side flexibility programs and microgrids in 2024:
1) Battery Storage as an Enabler
One of the biggest reasons more organizations are deploying microgrids is the growing availability of battery electric storage systems (BESSs). They multiply the benefits of microgrids, allowing enterprises to integrate more renewable resources and make the best use of on-site energy. By storing power from sources that fluctuate over time, such as solar and wind, BESSs allow users to use energy when it benefits them most, whether it be at times of peak hour rates or selling surplus to a utility. BESSs can replace utility power almost instantly in the event of an outage, increasing resilience by keeping critical infrastructure working.
Regulators are recognizing the opportunity. Federal, state, and other regulations now allow or require the inclusion of microgrid battery storage as a rapidly deployed buffer against utility grid disruptions. Technology continues to make the BESS story more compelling. Lithium-ion (Li-ion) has made battery storage more efficient and practical, and emerging systems such as sodium-ion are likely to continue this trend. In addition, we’ll continue to see vehicle-to-grid (V2G) technology opening other battery opportunities for microgrids.
2) Increased Focus on Grid Modernization
Utilities and grid operators will prioritize integrating demand-side flexibility and microgrids into grid modernization plans to aid in managing the variability and intermittent nature of renewable energy sources. Accelerated, deeper decarbonization of the supply side requires flexible infrastructure like microgrids. These ensure the grid is reliable and available under extreme conditions. We’ll see more advancement this year in modernizing the grid to be capable of handling more distributed energy resources interconnected to the grid. To make this possible, there will be increased focus on digitization of the grid, and enterprise tools must be modernized further.
3) Demand-Side Management Technology Advancements
The need for more advanced grid flexibility will be enabled by advancements in AI and machine learning. They will take more prominent roles in identifying, aggregating, and optimizing demand-side resources in grid flexibility programs, leading to more efficient grid management. Blockchain technology can create secure and transparent platforms for energy trading and peer-to-peer energy sharing among microgrids. This will give microgrid owners more incentives to take part and help to ensure fair pricing for all stakeholders.
4) Rise of Virtual Power Plants
Virtual power plants (VPPs) will aggregate distributed energy resources, such as rooftop solar panels and battery storage. These VPPs can participate in wholesale electricity markets and supply grid support services. We will see more deployment of VPPs in the U.S. and Asia-Pacific to reduce peak demand, decrease emissions, and increase asset utilization and capital efficiency. Along the way, VPPs and microgrids will continue to merge. As a result, the distinctions between the two concepts will become less significant. Working together, microgrids and VPPs can help deliver significant synergies to create a more reliable and sustainable electricity infrastructure while also delivering immense economic benefits to both the grid and customers.
5) Building-to-Grid Integration & Regenerative Buildings
The movement toward regenerative buildings, which produce more energy than they consume, benefits the energy ecosystem and the environment. As microgrids with utility grid interconnection and two-way energy flow are being built, onsite DERs can be used to meet not only on-site demand, but also the growing need for renewable grid power. As energy prosumers, regenerative building owners can cut costs by reducing their use of peak utility power and increasing their return on investment through buybacks. This will continue to become a focus in 2024 as more building owners see the operational and financial value in a building-to-grid connection.
6) Unlocking Demand Response
When it comes to managing peak demand, microgrids benefit every stakeholder. Past strategies have focused on microgrid owners avoiding peak pricing during peak hours. However, price benefits are just the beginning. Microgrids unlock additional demand response, which offsets peak demand impact on the grid. This enables more stability for everyone connected to it. What’s more, utilities avoid expensive capital expenditures when the highest levels of peak demand are reduced by microgrids supplying a portion of the energy.
Watch for innovation in the way microgrids are valued moving forward. Pricing structures will be pressured to change and reflect the benefits of increasing flexibility for demand response.
7) Standardization, and Interoperability
The lack of standardization and interoperability among demand-side flexibility platforms and microgrid components can hinder adoption and integration. The trend with the most potential to make microgrids more affordable, quick to deploy, and ultimately ubiquitous is standardization.
The evolution of microgrids from unique, custom-engineered projects into modular, repeatable systems – conceived and deployed in months instead of years – will be the key to faster adoption. Like our own EcoStruxure Microgrid Flex, designs based on a standard, validated set of DERs, configurations, and services slash costs and accelerate return on investment. This will enable more small and medium-sized commercial and industrial customers to afford the benefits of microgrids. The standardization breakthroughs that occurred in 2023 will continue in 2024, driving exponential growth in investment and innovation across an expanding ecosystem of system vendors and integrators.
8) Progress Toward Climate Goals
The climate clock is ticking faster, and corporations and governments are setting ambitious science-based targets (SBTs) to reach net-zero emissions. Microgrids let organizations integrate renewable DERs while precisely measuring their progress toward decarbonization goals. With their ability to track CO2 avoidance and every joule of overall energy consumption by source, microgrids are perfect tools for gauging progress against SBTs. And standardized frameworks that foster seamless data exchange between microgrids and utilities let players on both sides track their progress and adjust their tunes, making their SBT symphony a success for all.
9) Increased Investor Interest
Demand-side flexibility and microgrids power up investor interest as their potential shines brighter. Venture capital, private equity, and financial institutions are lining up to play, drawn by the promise of cleaner, smarter energy. One example is with community solar+battery projects as they offer both sustainable returns and local resilience – a sweet spot for investors and communities alike. This wave of investment could lead to a distributed energy future in which empowered consumers and communities become the engines of change.
10) Integration of DC Architectures
Finally, the energy world is buzzing with the rise of DC power behind the meter, especially in microgrids. Ditching AC-DC conversions, DC boosts efficiency, simplifies design, and plays nice with renewables. Microgrids are embracing DC to become more independent, flexible, and cost-effective. Despite remaining challenges, such as standardization and training, continuous advancements pave the way for DC’s dominance, shaping a brighter and cleaner future for energy.
Microgrid trends carrying forward
The microgrid revolution has already empowered many innovative, ambitious organizations to take control of their energy future. Increasingly, organizations are becoming part of the solution to energy infrastructure and climate challenges. Here’s to 2024 and witnessing and actively being part of the solutions driving and enabling microgrid growth and impact!
At Schneider Electric, we will continue to drive microgrids forward with innovative technologies and deployments that deliver real-world benefits. Learn more about Schneider’s microgrid vision here and discover why Guidehouse Insights named Schneider No. 1 among microgrid integrators here.