Microgrids are natural innovation zones for the Smart Grid because they have experimentation scalability and flexibility.  Smart utilities could create partnerships with academic and business campuses in their territories to deploy microgrids and study the most effective solutions for management of distributed generation.  Why distributed generation?  Because smart utilities should leverage the abilities of microgrids to contribute energy to the utility grid and disconnect from the grid during times of peak electricity use.  These campus microgrids can serve to generate electricity and store it so that when they disconnect from the grid, they function with energy self-sufficiency.   This concept of “islanding” has exciting implications for not only generation but for the unfortunately named Demand Response programs.  (Not exactly a friendly and intuitively obvious term – is it?)  The Smart Grid Dictionary defines demand response programs as “Utility programs designed to change on-site demand for energy through means of changes in prices, load control signals or other incentives to customers.  The programs are activated at times of peak usage.  Demand response programs may include dynamic pricing/tariffs, price-responsive demand bidding, contractually obligated and voluntary curtailment, and direct load control/cycling.  Utilities use these programs to address system reliability, asset use efficiency, market conditions, and avoid investments in new T&D assets.” 

Microgrids within a utility’s grid can collectively deliver utility-scale distributed generation by selling excess energy to utilities.  However, microgrids can also supply what I call “virtual” generation by disconnecting from the utility grid and functioning as energy islands during peak usage times.  This is an extreme form of a Demand Response Program, but it can be done at a scale that eliminates the need for future utility investment in generation assets.  It is quite a shift for utilities to no longer build to peak electricity needs – but the Smart Grid and microgrids in particular – can help utilities evolve planning functions to asset optimization.  And since many microgrids incorporate renewable generation and storage, they are a great way for utilities to add distributed renewable generation and storage management into their asset investment plans.     

I was at the National Electricity Forum last week and asked the panelists discussing a new electricity infrastructure about the assumptions they were making to include distributed generation and microgrids into their plans.  The bad news is that they really aren’t making plans for distributed generation.  They are making plans that assume that all new generation is remote from users, and requires investment in transmission facilities, including new lines and new routes.  That may happen, but it won’t happen quickly, and only at great political and capital costs.  There’s a fast track for the Smart Grid, and it is based on wide scale distributed generation and microgrids.  Distributed generation and microgrids can happen much faster than many other benefits of Smart Grid solutions, and lead the way for an energy ecosystem in which there are many more winners and fewer losers.

To learn more about microgrids, join me at the Sustainable Silicon Valley/Santa Clara University Smart Microgrid event on February 23.  You’ll hear about this university’s project to upgrade their existing microgrid to a smart microgrid and enjoy thought-provoking discussion from a great panel of industry leaders – I’m looking forward to being the moderator.

Mark your calendars for the Metering, Billing/MDM America conference in San Diego on March 7-10.  This is a great show to learn about metering of electricity, gas and water, and the latest technologies to make dumb meters into smart meters.