There are two schools of thought about how the Smart Grid will evolve.  One promotes a “system of systems” view, in which the current centralized structure continues to be the dominant model, and the other focuses on an interconnected network of microgrids.  There are pros and cons to each approach, but just like the old saying, “don’t put all your eggs in one basket” makes sense for investment strategies, avoiding single points of failure also makes sense from energy generation, storage, and distribution perspectives.     

The US grid today operates at three nines (99.9%) reliability– far worse than other nation’s grids like Japan, which gets five nines (99.999%) reliability.  The difference is a few hours of outage in the USA versus a few minutes of outage in Japan.   Outages are quite costly to our economy.  If a grocer loses power for a sufficient time period, the losses to food inventories are substantial.  If a traffic signal is out, accidents may result.  Lawrence Berkeley National Lab released a report in 2004 that noted that estimates of ANNUAL economic losses range from $22B to $135B. 

Utilities design redundancy into their systems to reduce the risks of outages.  However, it is extremely costly for utilities to build redundant transmission facilities and generation sources, and there are the siting issues to consider.  The work-around to this challenge has been to identify “sensitive loads” where a reliable electricity supply supports operations that are mission-critical or vital to business and society.  Mission-critical operations include data centers or industrial processes and emergency services are vital operations.  While this work-around has given us three nines reliability, we can improve it by emulating the power supply configurations for telecom networks.  These networks use distributed generation and storage to ensure that mission-critical and vital communications services can operate without power from the electrical grid.  Microgrids apply this practice to the electrical grid.   

Microgrids function as miniature versions of the larger electrical grid – with three significant distinctions.  First, microgrids don’t require build-outs of transmission facilities since generation is co-located with use of electricity.  Second, microgrids integrate renewables on a much greater scale than the overall grid.  And third, microgrids use onsite energy storage to be self-sufficient or “off-grid” for periods of time.   If we identify mission-critical operations and nest them in microgrids, we can improve the reliability of the overall electricity supply and shield them from larger system disruptions.  Islanding individual or networked microgrids can avoid greater instabilities to the outside grid, or even transmit power back to the grid to stabilize it. 

Islanded microgrids need to be self-sufficient, and that means leveraging all energy efficiency (EE) plays and practicing tactics that shift and spread electricity needs to avoid peak demands that outstrip their indigenous energy supplies.   Microgrids take many of the technologies and practices found in the Smart Grid and deploy them on a small scale.  It’s a compelling strategy because scaling up the Smart Grid in a distributed manner will be faster than continuing to rely on centralized generation and transmission, and help us achieve a grid with five nines reliability.     

Next week’s blog will focus on microgrid security, which is the topic of a panel I’m moderating on August 11 in San Jose at the Smart Grid Cyber Security Conference and Expo.