Central Solar Parks versus Microgrids: Cost Versus Security and Reliability

One of the biggest debates in today’s “energy society” relates to grid-scale renewable projects versus distributed generation, in particular the role of rooftop residential solar systems. Proponents of large centralized solar parks, such as the recently announced Xcel project in Pueblo, Colorado, point out, very correctly, that economies of scale allow those projects to produce power at about half the cost (excluding incentives) of residential rooftop projects. The typical counter argument, that distributed generation avoids transmission losses, misses the much more significant security advantage of decentralized systems in a microgrid configuration.

Microgrids can provide electrical service without the central grid, either in emergencies or during expensive peak power periods. To do this microgrids require various combinations of additional controls, switchgear, power electronics, storage, and/or backup power. That additional equipment would also provide much needed flexibility to the central grid, by serving as a source of spinning reserve, demand response, and other ancillary services. The design goal is not to provide the lowest cost power, but the highest value power.

Utility companies do an excellent job providing reliability that is high enough for typical applications, but not for many critical loads. Centralized systems, such as our current grid-based power system, are inherently vulnerable to a variety of disruptions. Decentralized systems are inherently more resilient. The solar resource is also inherently decentralized, so a power system with widespread use of solar-based microgrids can deliver cleaner, more reliable power as soon as the utility regulatory structure and the accompanying utility business models adapt.

The centralized grid provides cheaper power most of the time, but each microgrid can use its own controls to decide between buying power from the central grid or making its own and perhaps selling back to the grid.

As this debate continues, and particularly as regulators are asked to consider the policy implications of distributed generation, the larger picture of the value of microgrids must be part of the discussion. Microgrids can potentially provide valuable services to the grid, while at the same time providing greater energy security to individual buildings or neighborhoods.