Partnering between community, government, and industry helps piece together an affordable, sustainable microgrid puzzle.
Public-private partnerships, multi-stakeholder microgrid ownership, public-purpose financing, cooperative ownership, microgrid-as-a-service (MaaS)… It’s fitting that there are multiple monikers for a multi-benefit microgrid financing tool in which ownership is split between several entities. The multi-stakeholder microgrid ownership model challenges the often prohibitive private sector financing models that may disregard the public service microgrids can provide. Owners, partners, and stakeholders may include citizens, small businesses, tech services providers, utility companies, and government entities. This small but growing segment of the microgrid market makes projects possible by distributing costs between and delivering benefits to all parties.
Reports predict multi-stakeholder future
“The complex planning required to deploy microgrids is enabling innovative business models to emerge as focus grows on local power quality and grid-wide performance, coupled with improved distribution generation and automation,” predicted Dean Frankel, Lux Research associate and author of the 2014 report: “Microgrids: How Business Model Innovation Will Support New Development Opportunities.”
A recently released GTM Research study affirms Frankel’s earlier assessment. U.S. Microgrids 2016: Market Drivers, Analysis and Forecast analyzes emerging ownership models. Currently, more than two-thirds of microgrids are owned by end-users, but “a key feature of the multi-stakeholder ownership model is its ability to provide stacked value propositions to accommodate [end-users’] objectives,” the report explains. “These new models can significantly reduce the [capital expenditure] and O&M burden on end customers.”
Shared investment, shared benefits
Local residents and small businesses provide a strong support base for multi-stake microgrid ownership and benefit from reduced cost burdens. Utilities looking to reduce peak demand and congestion as well as move toward the renewables future benefit from partnering as microgrid owners. For the other stakeholders, utility participation provides additional credibility and economic viability. The U.S. military, which owns almost one-third of installed microgrid capacity in the country, benefits from this model as well. Technology and related equipment companies gain control and benefit financially from multi-stake ownership.
Examples of the growing trend toward multi-stakeholder ownership model:
- United Illuminating (UI, an investor-owned utility), FuelCell Energy, and the town of Woodbridge, Connecticut joined forces when the town could not finance the generation of its proposed community microgrid and UI was falling short of meeting its clean energy requirement. The two entities solved each other’s problems when UI invested in the project, easing the town’s financial shortfall while allowing UI to fulfill its clean energy obligation. FuelCell Energy provides the power plant to make it all work.
- The Department of the Navy partnered with Arizona electric company APS to develop a microgrid network generating 25MW of electricity at Marine Corps Air Station (MCAS) Yuma. By providing 100 percent of the backup power needed for MCAS Yuma in the event of a grid disruption, the microgrid enhances the base’s reliability and security. The base benefits from backup power generation and APS gets flexible and lower-cost peak power generation.
- Schneider Electric’s Andover, Mass, “Boston One campus” is getting its own microgrid through a PPA with equipment provider REC Solar and Duke Energy, who will own and operate the microgrid while Schneider supplies its own components to the system.
- Cogen Power Technologies’ 3.6 MW cogeneration plant serves the Burrstone Energy Center Microgrid, a cooperative project that includes Faxton-St Luke’s Healthcare, St. Luke’s Nursing Home, and Utica College. Under this arrangement, the hospital utilizes the electric, steam, and hot water produced by the plant while the college and the nursing home use the electric. Excess electricity is sold to the local utility’s power grid.
As the Microgrids 2016 report concludes: “While microgrids have historically focused on behind-the-meter benefits for end customers, recent ownership trends suggest a very different future.