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OwnerJuly 2015 to presentEl Cerrito

Finding best available technologies for meeting energy needs today and tomorrow: energy efficiency, demand response,, solar, wind, electric vehicles, biofuels and smart grid. It’s all the innovations that make the energy we use more secure, clean, and affordable. The energy world's best hopes lie in what's happening in the digital realm, especially in data analytics.

Wednesday, April 5, 2017

Capacity and Ancillary Services Markets

How will frequency regulation and load management be monetized?




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Back to Markets & Pricing Index
1. Background

2. Acronyms/Definitions
3. Business Case
4. Benefits
5. Risks/Issues
6. Success Criteria
7. Frequency Regulation Technologies
8. Companies/Organizations
9. Next Steps
10. Links

1.Background
  • Frequency regulation service is the injection or withdrawal of real power by facilities capable of responding appropriately to a transmission system operator’s automatic generator control (AGC) signal. When dispatched generation does not equal actual load plus losses on a moment-by-moment basis, the imbalance will cause the grid’s frequency to deviate from 60 Hertz, the standard in the U.S. While the system does deviate from 60 Hz in the normal operation of the grid, frequency deviations outside an acceptable range negatively affect energy consuming devices; major deviations caus generation and transmission equipment to disconnect from the grid, in the worst case leading to a cascading blackout. Frequency regulation service can help to prevent these adverse consequences by rapidly correcting deviations in the transmission system’s frequency to bring it within an acceptable range. The system operator calibrates the AGC signal sent to frequency regulation resources to respond to actual and anticipated frequency deviations or interchange power imbalance, both measured by area control error (ACE)

  • Today, frequency regulation is largely provided by generators (e.g., water, steam and combustion turbines) that are specially equipped for this purpose. Provision by other resources is emerging, as technologies develop and tariff and market rules adapt to accommodate new resources. For example, the Texas Interconnection and MISO currently use controllable demand response in addition to generators to provide frequency regulation service. Such “regulation capable” generation, storage devices, and demand response resources can respond automatically to signals sent by the RTO or ISO, through AGC, to increase or decrease real power injections or withdrawals and thereby correct actual or anticipated frequency deviations or interchange schedule imbalance, as measured by the ACE. The faster a resource can ramp up or down, the more accurately it can respond to the AGC signal and avoid overshooting. Alternatively, when a resource ramps too slowly, its ramping limitations may cause it to work against the needs of the system and force the system operator to commit additional regulation resources to compensate

  • The United States Federal Energy Regulatory Commission (FERC) defines the ancillary services as: "those services necessary to support the transmission of electric power from seller to purchaser given the obligations of control areas and transmitting utilities within those control areas to maintain reliable operations of the interconnected transmission system." and identifies six different kinds of ancillary services:
    1. scheduling and dispatch
    2. Reactive power and voltage control
    3. Loss compensation
    4. Load following - slower-ramping resources that ramp with the load over a five minute period
    5. System protection
    6. Energy imbalance

  • In the RTO and ISO markets, compensation for frequency regulation service has been based on several components. Depending on the RTO or ISO, these payments include consideration for capacity set aside to provide the service as well as some of the following:
    • the net energy that the resource injects into the system
    • accurately following the RTO’s or ISO’s dispatch signal
    • the absolute (rather than net) amount of energy injected or withdrawn.

    These payments are intended to cover the range of costs incurred in providing frequency regulation service, e.g., operation and maintenance costs, and loss of potential revenue from foregone sales of electricity.

  • The payment for capacity is essentially an option payment to the resource to keep a certain amount of capacity out of the energy or other markets in order to provide frequency regulation service, typically based on a market clearing price per MW of capacity sold. ISO-NE, NYISO, MISO, California ISO, and PJM incorporate into this payment the opportunity cost of foregone energy sales incurred by a resource that provides frequency regulation service. However, ISO-NE and PJM do not apply the opportunity cost payment uniformly to all cleared resources, but rather make ex post resource-specific opportunity cost payments.

  • Compensation for frequency regulation service also includes payments or charges for the net energy the resource injects into or withdraws from the system. All RTOs and ISOs currently provide a payment for the net energy injected by a resource providing regulation service during the operating hour, calculated as the amount of energy injected less energy withdrawn multiplied by the real-time energy price.

  • Accuracy of performance can also be incorporated into payments for frequency regulation service. Currently, NYISO incorporates accuracy into its compensation for frequency regulation service through a penalty that reflects the accuracy with which the resource follows its dispatch instruction. This is done through a performance index that tracks how accurately a resource follows the dispatch signal.

  • On October 20, 2011, FERC issued a final rule establishing a two-part market-based rate compensation methodology for the provision of frequency regulation service in RTO and ISO markets. The cost of providing regulation service generally is borne by customers serving load in the balancing authority area where the relevant resources are located. At present, different markets have different methods for compensating providers of frequency response service. Order No. 755 reforms the approach used to compensate these suppliers.

2. Acronyms/Definitions
  1. ACE – Area Control Error – Measures frequency deviations and interchange power imbalance. A measure of the quality of operation of the grid. ACE must be kept within grid operating requirements.

  2. Ancillary Services - Balancing services used to balance generation and demand in tightly limited situations to maintain the alternating current (AC) system frequency of 60 Hz. Energy storage is perfectly suited to provide this service by absorbing electric energy (charging cycle) whenever there is too much generation for a given demand and by injecting electric energy into the power grid discharging cycle) when there is too little generation. Traditionally, these services have been performed by conventional gas or steam turbine technologies. But rather than varying the torque of large rotary turbo-machinery on a second-by-second basis, electrochemical EES is much better suited to quickly respond to the grid needs.

  3. AGC - Automatic Generator Control - Frequency regulation service is the injection or withdrawal of real power by facilities capable of responding appropriately to a transmission system operator’s AGC signal.

  4. Ancillary Services Demand Response
    • In the Ancillary Services DR market, end-use customers are allowed to bid load curtailments in ISO/RTO markets as operating reserves. Accepted bids are paid the market price for committing to be on standby. In order to participate in ancillary-service markets, end-use customers must be able to adjust load quickly during a DR event. The response requirement depends on the nature of the event and the type of reserve being supplied.

    • Loads typically have a very short response time, usually specified in minutes, rather than in hours. These short timeframes and program requirements limit the type of resources that can participate. End-use loads that qualify for participation as an ancillary services option could include large industrial processes that can be curtailed safely and quickly without harm to equipment. Examples of loads are air products or electric arc steel furnaces, large water pumping load, or remote automatic control of appliances such as air conditioners.

    • End-use customers participating in the ancillary services market receive a capacity payment for committing loads to be on standby. The capacity payment is based on the market clearing price for capacity (MCPC). If load curtailments are needed, and they are called by the ISO/RTO, participants are paid the spot-market energy price. There is typically a higher minimum size for reductions and customers are required to install advanced real-time telemetry because of the stringent program requirements.

    • End-use loads that qualify for participation in the ancillary service option require capability to respond to an event notification that is going to occur within 30 minutes of the notification.

  5. Dispatchability - The ability of a given power source to increase and/or decrease output quickly on demand. This should be contrasted with certain types of base load generation capacity, such as nuclear power, which may have limited capability to maneuver or adjust their power output, or intermittent power sources such as wind power which cannot be controlled by operators. The time periods in which dispatchable generation plant may be turned on or off may vary, and be considered in time frames of minutes or hours.

    In general, when a resource submits its frequency regulation bid to the RTO or ISO, the bid is typically required to include its ramp rate in MW/min, its cost per megawatt-hours (MWh) of ramping ability, and the total capacity it is offering for frequency regulation.

    The resource’s total amount of capacity is based on and limited by its ability to ramp up or down. For example, a resource with a relatively large amount of capacity, but a relatively slow ramp rate would be limited in how much capacity it could offer as frequency regulation capacity. If the resource can ramp one MW per minute, it would only be able to offer five MW of regulation capacity (for a five minute dispatch) regardless of its total capacity. On the other hand, a smaller capacity, faster ramping resource might not face such a constraint. For instance, a storage device that can hold a 20 MW charge and ramp at 10 MW per minute, could offer its full 20 MW of capacity for five minutes.

  6. Dispatchability - The ability to provide a DR-inducing signal within a limited timeframe. Some argue that dispatchability is a requirement of a DR option. Time-of-use (TOU) rates are sometimes considered a demand-response option. TOU rates are non-dispatchable and produce a consistent reduction in peak demand.

  7. FERC Order 755 - Issued October 20, 2011 - Pursuant to section 206 of the Federal Power Act (FPA), ;the Commission is revising its regulations to remedy undue discrimination in the procurement of frequency regulation in the organized wholesale electric markets and ensure that providers of frequency regulation receive just and reasonable and not unduly discriminatory or ;preferential rates.

    Order No. 755, generators or other entities providing this service will be compensated in a two-part structure. 
    1. Capacity Payment  - Regulation service providers will receive a capacity payment reflecting the opportunity costs of the marginal resource providing frequency regulation service during the settlement period. This approach acknowledges that a frequency response resource must hold some of its capacity in reserve to provide frequency regulation service when such service is needed, and therefore the resource forgoes the revenue it could otherwise earn through energy market sales.

      Order No. 755 also allows for the recovery of inter-temporal opportunity costs, such as costs incurred by an energy storage device that must provide frequency response service at a time of day when it would be more cost-effective for it to buy energy to recharge the storage device. Order No. 755 leaves the specific methods for calculating such opportunity costs to individual regional markets, explaining that the operators of the separate regional organized markets are "in the best position to perform accurate cross-product opportunity cost calculations." With regard to inter-temporal costs, Order No. 755 requires that such costs be verifiable, but it allows individual regional market operators to determine whether these costs should be determined by the ISO or RTO or by market participants.

    2. Performance Based - The second component of regulation service compensation is "performance-based" and will reflect the amount of the up or down movement a resource provides in response to the system operator's dispatch signal and the resource's accuracy in responding to the dispatch signal. This approach accounts for the fact that a resource with faster ramping capability can provide a greater amount of capacity into the regulation market than can a slower-ramping resource.

  8. Frequency Regulation - Electric frequency must be maintained very close to 60 hertz (Hz), or cycles per second (50 Hz in Europe and elsewhere). When the supply of electricity exactly matches the demand (or "load"), grid frequency is held at a stable level. Grid operators, therefore, seek to continuously balance electricity supply with load to maintain the proper frequency. They do this by directing about one percent of total generation capacity to increase or decrease its power output in response to frequency deviations.

  9. ISO - Independent System Operator - In a deregulated marked, although utilities retain the ownership of transmission lines, they no longer control access to them. This responsibility has been transferred to a non-profit organization called an "Independent System Operator" which controls transmission of all electricity in the region.

    An RTO or ISO is defined as an electric utility regulated by FERC, and most are non-profit. It is
    funded by a grid management charge approved by FERC and paid by generators and load serving entities within the RTO/ISO’s balancing authority. It operates the electric transmission acilities under its authority in compliance with NERC approved mandatory reliability standards. In so doing, it provides nondiscriminatory access to transmission services for all qualified market participants.

    Historically, some RTO/ISOs evolved from power pools, for example PJM, while others were created by state legislation which also mandated electric industry restructuring, for example CAISO, or through other voluntary associations, such as the Midwest ISO.

    An RTO/ISO designs and administers within its balancing authority several types of auction markets, including day-ahead and real-time wholesale spot markets (including five minute dispatch) for electric energy and ancillary services, and forward markets for financial transmission rights; several also operate forward markets for capacity. These markets are characterized by transparent prices and have both ex ante and ex post rules that support workably competitive market outcomes.

  10. Regulation -The continuous adjustment of AC electricity frequency (60 Hz)

  11. Regulation Ancillary Service – The continuous matching of supply with demand in a control area. This would represent an economic opportunity for Vehicle to be available for short bursts of charge and discharge. Power plants provide regulation today, but they have slow response, low efficiency, energy and economic.

  12. VAR Support - Reactive power support can be provided on either a unitary or small-system basis, or as a secondary overlay application for a full-scale 20 MW frequency regulation power plant. For industrial and commercial end users, potential benefits include lower fees from utilities resulting from improvement of power factor levels that would otherwise fall below specified minimums, as well as higher power quality for sensitive industrial and commercial applications. For grid operators or utilities, potential benefits include the ability to defer investments in transmission and/or distribution infrastructure.

3. Business Case
  • On October 20, 2011, pursuant to section 206 of the Federal Power Act, FERC revised its regulations to remedy undue discrimination in the procurement of frequency regulation in the organized wholesale electric markets and ensure that providers of frequency regulation receive just and reasonable and not unduly discriminatory or preferential rates. Frequency regulation service is one of the tools regional transmission organizations (RTOs) and independent system operators (ISOs) use to balance supply and demand on the transmission system, maintaining reliable operations. In doing so, RTOs and ISOs deploy a variety of resources to meet frequency regulation needs; these resources differ in both their ramping ability, which is their ability to increase or decrease their provision of frequency regulation service, and the accuracy with which they can respond to the system operator’s dispatch signal.

  • The Commission found that current frequency regulation compensation practices of RTOs and ISOs result in rates that are unjust, unreasonable, and unduly discriminatory or preferential. Specifically, current compensation methods for regulation service in RTO and ISO markets fail to acknowledge the inherently greater amount of frequency regulation service being provided by faster-ramping resources. In addition, certain practices of some RTOs and ISOs result in economically inefficient economic dispatch of frequency regulation resources.

  • For example, that CAISO, NYISO, MISO, and PJM pay a capacity payment to all resources that clear the frequency regulation market, and then net the amount of regulation up and regulation down provided by these resources in order to compensate for the energy costs they incur. A simplified example would be to consider two resources that clear with the same amount of capacity and are directed to provide regulation up and regulation down over the course of a five-minute interval. The fast-ramping resource might be directed to move around an initial output level up five MW, then down three MW, up one MW, down ten MW, and finally up nine MW. A netting approach to compensation would determine that the resource provided an additional two MW of energy to the system (+ 5 – 3 + 1 – 10 + 9 = +2) during that five minute interval. Meanwhile, a slower ramping resource may be directed to move up three MW and then down one MW for a net of two MW in relation to its initial output level. The operator is not able to direct more movement because the slower-ramping resource would not be able to respond in the requisite time frame. Both resources would receive identical compensation for their movement, despite the first resource providing more ACE correction

  • By remedying these issues, the Commission is removing unduly discriminatory and preferential practices from RTO and ISO tariffs and requiring the setting of just and reasonable rates. Specifically, this Final Rule requires RTOs and ISOs to compensate frequency regulation resources based on the actual service provided, including a capacity payment that includes the marginal unit’s opportunity costs and a payment for performance that reflects the quantity of frequency regulation service provided by a resource when the resource is accurately following the dispatch signal
4. Benefits
The primary economic benefit that some commenters expect to see is reduced costs of procuring frequency regulation capacity, with a secondary benefit of reduced energy costs. fFaster-ramping resources are able to provide more frequency regulation service from the same amount of frequency regulation capacity because faster-ramping resources can provide more ACE correction in real-time.

  • Control Frequency - Provides frequency regulation to maintain the balance between the network's load and power generated. Provides stability, VAR support, power quality and transfer-leveling, and reliability.

  • Faster Ramping Resources Cost Less - The final rule serves to remove barriers to the participation of faster-ramping and more accurate resources in the frequency regulation markets. The utilization of these more accurate resources will lead to reductions in the amount of regulation capacity that each balancing authority must procure – savings which can then be passed on to consumers. Furthermore, the rule will also allow the mostly thermal generation fleet that currently provides regulation to instead more efficiently operate in the energy markets at their optimum heat rates, where they can submit lower offers to supply energy and thus further lower costs to consumers. Because the energy market is much larger than the regulation market, this is where there may be greater savings.

  • Improved Reliability - The final rule should enhance reliability as it incents new resources to come online and provide system operators in the ISOs and RTOs with additional tools and flexibility to manage the grid. As I have repeatedly indicated, we are asking our aging grid infrastructure to do more and more as regional electricity markets expand and we seek to transmit power over long distances from location constrained resources. We need to make sure that the operators of the grid are prepared to deal with these challenges with tools like the enhanced regulation market design we are directing today.

  • Reduced Emissions - The final rule will result in an overall reduction in emissions from the generation fleet. Some of the new resource technologies that are faster and more accurate produce no emissions themselves. Further, the mostly thermal generation that traditionally has provided regulation will now be able to bid their capacity into the energy markets at their optimum heat rates. This will enable the thermal generators to maximize their efficiency, which in turn will reduce their emissions.

5. Risks/Issues
  • The two-part rate is likely to be administratively-determined. There is no straightforward way for both the mileage payment and the capacity payment to be established through competitive offers. Therefore, the subjective judgment of the Commission and the operators of RTOs and ISOs will replace market forces in determining the value of frequency regulation service.

  • Subjectivity = Controversy - Bbecause the rate will be administratively-determined, it will be controversial and subject
    to litigation.

  • The performance payment will increase payments that must be recovered through uplift, complicating existing settlement procedures and efforts to reduce uplift.

  • Penalize Existing Technology A performance payment will unduly discriminate against existing technologies that could respond faster but for the presence of barriers that have not, to date, presented themselves as obstacles. These barriers include the use of static ramp rates that reflect typical performance under all conditions rather than peak performance under conditions that exist at a point in time.


  • Potential for Manipulation - Multi-part offers require complex rules to deter market manipulation because it is difficult to differentiate between legitimate and illegitimate bidding behavior.


  • Regulatory Treatment of Storage & Asset Classification - Today's regulatory structure and utility processes disfavors energy storage. Storage is neither supply nor demand in a traditional sense and existing regulatory framework is not set up to manage it. It is a matter of debate whether the cost of energy storage technologies utilized to shift transmission utilization to match capacity should be a generation or a transmission asset because of its multifaceted implications for business models, sources of financing, and regulatory cost recovery.


    1. Energy Storage is a transmission application because it is directly linked to the transmission system and its operation, without any bias towards its classification as such for regulatory or business model questions.
    2. Storage can also be used for energy price arbitraging and production leveling, which are normally generation functions and which developers prefer to perform on a merchant basis so that they can access market prices. Also, the operator takes ownership of the energy in redelivering it which isn’t a transmission function.
      We need appropriate regulatory, market, and incentive treatments to encourage storage in support of renewable energy. When Storage is used in a multi-purpose application (as at a substation), it is unclear how to allocate costs and benefits for cost recovery. Because these benefits address different functions (generation vs. transmission), it may be difficult to measure the different benefits and allow for full cost recovery based on these benefits.
    3. FERC rules for energy storage asset class

  • Cost Competitiveness - High cost of energy storage technologies due to the small scale of production. The costs of energy storage options need to be compared to other options, including the construction of new transmission infrastructure.


  • Value Not Monetized - Failure of the current marketplace to monetize the true value of storage. Storage has over 30 different elements of value and, right now, very few of those elements of value are monetized in the marketplace.


  • Market Information - Information on energy balance, requirements for ancillary services and related market values may not be available. In the case of longer term storage (minutes to hours) for energy arbitrage, load following and ramping, market information on both the current value of energy and the expected future value will be required to effectively schedule changing and discharging. Since all storage systems will have both a capital and an operational cost component, its dispatch will depend primarily on capacity and on energy value. Also the capacity and energy limits of the storage systems will need to be communicated back to either a dispatcher or aggregator.


6. Success Criteria
  1. Communications - In the case of short-term storage (seconds to minutes) for ancillary services, including frequency regulation, reactive supply and voltage support, requires fast and secure communications that allow for automatic control of the resource.

7. Frequency Regulation Technologies
  • Battery Storage (See my Blog Article - Battery Storage) - Utilities typically use batteries to provide an uninterruptible supply of electricity to power substation switchgear and to start backup power systems. However, there is an interest to go beyond these applications by performing load leveling and peak shaving with battery systems that can store and dispatch power over a period of many hours. Batteries also increase power quality and reliability for residential, commercial, and industrial customers by providing backup and ride-through during power outages.

  • EDLC - Electrochemical Double Layer Capacitors - (Also known as supercapacitor, supercondenser, pseudocapacitor, or ultracapacitor) (See my blog article - Supercacitors)  Store energy directly as charge. An EDLC is an electrochemical capacitor with relatively high energy density. Compared to conventional electrolytic capacitors the energy density is typically on the order of hundreds of times greater. In comparison with conventional batteries or fuel cells, EDLCs also have a much higher power density.

  • Flywheel (See my Blog Article) – Flywheels are designed to smooth out transient fluctuations in load and supply, Changing power output causes greater wear and tear on equipment, and fossil generators that perform frequency regulation incur higher operating costs due to increased fuel consumption and maintenance costs. They also suffer a significant loss in "heat rate" efficiency and produce greater quantities of CO2 and other unwanted emissions when throttling up and down to perform frequency regulation services.

  • SMES - Superconducting magnetic energy storage systems (See my blog article SMES) store energy in the magnetic field created by the flow of direct current in a superconducting coil which has been cryogenically cooled to a temperature below its superconducting critical temperature. A typical SMES system includes three parts: superconducting coil, power conditioning system and cryogenically cooled refrigerator. Once the superconducting coil is charged, the current will not decay and the magnetic energy can be stored indefinitely. The stored energy can be released back to the network by discharging the coil. The power conditioning system uses an inverter/rectifier to transform alternating current (AC) power to direct current or convert DC back to AC power.

    Supercapacitors are DC energy sources and must be interfaced to the electric grid with a static power conditioner, providing 60-Hz output. A supercapacitor provides power during short duration interruptions and voltage sags. By combining a supercapacitor with a battery-based uninterruptible power supply system, the life of the batteries can be extended. The batteries provide power only during the longer interruptions, reducing the cycling duty on the battery. Small supercapacitors are commercially available to extend battery life in electronic equipment, but large supercapacitors are still in development, but may soon become a viable component of the energy storage field.

  • Vehicle-to-grid (V2G) - (See my blog article V2G) - Describes a system in which power can be sold to the electrical power grid by an electric-drive motor of a hybrid vehicle that is connected to the grid when it is not in use for transportation. Alternatively, when the car batteries need to be fully charged, the flow can be reversed and electricity can be drawn from the electrical power grid to charge the battery

8. Companies/ Organizations
  1. FERC - The Federal Energy Regulatory Commission - United States federal agency with jurisdiction over interstate electricity sales, wholesale electric rates, hydroelectric licensing, natural gas pricing, and oil pipeline rates. FERC is also responsible for ensuring the reliability of the nation’s high-voltage interstate transmission system.
  2. Not all transmission is subject to FERC jurisdiction. Public power entities such as the Los Angeles Department of Water and Power are not under FERC jurisdiction. Federal agencies also self-govern, so the Bonneville Power Administration, the Western Area Power Administration and the Tennessee Valley Authority all fall outside FERC’s authority. Finally, most of Texas and all of Hawaii and Alaska are outside FERC jurisdiction because they are not connected, or not tightly connected, to the interstate transmission grid.
9. Next Steps
  • While Order No. 755 applies only to organized ISO and RTO markets, FERC may act to broaden its application. On June 11, 2011, FERC issued a Notice of Inquiry ("NOI") seeking comment on whether the cost-based compensation methods for frequency regulation in regions outside of organized markets should be adjusted to address the same issues addressed in Order No. 755. Third-Party Provision of Ancillary Services; Accounting and Financial Reporting for New Electric Storage Technologies, Notice of Inquiry, 135 FERC ¶ 61,240 (2011). In the NOI, FERC sought comments on different frameworks under which the speed and accuracy of frequency regulation resources might be appropriately valued in non-RTO and non-ISO markets. The matter is pending before FERC.

9. Links
  1. FERC - Final Rule October 20, 2011 - Frequency Regulation Compensation in the Organized Wholesale Power Markets Docket Nos. RM11-7-000

  2. CPUC - Demand Response Cost-Effectiveness Protocols - Final (MS-Word) - These protocols have been developed with the understanding that DR is in a transitional period.  Historically, DR was largely employed for reliability purposes during system emergencies in the form of interruptible programs for large industrial customers, which could be triggered when an ISO would otherwise have to shed load during a system emergency or when a utility was faced with a serious distribution system emergency.  However, the deployment of advanced metering technology and development of new energy markets is enabling greater use and flexibility of demand response by all types of customers.  Increasingly, customers are able to manage their loads to provide different levels of load reduction in response to price signals or other incentives.  These load reductions provide value to the grid not only during emergencies, but also during times of high energy prices or in the ancillary services market.  As a result, the methods used to measure the costs and benefits of demand response must be flexible enough to capture these emerging benefits.

Tuesday, March 28, 2017

Improved Volt/Var Control

Today’s digital devices are highly sensitive to variations in power quality  As electricity loads become more variable and intermittent sources become a larger portion of the energy supply, the power grid will need to become more flexible and more efficient. Dynamic voltage and volt-ampere reactive (VAR) control architectures (DVCAs) are increasingly essential to achieving cost-effective performance expectations.

Navigate this Report

Back to Distribution Index
1. Background

2. Acronyms/Definitions
3. Business Case
4. Benefits
5. Risks/Issues
6. Success Factors
8. Companies
9. Next Steps
10. Links

1.Background
  • Today, with rising penetration of distributed generation (DG) and increasing attention focused on energy efficiency, demand response (DR), and renewable energy integration, the task of managing the distribution network, including voltage and volt-ampere reactive power (VAR) levels, is becoming increasingly complex.

  • Improving the efficiency of power transmission and distribution comes down to two choices: you can reduce the resistance of the wires by making them larger or using better materials (not a practical solution), or you can improve the effectiveness of the flow of electricity. To address the latter, it’s important to understand the difference between real and reactive power.

  • Real power is what we use to run our lights, computers and production lines. It’s the power the “does the work.” Reactive power does not contribute anything to doing work, but it does cause conductors to heat up and it takes up a certain amount of “space” in the wires. The more reactive power flowing on a line, the less “room” there is for real power, and the less efficient the transmission and/or distribution system will be.

  • So, to optimize the movement of electric energy, we would ideally like to eliminate reactive power flows, or at least minimize them. Utilities do this today on their local distribution systems using devices such as capacitor banks or special transformers, typically located at substations or on feeder. These devices work to keep reactive power flows down, making the full capacity of the conductor available for the real power that will be used by our lights, TVs and refrigerators. This process is known as volt/VAr control.

    Historically, volt/VAr control devices have operated autonomously, independent of one another and without centralized coordination. This approach worked, but it left a good deal of efficiency on the table since actions taken by one device might have less-than-optimal results for another location on the grid or for the system as a whole.

  • The current electric grid was designed to serve analog devices such as lights, motors and pumps, which work just fine despite varying electric loads. However, today’s personal computers and other smart digital devices with microprocessors inside are highly sensitive to variations in power quality due to voltage surges and sags and harmonic changes in the alternating electron flow.

  • Almost all higher efficiency appliances, heating, ventilation, and cooling (HVAC) systems, consumer electronics, lighting, and other load devices are changing from being “resistive” (e.g., incandescent light bulbs) or “rotating” (as in motors) to “inverter based.” The transition of load from “resistive” to “inverter based” means that the overall system performance, especially with respect to power factor and reactive power needs, changes dramatically over time. Smart Grid technologies offer utilities increased monitoring of rapid power changes and help them adapt control schemes and deploy capacitors and other power-factor control devices—including power electronics-based devices in substations—to compensate.

  • In the 1980s, electrical load from sensitive electronic equipment (e.g. computer chips) and automated manufacturing was limited. In the 1990s, electronic share grew to roughly 10%. Today, load from electronic technologies and automated manufacturing has risen to 40%, and the load is expected to increase to more than 60% by 2015.

  • In power distribution, significant effort is made to control the reactive power flow. This is typically done automatically by switching inductors or capacitor banks in and out and by adjusting generator excitation. Electricity retailers may use electricity meters which measure reactive power to financially penalize customers with low power factor loads. This is particularly relevant to customers operating highly inductive loads such as motors at water pumping stations.


Capacitive Load (i.e. Battery) Capacitors store electrostatic charges. Current leads voltage. Instanteous power is mostly positive


Inductive Load (i.e. Motor) - Inductors store power in magnetic field. Current (i) lags voltage (e). Instaneous power (p) is mostly positive



Resistive Load (i.e. Heater) - Voltage (e) and current( i) are coincident. Instantaeous power (p) is always positive



2. Acronyms/Definitions
  1. AC Power – Produced by an Alternator (commonly referred to as a generator) that functions by rotating an energized magnetic field adjacent to a coil of wire. The energized field has a flux around it. When the magnetic field cuts across the coil of wire, electrons are induced to flow and AC electricity is produced. (Therefore the name, Induction Generator) Since AC power has a varying voltage, efficient power systems must therefore vary the current in synchrony with the voltage.

    • The polarity of the voltage across the wire coils reverses as the opposite poles of the rotating magnet pass by. When the direction of the AC voltage changes 60 times per second, it is called 60 Hertz (60 Hz) AC Power, the standard in North America
    • System operators can adjust the output of “real” and “reactive” power at short notice to meet changing conditions.
    • Numerically, the sine wave plot is:
      Angle Sine (angle) in degrees
      0 ............... 0.0000 -- zero
      45 ............... 0.7071
      90 ............... 1.0000 -- positive peak
      135 .............. 0.7071
      180 .............. 0.0000 -- zero
      225 .............. -0.7071
      270 .............. -1.0000 -- negative peak
      315 .............. -0.7071
      360 .............. 0.0000 -- zero
      The height of the plot (Y Axis) represents the voltage being produced. The peak of the plot does NOT measure the voltage output. Because the voltage varies through the entire cycle, and even goes negative for 1/2 the cycle, output voltage is actually a calculation of the RMS of the Phase Angle. The procedure consists of squaring all the positive and negative points on a waveform graph, averaging those squared values, then taking the square root of that average to obtain the final answer. A shorter equation is to take the sine of the voltage at 45 degrees. Sine 45 = 0.7071. Therefore, the RMS voltage is about 70% of the peak voltage plot.

  2. Active Power – see Real Power

  3. Amperage - Current is the rate of flow of electrons - A unit of measure for the rate of current flow. Symbol: I

  4. ANSI C84.1 - American National Standard establishing nominal voltage ratings and
    tolerances for 60-hertz (alternating current, AC) electric power systems above 100 volts and
    through 230, 000 volts. Voltage operating ranges are recommended for two voltage categories:
    1) the service voltage, typically the point of connection between utility and customer; and 2) the
    utilization voltage, typically the termination point to equipment. The utilization voltage range
    takes into account a voltage drop within the end user’s distribution circuits. ANSI C84.1
    expects equipment to operate at service voltages between 95% to 105% with a utilization
    voltage range of 87% to 106% (120V to 600V)

  5. Apparent Power - The product of the current and voltage of the circuit. Due to energy stored in the load and returned to the source, or due to a non-linear load that distorts the wave shape of the current drawn from the source, the apparent power can be greater than the real power.

  6. Capacitor Banks- Capacitors are considered to generate reactive power. This is the fundamental mechanism for controlling the power factor in electric power transmission; capacitors are inserted in a circuit to partially cancel reactive power of the load.
    • An automatic power factor correction unit is used to improve power factor. A power factor correction unit usually consists of a number of capacitors that are switched by means of contactors. These contactors are controlled by a regulator that measures power factor in an electrical network. To be able to measure power factor, the regulator uses a current transformer to measure the current in one phase.
    • Depending on the load and power factor of the network, the power factor controller will switch the necessary blocks of capacitors in steps to make sure the power factor stays above a selected value (usually demanded by the energy supplier), say 0.9.

  7. Capacitance - The ability of a body to hold an electrical charge.

  8. CVR - Conservation Voltag Reduction - By dynamically optimizing voltage levels using sophisticated smart grid technologies, CVR can continuously reduce energy consumption and demand during peak periods, when electricity prices are inflated and demand may exceed the available supply. Recent CVR pilot projects have delivered excellent results, and the technology is likely to become one of the most popular energy efficiency and demand response measures among North American utilities before the end of 2020. According to a new report from Navigant Research, revenue from CVR components in North America will grow from $8.4 million in 2013 to $776 million by 2022.

  9. Energy - Power multiplied by time

  10. FIDVR - Fault-Induced Delayed Voltage Recovery - Air conditioner (A/C) motor stalling is considered as one of the main reasons for the occurrence of delayed voltage recovery events leading to voltage collapse. In recent years, the phenomenon has increasingly been observed. FIDVR is caused by highly concentrated induction motor loads with constant torque which stall in response to low voltages associated with system faults. This results in an excessive draw of reactive power from the grid. FIDVR events become increasingly probable with the increased penetration of low-inertia air conditioner loads that lack compressor undervoltage protection.

    FIDVR events can, and have, occurred following faults cleared in as few as three cycles! Both the frequency and impact of FIDVR events can be decreased, but the elimination of FIDVR events in the near term is unlikely.

    Planning studies have not been able to replicate FIDVR events very accurately due to an inaccurate modeling of loads. Uncorrected, this modeling deficiency has a two-fold detrimental effect. First, it can result in studies that do not adequately identify potential FIDVR events. Second, it can give false confidence in mitigation plans designed to prevent FIDVR events.

  11. Harmonics - Variations in the wave shape. Electronic filters can remove harmonics

  12. Inductors- Inductors are considered to consume reactive power. This is the fundamental mechanism for controlling the power factor in electric power transmission; inductors are inserted in a circuit to partially cancel reactive power of the load.

  13. IVVC - Integrated Volt/VAR Control - IVVC equipment allows utilities to reduce system voltage without jeopardizing reliability.

  14. Loads
    1. Inductive Load – Cause trouble for PF. Inductive loads such as transformers and motors (any type of wound coil) consume reactive power with current waveform lagging the voltage. Most loads are inductive, so we add capacitors to balance system.
    2. Capacitive loads - Such as capacitor banks or buried cable generate reactive power with current phase leading the voltage.
    3. Resistive Loads – (aka Linear Loads) Have very little effect on PF are 'resistive' such as heating coils and lighting (excluding lights that have ballast transformers). If a purely resistive load is connected to a power supply, current and voltage will change polarity in step, the power factor will be unity (1), and the electrical energy flows in a single direction across the network in each cycle.

  15. LTC - Load Tap Charging Transformer - A transformer tap is a connection point along a transformer winding that allows a certain number of turns to be selected. This means, a transformer with a variable turns ratio is produced, enabling voltage regulation of the output. The tap selection is made via a tap changer mechanism.

    For many power transformer applications, a supply interruption during a tap change is unacceptable, and the transformer is often fitted with a more expensive and complex LTC mechanism. On-load tap changers may be generally classified as either mechanical, electronically assisted, or fully electronic.

    Historically, utilities have controlled the voltage level at the point of regulation, either at the load-tap changing transformer (LTC) or line regulator, so that the voltage at all points along the feeder is maintained within established standards

  16. Phase Angle - In the context of periodic phenomena, such as a sine wave found in electricity, phase angle is synonymous with phase. The phase of an oscillation or wave is the fraction of a complete cycle corresponding to an offset in the displacement from a specified reference point at time t = 0.

  17. Phase Shift - Current (amps) lags behind the voltage. When volts and amps no longer cycle together, it takes more of them to get the same effective power, that is, to do the same amount of work.

  18. Power – The rate of flow of energy past a given point. It is measured in watts. Electric power (watts) is transmitted by the simultaneous product of electric voltage and current in a wire. If large amounts of current are present when there is less voltage, the wires, transformers and other power equipment are heated, but less power is transmitted by the equipment. Since equipment is designed to remain cool up to a certain amount of current, vars waste some of the power unnecessarily as excess heat.

  19. PF - Power Factor - The ratio between real power and apparent power in a circuit. The equation for Power Factor is: PF = kVA / kVAR
    • Where the waveforms are purely sinusoidal, the power factor is the cosine of the phase angle (φ) between the current and voltage sinusoid waveforms. Equipment data sheets and nameplates often will abbreviate power factor as "cosφ" for this reason.
    • Power factor equals 1 when the voltage and current are in phase, and is zero when the current leads or lags the voltage by 90 degrees. Power factors are usually stated as "leading" or "lagging" to show the sign of the phase angle, where leading indicates a negative sign.
    • For two systems transmitting the same amount of real power, the system with the lower power factor will have higher circulating currents due to energy that returns to the source from energy storage in the load. These higher currents in a practical system will produce higher losses and reduce overall transmission efficiency. A lower power factor circuit will have a higher apparent power and higher losses for the same amount of real power transfer.

  20. PFC - Power Factor Correction - Achieved by switching in or out banks of inductors or capacitors. For example the inductive effect of motor loads may be offset by locally connected capacitors. When reactive elements supply or absorb reactive power near the load, the apparent power is reduced. Power factor correction may be applied by an electrical power transmission utility to improve the stability and efficiency of the transmission network. Correction equipment may be installed by individual electrical customers to reduce the costs charged to them by their electricity supplier. A high power factor is generally desirable in a transmission system to reduce transmission losses and improve voltage regulation at the load.

  21. PFC – Power Factor Controller

  22. Power Conditioning - Modifying the power to improve its quality. While there is no official definition of a power conditioner, the term most often refers to a device that acts in one or more ways to deliver a voltage of the proper level and characteristics to enable load equipment to function properly. In some usages, power conditioner refers to a voltage regulator with at least one other function to improve power quality.

  23. Power Quality - The set of limits of electrical properties that allows electrical systems to function in their intended manner without significant loss of performance or life. It is the quality of the voltage—rather than power or electric current—that is actually described by the term. Power is simply the flow of energy and the current demanded by a load is largely uncontrollable.

    It is often useful to think of power quality as a compatibility problem: is the equipment connected to the grid compatible with the events on the grid, and is the power delivered by the grid, including the events, compatible with the equipment that is connected? Compatibility problems always have at least two solutions: in this case, either clean up the power, or make the equipment tougher.

    The tolerance of data-processing equipment to voltage variations is often characterized by the CBEMA curve, which give the duration and magnitude of voltage variations that can be tolerated.

  24. Rectifier - An electrical device that converts alternating current (AC) to direct current (DC), a process known as rectification. Rectifiers have many uses including as components of power supplies and as detectors of radio signals. Rectifiers create non-linear loads which distort the current drawn from the system. In such cases, active power factor correction is used to counteract the distortion and raise power factor.

  25. Reactive Power - The portion of power flow which returns to the source in each cycle. Reactive power flows backwards and forwards in an alternating current. Reactive power, measured in volt-amperes reactive (VAR), is the energy supplied to create or be stored in electric or magnetic fields in and around electrical equipment.
    • Reactive Power is measured in 'kVAR' pronounced as 'kaye-VARs'
    • Reactive power is particularly important for equipment that relies on magnetic fields for the production of induced electric currents (e.g., motors, transformers, pumps and air conditioning). It also must supply the reactive losses on transmission facilities.
    • Reactive power can be transmitted only over relatively short distances, and thus must be supplied as needed from nearby generators. If reactive power cannot be supplied promptly and in sufficient quantity, voltages decay and, in extreme cases, a “voltage collapse” may result. The power grid needs enough reactive power to maintain reliable service.
    • Reactive power is provided by generators, synchronous condensers or electrostatic equipment such as capacitors and directly influences electric system voltage. Examples of reactive loads include capacitors and inductors.
    • If the load is purely reactive, then the voltage and current are 90 degrees out of phase and there is no net power flow. A practical load will have resistive, inductive, and capacitive parts, and so both real and reactive power will flow to the load.

  26. Real Power - (aka active power) The portion of power flow that, averaged over a complete cycle of the AC waveform, results in net transfer of energy in one direction. Real Power flows one way, from generator to load. It is the rate at which work is performed or that energy is transferred and is usually expressed in kilowatts (kW) or megawatts (MW).

  27. RMS – Root Mean Square - A statistical measure of the magnitude of a varying quantity. Engineers often need to know the power, P, dissipated by an electrical resistance, R.

  28. Shunt - A device allowing electrical current to pass around a point in a circuit.

  29. Synchronous Condenser (aka Synchronous Compensator or Dynamic Power Factor Correction System) - A synchronous motor that is not attached to any driven equipment. Its field is controlled by a voltage regulator to either generate or absorb reactive power as needed to support a system's voltage or to maintain the system power factor at a specified level. The condenser’s installation and operation are identical to large electric motors.
    • Increasing the device's field excitation results in its furnishing magnetizing power (kilovars) to the system.
    • Its principal advantage is the ease with which the amount of correction can be adjusted; it behaves like an electrically variable capacitor. Unlike capacitors, the amount of reactive power supplied is proportional to voltage, not the square of voltage; this improves voltage stability on large networks.
    • Synchronous condensers are often used in connection with high voltage direct current transmission projects or in large industrial plants such as steel mills.

  30. Var - Volt-Ampere Reactive power - A unit used to measure reactive power in an AC electric power system. 1 var = 1 V•A. Vars measure unsynchronized "leading" or "lagging" currents. These currents are usually caused by the side effects of powering equipment that behaves like coils (e.g. motors) or capacitors (e.g. arc welders).

  31. Voltage - Electromotive force - An electrical measurement of potential
    difference, electrical pressure, or electromotive force (EMF). Symbol: E

  32. VVO - Voltage and VAR Optimization - Improving on the traditional approach using uncoordinated local controls, VVO uses real-time information and online system modeling to provide optimized and coordinated control for unbalanced distribution networks with discrete controls.

3. Business Case
  • According to Navigant Research, global annual Volt/VAR control and optimization revenue is expected to grow from $415.0 million in 2017 to $768.7 million in 2026.

  • Voltage/VAR controls are a basic requirement for all electric distribution feeders to maintain acceptable voltage at all points along the feeder and to maintain a high power factor. Recent efforts by distribution utilities to improve efficiency, reduce demand, and achieve better asset utilization, have indicated the importance of voltage/VAR control and optimization. Utilities continue to face system losses from reactive load, such as washing machines, air conditioners. By optimizing voltage/VAR control great efficiencies can be realized. EPRI estimates 55% of the 566,000 distribution feeders will include voltage/VAR control by 2030, at an average cost of $258,000/feeder.

  • Advances in automation and communications have laid the foundation to make centralized, coordinated voltage control possible and in fact applications to take advantage of it have been in the works for years. The problem lies in the fact that the computing requirements for such applications to generate useful solutions in near real time are staggering. However, new methodologies and today’s faster computers have converged to make volt/VAr optimization viable.

  • VVO is an advanced application that runs periodically or in response to operator demand at the utility control center or in substation automation systems. Combined with two-way communication infrastructure and remote control capability for capacitor banks and voltage regulating transformers, VVO optimizes the energy delivery efficiency on distribution systems using real-time information.

  • The real breakthrough is in the speed and quality of the computation. VVO uses advanced algorithms to identify the optimal operation strategy from millions, or even billions of possibilities. Arriving at that result fast enough to apply it in practice, in a day-to-day utility working environment, is a tall order.

  • The result is improved efficiency that reduces the amount of power that must be generated and with it the emissions of CO2 and other pollutants associated with power generation. VVO also allows utilities to control costs better by getting the most out of their networks.A smart grid is needed at the distribution level to manage voltage levels, reactive power, potential reverse power flows, and power conditioning, all critical to running grid-connected DG systems, particularly with high penetrations of solar and wind power and PHEVs. Advanced voltage regulation, fault-detection, and system-protection practices need to be rethought as an increasing number of DG resources become available. This may require new equipment to identify and isolate DG resources in the event of a fault occurrence.

  • During the daily operation, power systems may experience both over-voltage and under-voltage violations that can be overcome by voltage/Var control. Through controlling the production, adsorption, and flow of reactive power at all levels in the system, voltage/Var control can maintain the voltage profile within acceptable limit and reduce the transmission losses.

  • Control of automated capacitor banks on distribution circuits and in substations can be greatly improved with better real-time information provided through the Smart Grid.

  • The primary operating lever that utilities can use to affect the flow of reactive power is voltage control, which is accomplished through the use of various devices that inject, absorb, or force the flow of reactive power in the grid. These devices include: synchronous generators, synchronous condensers, shunt capacitors, shunt reactors, static VAR compensators (SVC), and STATCOM (Static Compensators). A Smart Grid will facilitate the application and monitoring of such devices. Similarly, a Smart Grid will enable opportunities to reduce distribution line losses through adaptive voltage control at substations and line drop compensation on voltage regulators and load tap changers (LTCs) to levelize feeder voltages based on load.

  • ANSI standard C84.1, specifies a preferred tolerance of +/- 5% for 120V nominal service voltage to the customer meter, or a range of 114 – 126 V. Utilities tend to keep the average voltage above 120V to provide a safety margin during peak load periods. However, maintaining voltage on the upper end of the ANSI C84.1 band at all times, which most utilities do, wastes energy. A Smart Grid will allow utilities to place sensors at the ends of feeders to monitor and maintain voltage at 114 V, which minimizes energy losses without compromising the quality of delivered electrical service.

  • Currently, the two primary modes of Volt-VAR optimization (VVO) under consideration are energy efficiency (EE) and demand response (DR). The energy efficiency mode would call for the system to be operated year-round at a near-unity power factor with the voltage as near as possible to the lowest ANSI allowable voltage. As determined in the EPRI’s Green Circuits project and other documented research, end-use equipment typically operates most efficiently at the lower end of the usual operating voltage band. Operation of the distribution system at the lowest ANSI voltage would increase the risk of power quality and reliability issues for customers, such as voltage sags and more sustained outages. Based on findings by Alabama Power in the Green Circuits project, system line and transformer losses only accounted for a percentage, typically less than 5 percent, of the overall energy reduction when VVO was implemented.

  • On the other hand, the utility could choose to develop a DR program to utilize the VVO equipment during peak load periods. This mode of operation would control distribution devices in a manner that would maximize the demand reduction of the system. This type of operation might also result in a leading power factor at the substation; however, the excess VAR flow back to the transmission and generation systems should aid in the overall efficiency of the T&D system as a whole. This approach, as with the EE mode, would allow the utility to avoid building additional generation units, to defer capital improvement projects, and/or reduce demand charges from the generation supplier. However, the DR mode of operation would limit any loss of revenue and the potential for power quality issues since it would be used relatively few hours each year.

  • A Smart Grid will also facilitate more intelligent controls on capacitors, optimizing their usage to reduce system losses further. A Smart Grid will also enable automatic reconfiguration to minimize losses during the day, which requires distribution state estimations, more sensors, and real time control.

4. Benefits
  • Reduce Distribution Losses - Up to a 30% reduction in distribution losses is possible from optimal power factor performance and system balancing. Grid efficiency comes down largely to “line losses,” the amount of power leaving a generation plant that is lost on the way to our homes and businesses. Losses in the transmission and distribution system of 6 to 8 percent are typical even in the world’s most advanced countries, and they can run even higher.
    In 2006, a total of 1,638 billion kWh of energy was lost on the US power grid, with 655 billion kWh lost in the distribution system alone. To put this in perspective, consider that a 10 percent improvement in grid efficiency at the distribution level alone would have produced $5.7 billion in savings based on the 2006 national average price of electricity. It would also have saved over 42 million tons of CO2 emissions.

    ERPI's Green Circuits found that Electric power transmission and distribution (T&D) systems typically have aggregate annual energy losses of 7–10%. The percentage losses across all U.S. T&D equate to approximately 300 million MWh based on a U.S. annual generation total of 4,157 million MWh according to the Energy Information Administration. Because these losses are inherent in the process, they cannot be reduced to zero but might be reduced significantly with present technology. Approximately two-thirds of these losses are incurred at the distribution voltage levels.
  • Improved Equipment Lifespan - Advanced, controllable dynamic Volt/VAR control architecture (DVCA) technologies and various Volt/VAR devices and control solutions can serve as oil in the machinery. They can keep transformers, generators, transmission lines, and distribution systems from overheating, reducing the risk of being retired or upgraded before the end of their intended lifespan.
  • Reduced Required Voltage - Reduce energy and carbon by precise dynamic voltage control. Reduce load while respecting given voltage tolerance (normal and emergency)While the impact of voltage reduction on energy consumption will vary from circuit to circuit based on resistive or reactive nature of the load, many studies have shown a 1% drop in voltage results in a close 0.8% drop in energy demand.  On this basis, EPRI quantifies the savings range for a Smart Grid in reducing losses through voltage regulation as 3.5 to 28.0 billion kWh per year in 2030.  Minimize kWh consumption at voltages beyond given voltage quality limit; ensure standard voltages at customer terminals.
  • Reduced Reactive Power - Reactive power can be reduced by adding devices to compensate for poor power factor. If we know how much reactive power is needed, we can furnish systems to supply the reactive power and only take real power from the power company. This reduces the power company’s losses and reduces the power bill.
  • Reduced Congestion - Reduced transmission congestion costs from increased transmission transfer capability without building additional transmission capacity.  Minimize feeder segment(s) overload.  Reduce or eliminate voltage violations on transmission lines.  Reduce or eliminate overload in transmission lines
  • Improve Reliability - Provide spinning reserve support
  • Cost Savings - Minimize cost of energy

5. Risks/Issues
  • Transmission Capacity – Extra VAR’s to supply reactive power fill up transmission lines. Extra wire to carry the reactive current.
  • Circuit Overload - Poor PF can over-load electric circuits and cause trouble for the utility and the end-user. Circuits that are over-loaded heat-up and heat cause failures. Heated circuits draw more 'real' power and PF penalties billed by electric utilities can substantially increase monthly bills much higher than just the extra real power draw
  • Harmonics – Typically causes power capacitor ratings to be exceeded. The effect is overheating and increased stress which results in premature failure.
  • Overvoltage - The reactive elements can create voltage fluctuations and harmonic noise when switched on or off. They will supply or sink reactive power regardless of whether there is a corresponding load operating nearby, increasing the system's no-load losses. In a worst case, reactive elements can interact with the system and with each other to create resonant conditions, resulting in system instability and severe overvoltage fluctuations. As such, reactive elements cannot simply be applied at will, and power factor correction is normally subject to engineering analysis
  • Undervoltage

6. Success Factors
  • Communications - The ability to move large amounts of data from disparate points on the grid is the key to enabling the applications that will in turn facilitate the widespread adoption of distributed generation and maintain (or even improve) the level of service customers expect. 
  • Emerging Markets - In areas with growing penetration of distributed energy resources (DER), Volt/VAR control (VVC) is emerging as an ancillary service to be provided by microgrids, power factor correction (PFC) systems, distributed PV, and electric vehicle (EV) chargers.

7. Companies
  1. ABB Zurich Switzerland(NYSE: ABB)- - Smart Grid Portal    Vo/tVAR Management Solutions

  2. Advanced Control Systems (ACS Power) - Norcross, GA - In March, 2014 Falfurrias Capital Partners, a Charlotte, North Carolina-based private equity firm, acquired Norcross, Georgia-based Efacec ACS, Inc. from the Efacec Group for undisclosed terms. The company name changed to Advanced Control Systems, Inc. (ACS), and operates as an independent portfolio company of the North American T&D Group (NATDG).

    ACS's product portfolio includes SCADA, distribution management, outage management and substation automation. ACS was one of the first companies in the industry to deliver a truly integrated ADMS platform, combining distribution and outage management functions using a common network model and user interface. This enables electric utilities to more effectively manage their networks and provide improved outage response and service to their customer. xxx

  3. Beckwith Electric - Largo, FL - Offers the smartest next generation control technology for LTC Transformers, Voltage Regulators, and Capacitor Banks for Smart Grid applications including Volt/VAr Optimization (VVO) and Conservation Voltage Reduction (CVR). Field proven with thousands of installed units, our controls lead the charge in advanced distribution grid solution applications.

  4. Eaton Cooper Power Systems Waukesha, Wisconsin - Engineers and manufactures medium- and high-voltage electrical equipment, components, and systems that deliver reliable electric power to homes, industries, businesses, and institutions worldwide.

    In May, 2012,  Eaton Corp., the power and control systems giant, announced that it would acquire Cooper Industries, catapulting the 90-year-old Eaton into a new class of smart grid competition.

  5. DC Systems, Redwood City, CA - A leading developer of Smart Grid software for utilities and large energy users. Founded in 1990, the company has pioneered solutions that provide powerful architectural advantages by combining distributed intelligence SCADA computing with centralized data management. Customers worldwide use the DC Systems RTscada™ family of products to put intelligence where it is needed—in hundreds of locations such as substations, control centers, and power generation sites—while centralizing configuration, administration and monitoring at the enterprise level.

  6. Dominion Voltage, Inc. - Richmond, VA - A Dominion Resources company, was established to bring to market Dominion’s unique approach to Energy Distribution & Grid Efficiency. DVI's solutions plan, manage, and validate your investments in grid-optimizations while delivering significant savings. DVI provides solutions for energy efficiency, demand response, Volt/VAR control, and renewables integration,

  7. GE Grid Solutions-  (NYSE: GE)- Atlanta, GA A GE and Alstom join venture is serving customers globally and equips 90% of power utilities worldwide to bring power reliably and efficiently from the point of generation to end power consumers.  The  joint venture. serving customers globally with over 20,000 employees in approximately 80 countries. Grid Solutions helps enable utilities and industry to effectively manage electricity from the point of generation to the point of consumption, helping to maximize the reliability, efficiency and resiliency of the grid.
    1. Substation Automation
    2. Monitoring & Diagnosis
    3. Power Sensing
    4. Utility Operations Systems

  8.  Gridco Systems - Woburn, MA - A leader in agile grid infrastructure solutions, enabling utilities to more effectively integrate renewable and distributed generation, increase energy efficiency, manage peak capacity, and improve system reliability. The Gridco Systems emPower™ Solution combines modular power electronics, advanced controls, distributed networking, and power system analytics to deliver the industry’s only end-to-end hardware and software platform purpose built to solve utilities’ current and emerging distribution challenges in a distributed, dynamic, and decoupled fashion.

  9. OATI - Open Access Technology International, Inc., Minneapolis, MN - Provides smart grid, energy trading and risk management, transmission scheduling, congestion management, and market management products and services in North America

  10. Open Systems International - Medina, MN - Provides open automation, and network management and optimization solutions worldwide. The company offers supervisory control and data acquisition systems, network management systems, generation management systems, transmission management systems, distribution management systems, substation automation solutions, and remote telemetry solutions.

  11.  S&C Electric, Chicago, Their IntelliTEAM system of networked devices isolates and restores faults in a distribution grid. S&C has designed its own SpeedNet radios, capable of about 5 millisecond "hops" from device to device, to handle the task.

  12.  Schneider Electric  Rueil-Malmaison, France - A French multinational corporation that specializes in electricity distribution, automation management and produces installation components for energy management.

  13. SEL - Schweitzer Engineering Laboratories, Inc. Pullman, WA - Designs and manufactures solutions for protection, monitoring, control, automation, and metering of electric power systems. The company provides secure communications; transmission, distribution, and generator and motor protection; revenue and power quality metering; industrial power; integration and automation; and rugged computing products. It also offers precise timing, fiber-optic communications, testing, transformer, bus, breaker, and capacitor protection products, as well as SEL software solutions, SEL software downloads, and SEL accessories.

    SEL Distribution Automation Control System automates feeder restoration and reduces outage times. The system analyzes and detects fault conditions, isolates affected feeder sections, and restores power to unaffected sections. The system includes simple drag-and-drop IEC 61131 function block configuration software on an SEL information processor, with the ability to automate up to 100 devices per controller.

  14. Siemens AG -  Germany - Distribution Automation improves significantly the reliability and availability of power distribution grids.The functionality ranges from remote monitoring and control to fully automated applications, like high speed FLISR (Fault Location, Isolation and Service Restoration), Volt / VAR Control and others.

  15. Silver Spring Networks Redwood City, CA - Launched a new application in May 2011 that lets utilities monitor power quality across the grid and gain insights into potential problems before they can affect service.  UtilityIQ Power Monitor uses the distributed intelligence in Silver Spring networking devices to help utility companies keep an eye on key power quality metrics throughout their service territory. Silver Spring clients can use smart grid devices already deployed, combined with distributed polling, to improve vital grid efficiency applications such as Conservation Voltage Reduction (CVR) and Volt/VAR Optimisation (VVO).

    The new application provides Silver Spring clients with proactive notification of meter locations where voltage levels exceed or fall below expected levels. UtilityIQ Power Monitor works with Silver Spring’s UtilOS firmware to expand the capabilities of meters and other devices distributed throughout the grid, without requiring modification to any hardware or a field visit.

    The Silver Spring ecosystem now includes leading providers of Volt/VAR Optimization (VVO) and Conservation Voltage Reduction (CVR) software, including ABB/RCCS, CURRENT Group, DC Systems, and Open Systems International (OSI.)

  16. Survalent Technology - Brampton, ON - Designs and develops Survalent ONE - ADMS, an advanced distribution management system. The company's solutions include Survalent SCADA, Survalent Outage Management System (OMS), and Survalent Distribution Management System (DMS). It also offers database and graphics, and GIS data importing and modeling services. The company serves electric, renewable, wastewater, and water utilities, as well as the transit industry. It partners with Aclara Technologies LLC, Clevest Solutions Inc., G&W Electric, GridSense Inc., and Oracle Utilities. The company was formerly known as Dacscan Ltd.

  17. Utilidata - Providence, RI - Their patented digital platform captures real-time intelligence from the electric distribution grid and powers our signature Volt/VAR Optimization application, AdaptiVolt™, the market leader in voltage optimization. AdaptiVolt enables utility companies to achieve best-in-class energy efficiency and demand reduction.

  18. Varentec -  San Jose, CA - Develops advanced power electronic-based systems for electric grid and industrial applications. Total Equity Funding $37.92M in 4 Rounds from 3 Investors  including Bill Gates, 3M, and Khosla Ventures, Most Recent Funding$13M Series C on November 14, 2015

    Varentec’s shunt-connected devices, by contrast, can be deployed on these problem feeders or nodes, to raise their voltages, as well as to dynamically flatten the overall feeder voltage profile, allowing central systems to push overall voltages lower, 

8. Next Steps
  • Smart Inverters - Inverters, which convert DC to AC, are required for
    all PV systems. Inverters are now “software-driven” and have some amazing capabilities to shift their output:
    • They can manipulate Watts (energy) output (as long as they remain within the capabilities of the PV system)
    • More importantly, they can manipulate VArs
    • Can provide capabilities like volt-var control, frequency-watt control, and dynamic grid support as part of low voltage ride through
    • Inverters can sense local conditions, such as voltage and frequency, and respond with autonomous actions These pre-set reactions will improve power system efficiency and delay the need for distribution upgrades and can help avoid outages and system black-outs
    • Inverter manufacturers are already adding these functions for  the European market
    • Expensive communications between utilities and these inverters are not immediately necessary
      • Smaller inverters may never need communications
      • Medium inverters may need to respond to broadcast commands
      • Larger inverters or those on more “sensitive” circuits may need more interactive communications

9. Links
  1. A Review of Voltage/VAR Control M. Lin, R. K. Rayudu and S. Samarasinghe Centre for Advanced Computational Solutions Lincoln University
  2. Power Factor Correction Whitepaper
  3. EERE - REDUCING POWER FACTOR COST
  4. Power Factor Java Applet Demo
  5. Volt/VAR Optimization Reduces Losses, Peak Demands By: Xiaoming Feng, ABB Corporate Research and William Peterson, ABB Power Systems Raleigh, North Carolina
  6. Dynamic Volt/VAR Control Architectures - Navigant Q2 2014
  7. Varentec Controls the Distribution Grid With Networked Power Electronics Greentech Media - How last-mile grid devices can also balance the grid at large—at scaleby Jeff St. John February 18, 2015
  8. Gridco Proves Power Electronics Keep the Grid Edge Stable Despite Solar Disruptions -  Greentech Media How to lock down local voltage in the face of rooftop PV, non-linear loads and other grid-edge bugaboos
    by Jeff St. John

Friday, March 24, 2017

Microgrids


Navigate this Report
Back to Distribution Index
1. Background

2. Acronyms/Definitions
3. Business Case
4. Key Opportunities
5. Benefits
6. Risks/Issues
7. Success Criteria
8. Case Studies
9. Companies
10. Links
Residential Microgrid


1.Background
  • Microgrids have a long history. In fact, Thomas Edison’s first power plant constructed in 1882 – the Manhattan Pearl Street Station – was essentially a microgrid since a centralized grid had not yet been established. By 1886, Edison’s firm had installed fifty-eight direct current (DC) microgrids. However, shortly thereafter, the evolution of the electric services industry evolved to a state-regulated monopoly market, thus removing incentives for microgrid developments.

  • Today, though, a variety of trends are converging to create promising markets for microgrids, particularly in the United States. It has been become increasingly clear that the fundamental architecture of today’s electricity grid, which is based on the idea of a top-down system predicated on unidirectional energy flows, is obsolete.

  • AAccording to GTM Research’s report, North American Microgrids 2015: Advancing Beyond Local Energy Optimization, cumulative investments in U.S. microgrids from 2015 through 2020 will surpass $3.5 billion. By then, the U.S. will be home to an estimated 2.8 gigawatts of total microgrid capacity, a 127 percent cumulative capacity increase relative to 2015 numbers.
  • Technological improvements in gas turbines have changed the economics of power production. It isn’t necessary anymore to build a 1,000- megawatt generating plant to exploit economies of scale. Combined-cycle gas turbines reach maximum efficiency at 400 megawatts, while aero-derivative gas turbines can be efficient at scales as small as 10 megawatts.  Renewables can power microgrids more cost effectively now too.

  • Most existing power plants, central or distributed, deliver electricity to user sites at an overall fuel-to-electricity efficiency in the range of 28-32%. This represents a loss of around 70% of the primary energy provided to the generator. To reduce this energy loss it is necessary to either increase the fuel-to-electricity efficiency of the generation plant and/or use the waste heat. Combined power cycles technology can attain efficiencies approaching 60% with ratings in the hundreds of million watts. On the other hand if the waste heat from generators with much lower efficiency (28-32%) can be utilized through heat exchangers, absorption chillers or desiccant dehumidification the overall fuel-to-useful energy efficiency can be higher than 80%.

  • Today we talk about energy “distribution,” from central power plants down to light bulbs, which is slightly different from having distributed energy, much of which is not on the grid, like standalone PCs used to be. In a Smart Grid, energy is more likely to be exchanged than distributed. In this new topology, the grid become more peer-to-peer, more multi-vendor, with more standards, and more competition. The transmission of energy then becomes more networked, and more symmetrical, more among than between. Radios and TVs are being replaced by mobile devices, which upload, not just download. The same holds true in energy grids.


Microgrid Overview
. Uploaded by GoogleTechTalks on Mar 26, 2009 - Dr. Chris Marnay UC Berkeley CERTS - DOE's Consortium for Electric Reliability Technology Solutions . . 2. Acronyms/Definitions
  1. DISCO – Distribution Company - Local distribution monopoly.

  2. FOCACA - Freedom Of Choice Among Competing Alternatives

  3. Island – A portion of a power system that is electrically separated from the interconnection due to the disconnection of transmission system elements.

  4. Islanding - The ability of distributed generation to continue to generate power even when power from a utility is absent.

  5. Microgrid - An integrated energy system consisting of distributed energy resources and multiple electrical loads operating as a single, autonomous grid either in parallel to or “islanded” from the existing utility power grid. In the most common configuration, distributed energy resources are tied together on their own feeder, which is then linked to the grid at a single point of common coupling. Microgrids can be viewed as the building blocks of the smart grid or as an alternative path to the much hyped smart “Super Grid.”

    There were approximately 20 microgrids can be found at universities, petrochemical facilities and U.S. defense facilities ;provding 785 MW of capacity in 2005. ; ;Outside of the petrochemical microgrids, there are no commercial microgrids in the United States. Most current microgrid implementations combine loads with sources, allow for intentional islanding and try to use the available waste heat.

  6. Microturbine - Microturbines are an important emerging technology. They are mechanically simple, single shaft devices with air bearings and no lubricants. They are designed to combine the reliability of commercial aircraft auxiliary power units with the low cost of automotive turbochargers. The generator is usually a permanent magnet machine operating at variable speeds (50,000-100,000 rpm). This variable speed operation requires power electronics to interface to the electrical system.

  7. Peer-to-Peer Concept - Insures that there are no components, such as a master controller or central storage unit that is critical for operation of the microgrid. This implies that the microgrid can continue operating with loss of any component or generator. With one additional source (N+1) we can insure complete functionality with the loss of any source.

  8. Plug-and-Play - Implies that a unit can be placed at any point on the electrical system without reengineering the controls. Plug-and-play functionality is much akin to the flexibility one has when using a home appliance. That is it can be attached to the electrical system at the location where it is needed. The traditional model is to cluster generation at a single point that makes the electrical application simpler. The plug-and-play model facilitates placing generators near the heat loads thereby allowing more effective use of waste heat without complex heat distribution systems such as steam and chilled water pipes.

  9. Power Loop – Automatically isolate faults and reroute power flows from either direction.

  10. UDM - Utility Distribution Microgrid - Utilities across the United States are UDM's in order to explore new market opportunities in the emerging distributed energy resources (DER) landscape. Previously opposed to the concept of intentional islanding, utilities are now exploring microgrids thanks to recent technology advances such as smart inverters, smart switches, and new DER control platforms. Rather than being focused on providing economic value and resiliency benefits to behind-the-meter customers, UDMs can enable utilities to manage DER portfolios to bolster reliability at the distribution level of power service.

    In 2015, 29 MW of new UDM capacity was deployed across the United States, representing an estimated $161 million in implementation revenue. By 2024, those numbers are expected to increase to 241 MW annually, with corresponding annual revenue of $917 million. Microgrids operated/owned by utilities can serve the distribution grid first (and be a platform for new services). UDMs can also be seen as vehicles to help utilities address DER deployment trends to their advantage. Yet, UDM adoption is dependent upon regulatory reforms, natural disasters, and customer adoption rates of DER such as solar PV and energy storage. As such, UDMs will only be deployed for a very small portion of the broad addressable market over next decade.

  11. UPS – Uninterruptible Power Supply

Pilot Microgrid - ;CESI RICERCA DER ;Constituted by several generators with different technologies (renewable and conventional), controllable loads and storage systems. DER-TF can provide electricity to the main grid with a maximum power of 350 kW.
3. Business Case
  • The goals of both the smart grid and the microgrid are the same: to maximize generation assets through embedded intelligence while dramatically boosting efficiencies, thereby minimizing costs. However, they appear to offer two potentially different paths forward.

    Both “supergrid” and “microgrid” will need to get smarter, though it is the distribution system that is currently the prime source of outages and unreliability. Today’s distribution grid network is clearly inadequate to support the type of innovation now occurring with distributed resources, including devices such as plug-in hybrid electric vehicles (PHEV) serving as distributed storage batteries. The question is: Do we need bottom-up or top-down innovation?

  • The smart grid will seamlessly integrate an array of locally distributed power resources, including clean renewable solar sources and storage in quantities far beyond what is possible with today’s power system. This plug and play capability will enable consumers to supply as well as purchase power.

  • Application of individual distributed generators can cause as many problems as it may solve. A better way to realize the emerging potential of distributed generation is to take a system approach which views generation and associated loads as a subsystem or a “microgrid”. In this model it is also critical to be able to use the waste heat by placing the sources near the heat load. This implies that a unit can be placed at any point on the electrical system as required by the location of the heat load.

  • A utility determines that an electric island (microgrid) could be intentionally established and dispatches electric storage as well as other DER generation and load management capabilities to support this islanding.

  • Europe has a whole lot more loops than radial runs in their transmission system compared to the US which provides redundancy. ; A microgrid is an attempt to make a radial feed look more like a loop.

  • Control systems fall into two major camps. The purists – epitomized by the CERTS software – believe that microgrids should operate without any central command and control system, with generators and loads harmonizing autonomously based on local information. This is the view espoused by leading academics and localization advocates and the rationale is compelling. This system will work for the majority of smaller microgrids with a single owner and whose top priority is reliability and sustainability during emergencies. These are the “dumb” microgrids, if you will.

    In the other camp are what you might call the pragmatists. They lean toward systems that can be described as “master/slave,” (whereas the CERTS approach has been described as being “like a commune.”) These operating systems are much more focused on optimization of services outside the microgrid. The benefits of reliability may come second to generating new revenue streams from excess generation (or even demand reductions.)

    There are also those systems that can straddle these two views. There are few clear cut direct competitors in the space since no standards exist and microgrids are so modular, diverse and optimize such a broad array of energy-related services. It is these control systems – still literally being defined – where the fiercest competition may reign within the microgrid space. This is the guts of the microgrid, if you will, and the focus of current software innovation.

  • The Federal Energy Regulatory Commission’s (FERC) March 2011 ruling (Order 745) mandating a demand response (DR) market by authorizing Independent System Operators (ISO) to compensate these distributed resources on par with generators is a game changer and will only accelerate the growing marriage of supply and demand resources within and outside of microgrids. This ruling could transform microgrids from threats to local distribution utilities into valuable resources for the larger grid. The FERC ruling’s primary impact is on energy service provision and less so on capacity and ancillary service offerings. Each ISO/RTO filed its demand response compensation tariffs in July 2011, but for all practical purposes, it will not be until summer 2012 that this new revenue stream will be available to demand response providers.

  • Significant barriers remain for microgrids to be considered a standard option for adding new capacity and other energy-related services across global markets. Nevertheless, there are certain application segments located within specific geographies where microgrids can make economic sense. Sometimes these deployments depend on government incentives or other sources of supplemental funding. Yet the number of microgrids that are being deployed without the help of government grants and incentives is growing. The largest microgrid market today is Asia Pacific, displacing North America for the first time. By the end of the 10-year forecast, these two regions are expected to switch places, with North America in the lead again. According to a study by Navigant Research, global microgrid capacity is expected to grow from 1.4 GW in 2015 to 7.6 GW in 2024 under a base scenario.

4. Key Opportunities for Microgrids Each microgrid market segment – whether a commercial building cluster or a remote community – is characterized by different priorities. Within the federal government sector, and especially in the case of military bases, islanding for reliability purposes is paramount. For commercial institutions, islanding may still be important, but the buying and selling of services from onsite generation or aggregated demand reductions to the distribution utility is often more important.
    In 2015, Institutional Campuses are projected to control almost half the North America Microgrid Market
  1. Military Bases – The Defense Department has become a leading proponent of installing microgrids. ;In 2008, a ;task force recommended DoD launch a comprehensive program to reduce the risk to critical missions at fixed installations from loss of commercial power and other critical national infrastructure. It suggested that the Department should take immediate actions to “island” critical installations and increase the efficiency of critical equipment to reduce the burden for backup systems.

    Currently the smallest market segment, these microgrids are just now being developed. They are integrating Renewable Distributed Energy Generation (RDEG) as a way to secure power supply without being dependent on any supplied fuel.

    In 2009, General Electric received a contract to work with the Department of Defense in a $2 million project to transform the Twentynine Palms Marine Corps base into a model smart microgrid system. The vast Twentynine Palms Base in California houses the Marine Corps Combat Center. The Corps' premier site for training exercises occupies 932 square miles in the southern Mojave Desert, an area about the three-quarters the size of Rhode Island. ;Like most U.S. military bases, Twentynine Palms generates power on site to cover critical needs -- it has a solar plant as well as a fuel cell installation -- and is connected to a larger electrical grid network, the California grid. GE plans to design a system for the base that features a suite of microgrid control technologies. The system is intended to serve as a showpiece of smart energy management for deployment of microgrid technology in general and, more specifically, for military bases.

    Microgrid in War Time

  • University Campuses - Because of the advantage of common ownership, this class of microgrids offers the best near-term development opportunity. At present, 322 MW of college campus microgrids are up and running in the United States, with more sophisticated state-of-the-art microgrids on the drawing boards. In the U.S., 40% of future microgrids will be developed in this market segment, adding 940 MW of new capacity valued at $2.76 billion by 2015.

  • Industrial Campuses - ; The first “modern” industrial microgrid in the United States was a 64 MW facility constructed in 1955 at the Whitling Refinery in Indiana. All told, 455 megawatts (MW) of these vintage microgrids are currently online in the United States. Unlike today’s conceptual state-of-the-art models, these initial designs for the petrochemical industry still feature centralized controls and fossil-fueled generation sets. Japan is a modern leader in the commercial/industrial sector, though most of its microgrids include governmental and other institutional customers.

    For example, in March 2011, plans for an ambitious multi-faceted energy and research park in northern Colorado have been approved by local county commissioners. The 640-acre project, Niobrara Energy Park, will include natural gas and renewable energy generation plants with onsite storage, cloud computing data centers and facilities for scientists, institutions, engineers and others to research energy systems integration, renewables, smart grid and energy storage.

  • Cities with 25-75,000 population - Most observers predict that this class of microgrids will not achieve widespread commercial acceptance until standards are in place and regulatory barriers are removed.
  • Municipal Utilities -
  • Cooperative Utilities
  • Indian Tribes
  • Large Data Centers
  • Mission Critical Centers (for example the FAA)
  • Mining and Manufacturing Sites
  • Jails and Prisons - An $11.7 million microgrid project designed and built by Chevron Energy Solutions will mean Santa Rita Jail in California's Alameda County can sustain power for daily operations and security if its connection to the grid is interrupted.

    The jail's onsite power generation integrates with energy storage to ensure power is never lost. The microgrid also allows the jail to buy power from the utility during least expensive nonpeak hours and store it for use during the most expensive summer peak hours, which provides significant savings. In fact, the county anticipates it will save $100,000 per year in energy costs at the "mega jail" which covers 113 acres and houses as many as 4,000 inmates, making it the fifth largest such facility in the country. The Santa Rita Jail requires 3MW of constant, reliable electricity to maintain daily operations and ensure the safety of the inmates and staff.

    The microgrid initiative is the culmination of several renewable energy projects implemented at the jail, including solar photovoltaic panels, a 1MW fuel cell cogeneration plant and wind turbines, along with a 2 MW advanced energy storage system. The project was funded in part by the Department of Energy, the California Energy Commission and the California Public Utilities Commission.

  • Remote locations - This segment represents the greatest number of microgrids currently operating globally, but it has the smallest average capacity. While many systems have historically featured diesel distributed energy generation (DEG), the largest growth sector is solar photovoltaics (PV). Small wind is projected to play a growing role,as well.

  • The United States is the current capacity leader – with at least 626MW operating by 2010 – and Pike Research estimates that capacity will increase to 2,352MW by 2015. Two of the fastest growing segments in this market are the Commercial & Industrial and Institutional/Campus sectors.
    5. Benefits
    • Manage Distributed Energy Resources - See my DER Blog Article Microgrids could help utilities use distributed power generation systems like solar panels on customers’ rooftops in a far more effective way. Application of individual distributed generators can cause as many problems as it may solve. A better way to realize the emerging potential of distributed generation is to take a system approach which views generation and associated loads as a subsystem or a “microgrid”.

    • Avoided Transmission Investment - This, in turn, could help them cut back on the need for a massive investment (and permitting nightmare) in building lots of new high-voltage transmission lines to carry renewable power from far-off wind farms and utility-scale solar plants to towns and cities. Locally-based solar, wind, biomass generators, fuel cells and other distributed generation systems would be much more convenient sources of power, and would cut down on the line losses associated with long-range transmission to boot. But right now, distributed generation systems are more of a headache than a help for most utilities, since utilities can’t control the way those resources put power onto the grid.

    • Flexibility - Traditional Power Flow Model with AMI and Automated Switching only one switch may be open, and power always flows the same direction depending upon configuration. In a Microgrid, more than one of switches A through E can be open simultaneously without outages due to distributed generation. Power flow direction is variable.

    • Innovation - ;According to SBI Energy, microgrids will become the incubator and operational test bed for innovative smart grid solutions and vendors since it is significantly less difficult and costly to deploy smart technologies.

    • Critical Systems Resiliency - Everything is interdependent. For example, if vital communications go down, other sectors falter, but if sensitive equipment is powered locally, our vulnerable, centralized power system becomes much less critical, and is a less attractive terrorist target.

    • Islanding – The ability to separate and isolate itself from the utility’s distribution system during brownouts or blackouts. Under today’s grid protocols, all distributed generation, whether renewable or fossil-fueled, must shut down during times of power outages. This fact exasperates microgrid advocates, who argue that this is precisely when these on-site sources could offer the greatest value to both generation owners and society. Such sources could provide power services when the larger grid system has failed consumers and owners of distributed energy generation systems.

      Utility engineers have historically opposed the concept of islanding on the basis of safety and lack of control of their own power grids. The standard line was that unintentional islanding endangered the lives of crews working to restore power. Today, however, a host of new power conversion inverter technologies have convinced the Institute of Electrical and Electronics Engineers that little islands of self-sufficient microgrids are no longer a threat to either workers or to the utility grid in general.

      During disturbances, the generation and corresponding loads can separate from the distribution system to isolate the microgrid’s load from the disturbance (providing UPS services) without harming the transmission grid’s integrity. This ability to island generation and loads together has a potential to provide a higher local reliability than that provided by the power system as a whole.

    • Reliability -Another element of fault tolerance of smart grids is decentralized power generation. Distributed generation allows individual consumers to generate power onsite, using whatever generation method they find appropriate. This allows individual loads to tailor their generation directly to their load, making them independent from grid power failures.

      • Avoid an outage altogether
      • Maintain perfect service

    • Environment - Enable cleaner alternative sources of energy, especially solar power with back up storage in homes and offices

    • Efficiency - Increase energy efficiency while reducing the need for new, expensive large centralized power plants and their power delivery infrastructure. Smart microgrids can also take advantage of waste heat from local distributed power generation to heat and cool buildings thus doubling the overall efficiency of the power generation.

    • Self-Sufficiency - Bottom-up electrification initiatives are emerging in the developing world. These are proving to be particularly efficient and cost-effective entry level approaches.

    • Resiliency - It is a decade from now. An unusually destructive storm has isolated a community or region. Ten years ago, the wait for the appearance of a utility’s “trouble trucks” would begin. The citizens would remain literally in the dark, their food spoiling, their security compromised and their families at risk. Instead, with full microgrid deployment, this future community is not waiting. Instead, it’s able immediately to take advantage of distributed resources and standards that support a Smart Grid concept known as “islanding.” Combining distributed resources of every description – rooftop PV (solar), fuel cells, electric vehicles – the community can generate sufficient electricity to keep the grocery store, the police department, traffic lights, the phone system and the community health center up and running. While it may take a week to restore the lines, the generation potential resident in the community means that citizens still have sufficient power to meet their essential needs.

    • Compatibility - Microgrids are completely compatible with the existing centralized grid, serving as a functional unit that assists in building out the existing system, helping to maximize otherwise stranded utility assets.


    6. Risks/Issues
    • Legal Prohibition - One of the most significant barriers to smart microgrids is the legal prohibition against private electric lines crossing public streets. This ban is a result of the 20th century argument that consumers are best serviced by giving one organization an electricity distribution monopoly in each geographic service areas.

    • Regulation - Cross-jurisdictional Issues between federal and state regulators: FERC, NERC, Public Utility Commissions.

    • Complexity - Microgrid solutions rely on complex communication and control and are dependent on key components and require extensive site engineering. What is needed is to provide generator-based controls that enable a plug-and-play model without communication or custom engineering for each site.

    • Merging Power and Industry - As more customer-centric applications like real-time pricing, distributed generation and micro-grids are deployed; utilities must take more of an interest in the industrial automation world. What was previously a one-way relationship must become a partnership as customers become active contributors to the operation of the power system.

    • Distribution Automation (See my ;DA Blog Article)

    • Asset Management -Not overloading existing assets as we transition into and out of microgrid operations

    • Security – Cyber & Physical (See my ;Network Security Blog Article)

    • Integration of Distribution Energy Resources - Need to connect customer-owned DG to supply-demand decisions across grid. Smart Grid can take enable the current distribution system by providing more control

    7. Success Criteria
    • Development of technology, tariffs, regulations, standards and controls to balance dynamic supply and demand.

    • Testing - More Investigation and pilots re: customers as supply resource

    • Plug-and-Play - Implies that a unit can be placed at any point on the electrical system without reengineering the controls

    • Voltage Regulation for local reliability and stability. Without local voltage control, systems with high penetrations of micro-sources could experience voltage and/or reactive power oscillations.

    • Distributed Generation - A necessary precursor to establishing microgrids is the creation of networks of rooftop solar, small turbine, battery storage, and other related technologies. Without distributed generation and storage capabilities, the microgrid can not survive independent of the national grid.

    8. Case Studies
    • Stafford Hill Solar Farm - In August 2014, Green Mountain Power (GMP) broke ground on a solar plus energy storage microgrid in Rutland, Vermont with one expert calling it a "perfect" project. The 2.5-MW Stafford Hill solar project is being developed in conjunction with Dynapower and GroSolar and includes 4 MW of battery storage, both lithium ion and lead acid, to integrate the solar generation into the local grid, and to provide resilient power in case of a grid outage.

      • The companies said that this project is one of the first solar-only microgrids in the nation, and the first to provide full back-up to an emergency shelter on the distribution network. “Solar power and battery storage will provide clean reliable power to a school that serves as an emergency shelter, helping a community cope with loss of power in a future disaster,” said Lewis Milford, president of Clean Energy Group, which manages the Clean Energy States Alliance.

      • The energy storage component of this project is co-funded by a federal-state-NGO partnership involving the State of Vermont; the U.S. Department of Energy, Office of Electricity; and the Energy Storage Technology Advancement Partnership (ESTAP), a project managed by Clean Energy States Alliance and Sandia National Laboratories.

      • Cost recovery for this project will come largely through services to the grid. During non-emergency periods, the energy storage is simply there to make the grid smoother.  The project will help further the discussion on how utilities will value grid resiliency and how to monetize emergency services.

      • Frequency regulation has now become a commercially viable business, not only because it has been demonstrated to work technically but also because FERC realized its value. Developers estimate that frequency regulation with energy storage is valued a roughly twice what frequency regulation is when it's done with fossil fuels.

    • Clean Coalition - The Hunters Point Community Microgrid Project is the flagship Community Microgrid project and is being conducted in collaboration with Pacific Gas & Electric.

      • It is designed to transform the Bayview and Hunters Point areas of San Francisco into a world-class Community Microgrid. The Hunters Point Community Microgrid Project, named after the substation that serves the area, showcases how a utility can deploy higher levels of local renewables to secure economic, energy, and environmental benefits for its customers.

      •  The Hunters Point Project also demonstrates that the technologies and methodologies required to deploy Community Microgrids are readily available today.

      • Once deployed, the Hunters Point Community Microgrid Project is expected to bring $100 million in local wages to the Bayview-Hunters Point community, while reducing greenhouse gas emissions by 1.5 billion pounds over the next 20 years.

      •  Hunters Point Community Microgrid Project Benefits Analysis (update coming soon).

        • Economic Benefits1
          • $200 million in total added regional economic output
          • $70 million in local wages from construction and installation, representing 1,270 near-term construction job-years 
          • $29.7 million in local wages from operations and maintenance, representing an additional 520 job-years (26 full-time equivalent or FTE jobs, $1,485,000 in annual wages) 
          • $5.8 million in construction-related state sales tax revenue
          • $10 million in site leasing income to property owners in Bayview-Hunters Point (an amount equal to $500,000 annually)&

        • Energy Benefits
          • A wholesale cost for distributed solar PV equal to or less than conventional natural gas generation (using a 20 year levelized cost of energy or LCOE)2
          •  $260 million spent on local energy resources versus sending those dollars out of the community
          •  $38 million in avoided transmission access charges
          • $30 million in avoided costs from new transmission capacity
          • $30 million in avoided costs by reducing power interruptions in the community
          • $12 million in avoided costs from transmission line losses

        • Environmental Benefits
          • Reduce annual greenhouse gas (GHG) emissions by 78 million pounds4, the equivalent of removing 6,660 cars from the road
          •  Save 15,000,000 gallons of water annually
          • Preserve 375 acres land through secondary use of roof and parking lot areas

      9. Companies
      1. CERTS - DOE's Consortium for Electric Reliability Technology Solutions ; ;- Program Office run by Lawrence Berkeley Labs- Formed in 1999 to research, develop, and disseminate new methods, tools, and technologies to protect and enhance the reliability of the U.S. electric power system and efficiency of competitive electricity markets.

        CERTS was piloted at the Sacramento Municipal Utility District(SMUD)’s corporate headquarters. Developed with help from the California Energy Commission and the University of Wisconsin, newly developed software and “smart” switches allows all generation sources and appliances and other “loads” to harmonize like a commune when the grid goes down. CERTS software is embedded in devices such as the Tecogen’s 100 kW CHP unit, reducing the price tag attached to most microgrid control systems.

        In the case of SMUD, its microgrid will be fueled primarily by solar photovoltaic panels, small combined heat and power units – which generate both electricity and heat from natural gas – and zinc flow batteries. It is expected to be up and running summer 2011.

      2. Eaton, Cleveland, OH - Entered the microgrid market in 2011. A global provider of power distribution, power quality, and industrial automation products for 100 years, Eaton  received a $2.4 million stimulus grant to validate its microgrid at the U.S. Army Engineer Research and Development Center’s Construction Engineering Research Laboratory (CERL). The Eaton microgrid architecture will then be demonstrated at Fort Sill, Oklahoma.



      3. Galvin Electricity Initiative  - Founded by former Motorola chief Bob Galvin, the Galvin Electricity Initiative is leading a campaign to transform the way communities generate, deliver, and use electricity in the U.S. They promote a new smart grid paradigm that is consumer-focused and based on microgrids – the foundation of Perfect Power

        In April 2011, Galvin announced a ranking and recognition program for smart microgrid projects intended to encourage innovation in the electricity industry by emphasizing consumer needs. The program, the Perfect Power Seal of Approval™, will rank projects based on performance in the key categories of reliability, consumer empowerment, efficiency and environment, and cost.

      4. General MicroGrids, formerly Balance Energy is a San Diego-based initiative of the U.S. arm of British defense contractor BAE Systems PLC. It offers a business model tilted toward utilities, rather than end-use customers, with islanding capability often being a secondary concern.   It supplies end customers with renewable energy, and packages it up into a microgrid. Balance Energy's first project is intended to be with San Diego Gas & Electric, a $212 million project aimed at providing the University of California at San Diego with its own microgrid – a self-contained electricity generation and distribution system that can serve as an island of stability amidst a wider-scale power grid.

      5. Honeywell - (NYSE: HON) Launched its microgrid business in 2010 when it was awarded a cost plus fixed fee $4.6 million contract to develop mobile microgrids for the U.S. Army Tank Automotive Research Development Engineering Center. The systems can integrate distributed solar PV as well as legacy on-site fossil generation. The microgrid will be deployed for the first time at Wheeler Air Base, Hawaii. This is a remote microgrid system that the Army claims could reduce fossil fuel consumption by 60 percent if deployed widely.

        In 2014 Honeywell was awarded a $3.4-million project to help improve energy security and surety at Fort Bragg, N.C. The company built a microgrid that uses advance controls to network new and existing backup generators on the U.S. Army post, the first application of this technology for a federal agency.  The Department of Defense (DOD)  financed the project through its Environmental Security Technology Certification Program (ESTCP), which identifies and demonstrates innovative, cost-effective technologies that address the department's energy and environmental requirements.

      6. Perfect Power System at the Illinois Institute of Technology, campus in Chicago. The Perfect Power System will allow IIT to avoid costly system upgrades and realize efficiency savings well into the future. It is estimated that the system will pay for itself as it is built, over the next five years. The project is funded by IIT and the DOE.

      7. MRC - Microgrid Resources Coalition - Advocates for formal regulatory reforms that recognize and appropriately value these services, while assuring non-discriminatory access to the grid for a wide variety of microgrid configurations and business models. Founded by Princeton University, NRG Energy, ICETEC Energy, Concord Engineering and the International District Energy Association

      8. Non-Synchronous Energy Electronics, Merrimack, NH, Specializes in sales and systems design of power electronic systems to enable efficient use of, and integration of, the power-generation applications of the future. Designs and consults for power systems using electronic AC-DC-AC power converters, and sales of the necessary equipment. These power converters are specifically designed to overcome difficult interconnection and control issues with the existing power grid as well as the supply of islanded grids.

        NSEE is working with Pareto Energy to develop a microgrid that avoids utility interconnection issues in a Stamford, Connecticut pilot project by only purchasing – and not sending back – power from the host distribution utility.



      9. Power Analytics - Escondido, CA- formerly EDSA Micro Corporation - Maker of Paladin® SmartGrid™ is the first commercially-available software platform designed specifically for the on-line management and control of next-generation “hybrid” power infrastructure incorporating both traditional utility power and on-premise power generation, e.g. solar power, wind turbines, battery storage, etc.

        It optimizes energy consumption in multi-energy source sites, whether they are focused on a single objective – such as minimizing the annual cost, carbon footprint, peak load, or public utility consumption – or a combination of objectives that vary by time, costs, energy source reliability, etc.

        Power Analytics supplied a models-based management continually updated according to external fuel factors (such as levels of sunlight) and internal factors (shifts in demand) to University of California-San Diego, a 42 MW state-of-the-art microgrid that is actually up and running today. Layered on top of this sophisticated scheduling platform is Viridity Energy’s software, designed to extract the greatest value for the microgrid owner according to real-time market conditions.

      10. SDG&E, San Diego, CA - Testing microgrids and intentional islanding in the small desert community east of the city. ;The Borrego Springs microgrid demonstration project has been designed to both enable more active participation by customers as a supply resource (in accommodating various generation and storage configurations), and to reduce the peak load of feeders and enhance system reliability.

        Borrego Springs already has a high concentration of customer-owned solar generation. SDG&E's pilot program is a three-year program of sensors, communications and control equipment, designed to incorporate these home- and business-based solar power generators, coordinate new peak load management technology, leverage smart meters and remotely control distributed generation storage devices to allow access to electricity in emergencies-in essence, the ability to "ride through" an outage. Batteries will also be installed on homes with solar panels, to aid in filling the gaps in power supplied from the panels during the day. These smaller batteries could also feed emergency supply back to the grid for short periods when needed.

        In addition to microgrid technology, the Borrego Springs project will explore numerous technologies, from battery storage to fuel cells, to balancing load on a circuit-by-circuit basis.

      11. Viridity Energy Philadelphia, PA - The Viridity Energy VPower™ system is a technology platform that transforms a customer’s portfolio of buildings and optimized supply and demand-side energy resources into a 24/7 virtual power plant. Viridity's software, designed to extract the greatest value for the microgrid owner according to real-time market conditions is part of the University of California-San Diego, a 42 MW state-of-the-art microgrid.  It is layered on top of a Power Analytics supplied models-based management system.

      Microgrid Incorporating Combined Heat and Power
      10. Links
      1. Perfect Power - Energy providers and policy makers will reinvent today's centralized power systems and integrate them with new, efficient “microgrids." - From Robert Galvin, Motorola's visionary leader and legendary former CEO, and Kurt Yeager, former CEO of the Electric Power Research Institute
      2. Paul Fenn's Local Power Revolution Blog