John Kelly Talks with Smart Grid Today about benefits of microgrids and threat of Prop 16
In the May 26, 2010 issue of Smart Grid Today, John Kelly talks about the importance of microgrid development, the need for community empowerment, and the threat of Prop 16.
Smart Grid Today (May 26, 2010)
Spending on microgrid development by utilities, others debated
Microgrid development is facing resistance from utilities in the US, microgrid experts said last week. There is “unbelievable opposition” from utilities who want to “keep themselves in power and not empower the communities,” Galvin Electricity Initiative Deputy Director John Kelly said at a Washington, DC, briefing.
Kelly applauds Marin County, Calif, for starting Marin Clean Energy, an aggregation program in which municipalities buy electricity on behalf of local residents and set their own rates while traditional utilities continue to own and operate the electrical grid.
Programs like Marin's could be jeopardized in California if Proposition 16 passes next month, Kelly noted. The June ballot measure would amend the state's constitution to require that two-thirds of voters approve any public agency entering into the business of producing or selling electricity in California.
“Here's a regulated…utility spending millions of ratepayer money” to pass a measure that would make it more difficult for cities to purchase renewable energy supply on their own, Kelly said.
PG&E is using only shareholder funds to support the Prop 16 campaign, Andrew Souvall, a spokesperson for the utility, told us Friday. So far, PG&E contributed $37.5 million to back Prop 16, he added.
QUOTE OF THE DAY: "We support giving our customers more control over how public funds in their communities are being spent. Under current law, our customers are not always guaranteed a vote when their local government wants to spend public money to enter the electricity business. We think that they should have a voice in this very important decision."
Andrew Souvall, a spokesperson for PG&E
But US cities and communities lack representation in deciding how to operate their electric systems, Kelly argued. “Electric utilities collect all these distribution dollars [in their rate base] and spend virtually none of them locally,” he said. “They're rolling out the transmission systems. They're building new power plants. They're spending the money everywhere but locally. And that's why our system is…in disrepair.”
Control issues loom
A microgrid would let the community be in control, said Kelly. “It puts the local energy district in charge. It puts the university in charge,” he explained.
Microgrids represent a chance to complement the larger power grid -- “by having more local generation,” an Intel executive said at last week's briefing of US lawmakers, congressional staffers and smart grid industry officials gathered on Capitol Hill (SGT, May-21).
Some developers are, however, pursuing microgrids to get out from under the control of a utility, GridPlex Networks Chairman Larry Silverman told us this week. GridPlex is a smart grid and automation network technology firm.
In that case, the green power produced by the microgrid may not get loaded into the larger grid as a DR resource, Silverman noted. “That is where the dividing line exists between when utilities support a microgrid versus when they do not,” he said, adding that microgrids are an “extremely effective way … to shift some of the power, so to speak, from the utility to the consumer.”
Many firms focusing on DG view microgrids as adjuncts to a building, for example, where DR and renewable energy certificates represent the principle value -- and not as independent distributed utility systems, said Silverman.
Utilities are right to be concerned about potential grid destabilization if DG owners or microgrid operators can dump power into the grid at any hour, Silverman noted. Problems like over-stressed transformers can result from DG that is not under a utility's control combined with a poor balancing system and insufficient interface to manage it, he said.
The system works now since the industry is still in the early stages of DR, with a limited amount of dispatchable resources, Silverman explained.
CEO sees progress
Some utilities, of course, support microgrid development.
Microgrid specialist Pareto Energy has “great relationships” with executives at several utilities, CEO Guy Warner said at the Capitol Hill briefing. One good example is Connecticut Light & Power (SGT, Apr-27).
“We've found utilities are changing,” he added. “Regulations in the states are changing.”
The states of Pennsylvania and Maryland, for example, will penalize utilities if they do not reduce their demand, Warner noted. “Now, utility companies are our allies in this.”
Microgrids offer clear financial advantages over substation upgrades for utilities like Con Edison, he added.
In the parts of New York City where property is expensive, it would be much cheaper for Con Edison to develop microgrids than to upgrade a substation, Warner said. “You need more land for a new substation. It could be $3,000-$4,000/KW. You can build a whole microgrid for $2,500/KW. It makes sense.”
A microgrid can provide an alternative to utility substation build-out by locating distributed energy resources (DER) on a microgrid customer's property. Parking garages and rooftops are prime candidates.
This story has been reproduced from the May 26, 2010 issue of Smart Grid Today with the permission of the publisher, MMI Inc. To view the full story on Smart Grid Today’s website, please visit http://www.smartgridtoday.com/public/1631.cfm?sd=31.
