Can Onsite Generation With Microgrids Help Zap Widespread Blackouts?

Is it more efficient for electricity to be centrally generated before sending it over high-powered transmission lines or is it better for the power to be produced onsite and then delivered by localized microgrids? 

Central generation is less expensive per kilowatt hour than that of distributed generation. But onsite generation with microgrids can lead to fewer “line-losses” because the electricity does not have to be “wheeled” across the country. That can result in losses of 5% of the power generated — a huge amount given the total volume of electricity that is consumed each year.  

“We are in the middle of a health emergency and we don’t need more pollution and more bad air days from another fossil fuel power plant,” writes Jeff Tittel, with the New Jersey Sierra Club, adding that microgrids lead to the greater use of renewables as well as fewer emissions and greater reliability. The environmental group is trying to get New Jersey to use distributed assets as part of the state’s masterplan to hit 100% clean energy by 2050. 

Three decades ago, national efforts encouraged the building of more large power generation that feeds into local distribution networks, partly paid for through power purchase agreements that guarantee the sale of that electricity. More recently, however, policies have encouraged more green energy development, which conforms more to a decentralized system.

Distributed generation and distribution centers on solar power, battery storage and microgrids. To that end, California’s energy regulators just laid the framework for utilities to develop microgrids with battery storage — a move that comes in the aftermath of the state’s wildfires that have ravaged local economies and left consumers without power. It is a direct response to PG&E Corp.’s bankruptcy that resulted from a deadly and destructive wildfire in 2018. 

“Many residents affected by the wildfires in California rely on their own wells for water. These residents need power to pump water for domestic use, but also to defend their homes from an approaching wildfire,” says YouSolar Chief Executive, Arnold Leitner, in an email. “What we saw in New York last week were power outages that forced those who have been working remotely and sheltering in place to leave their homes in search of power and internet. For these people, this is another disruption in an already difficult year.”  

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So, onsite generation is all about achieving more reliability while also avoiding line losses and using cleaner energy. Enter a variation of distributed generation called combined heat and power: Instead of that energy escaping and going up in smoke, it is captured and reused and thus, it saves money while mitigating harmful emissions. 

Consider Procter & Gamble's factory in Wyoming County, Pa., which takes advantage of combined heat and power: Its onsite operations are more efficient than if it had bought power from central-station utility generators. In fact, conventional power plants have an efficiency rate of about 51%, whereas the combined heat and power units like the ones used by Proctor & Gamble PG can achieve 75%, says ICF International ICFI .

Meanwhile, Evonik Industries sought to reduce its greenhouse gas emissions at its site in Darmstadt, Germany by using waste heat to run its production processes. It built a mile-long steam pipeline to connect a waste incineration plant with the chemical maker’s site. It says that such investments yield a positive return, although those forays have a longer payback period. 

Fuji Electric Co., GE Power & Water and Honeywell International HON  are also building onsite power generation along with localized microgrids. Indeed, these companies have more energy-saving solutions than ever before — everything from LED lighting to fault detection and diagnostics software.

And while those companies are on the cutting-edge of technology, they face such obstacles as the ability to integrate data across multiple units. With that, Siemens Corporate Technology has just launched an advanced microgrid demonstration project in New Jersey, which it says can react in real-time to weather-related events. The goal, it says, is to replicate this model at universities, industrial sites and office parks while minimizing CO2 footprints.

In Siemen’s case, it will use rooftop solar panels along with battery storage and microgrids. Modern technologies will integrate the data, making it visible on dashboards and in real-time. The company suggests starting with an energy audit that can identify potential conservation measures, including whether a facility could support a microgrid and whether it could be “islanded” from the grid.

“It's challenging to determine the exact paybacks for microgrids,” says Matthew Walters, head of distributed energy systems for Siemens, in an interview. “The value of resiliency (having backup power) is about the cost of avoiding down-time — similar to how you would value an insurance policy.”

The use of centralized generation will continue to service the masses. But the emergence of localized generation will deter the need to keep building more large infrastructure projects — all highlighted by the ventures in New Jersey and California. While the initial price tag is high, the efforts are generating returns by improving reliability and cutting emissions.