To reduce their reliance on fossil fuels and minimise their carbon footprint, an increasing number of companies are implementing low-carbon microgrids. Just like traditional microgrids, low-carbon ones can help firms meet their energy demands without depending solely on the national grid. Unlike traditional solutions, however, these eco-friendly microgrids are almost zero-emission. Neil Ballinger, head of EMEA at EU Automation, explains the benefits for manufacturers.
A microgrid is a localised group of energy resources and loads that can operate independently and when connected to the wide area grid. The ability to work in island mode is what differentiates a microgrid from other forms of on-site energy generation. This also makes microgrids a popular option among manufacturers who wish to secure a steady supply of electricity without having to rely solely on their country’s national grid.
A microgrid is formed by connection to a point of common coupling (PCC), a source of energy supply and a charge/discharge storage system, in the form of batteries, for example. Traditional microgrids rely on fossil fuels as a source of energy supply. However, low carbon microgrids use renewable sources, such as solar panels or wind turbines, to generate a significant part or even all of their energy supply.
Improved reliability
There are three scenarios where microgrids have traditionally been used and where low-carbon solutions are now on the rise. These include off-grid areas, areas with unsatisfactory or intermittent grids, and areas with reliable grids but high security needs.
Off-grid areas are still common in some regions of Africa, some small islands, and sparsely populated territories such as central Australia. Despite their lower level of industrialisation, these areas are important in sectors such as the extractive industry, as they are rich in mineral resources. In this scenario, low-carbon microgrids offer new opportunities to satisfy the sector’s energy needs while reducing the considerable environmental impact of mineral extraction.
Areas with insufficient or intermittent grids are still prevalent in many developing regions, such as Latin America and the Indian subcontinent. Normally, manufacturers in these regions use diesel generators as a back-up power solution. However, the price of diesel is subject to market fluctuations, so low-carbon microgrids represent a cheaper and more sustainable option.
In industrialised countries, low-carbon microgrids are used in areas where the electricity supply is steady and reliable, but where the need for security is paramount, such as hospitals, airports, data centres and military bases.
Microgrids can be completely off-grid and operate in constant island mode, being the sole power source of their customers. This is the case, for example, on the Isle of Eigg in Scotland. Prior to the installation of microgrids, the island’s few residents depended on unreliable, expensive and carbon-intensive diesel generators. But in 2008, the island became the world’s first off-grid community powered solely by wind, water and solar. Completed off-grid microgrids have been installed in several communities that, for economic or geographical reasons, didn’t have access to a national grid, such as rural villages in the Manipur state of India or the Native American reservation of Blue Lake Rancheria, in California.
Though many similar projects are taking off, most microgrids today are still connected to the main grid, which represents an additional source of power and provides more flexibility. This is the case of most community microgrids, which provide clean energy to towns that do have access to the grid, but are striving to minimise their carbon footprint while reducing energy bills.
More savings, less carbon
Recently, an increasing number of plants with reliable electricity supply have turned to low-carbon microgrids to cut energy bills and reduce their environmental impact.
The main benefit of implementing a solar or wind-based microgrid is economical, since the price of both renewable energies and modern storage solutions is dropping. According to a recent report by the World Business Council for Sustainable Development (WBCSD), the global cost of solar panels fell by more than 60% between 2009 and 2015, while lithium-ion battery costs decreased by more than 50% from 2013 to 2016.
The cost of solar is expected to fall further as adoption rates rise. Moreover, firms can sign a Power Purchase Agreement (PPA) with an external provider of renewable energy solutions, giving them access to a low energy price over a long- term period. Strategies like this can also help manufacturers shield against the volatility of crude oil prices.
Low carbon microgrids are also an efficient way of reducing a firm’s carbon footprint and therefore its environmental taxes. In areas with carbon offsetting targets, such as the EU Emissions Trading System or the UK Carbon Price Floor, switching to a low carbon microgrid can drastically cut a plant’s compliance costs. Moreover, reducing emissions can improve a firm’s Corporate Social Responsibility (CSR) rating and enhance its brand image.
The challenges
Though microgrids have been installed for decades, there is still no clear legal framework for them, with many states not even having a legal definition of a microgrid. This means, for example, that while financial incentives are usually available for businesses willing to invest in renewables, in some cases it is unclear whether or not these incentives apply to the construction of low-carbon microgrids.
The lack of a clear legal framework also means that business owners might face the risk that new regulations will impose restrictions or costs that they didn’t anticipate while planning or constructing their low-carbon microgrid.
Despite the falling prices of renewable energy sources and their storage solutions, financial hurdles can also contribute to slow down the deployment of microgrids. Microgrids tend to integrate multiple energy sources and are often implemented in geographical areas with unique characteristics or in high-risk applications. As a consequence, investors tend to see them as a challenging project. Public-private partnerships and mixed ownership agreements can help overcome financial barriers, encouraging investment in renewables-powered microgrids.
