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					District Energy Systems & Microgrids Conference




   The Role of Microgrids in the
  Electric System Transformation
     Meeting the future energy needs with less…

       Steve Pullins, President, Horizon Energy Group,
                       November 2010

                            For Official Use Only        1
 Example:
 1.5 MW Microgrid - Executive Summary
• Microgrid – sustainable, reliable active 24/7 control of supply
  and load
• Sustainability Objectives
   –   Reduce annual energy cost by 15% for the long-term
   –   Reduce carbon footprint by 18,750 Tons over 10 yrs
   –   Increase reliability and reduce the risk of an outage
   –   Sustainability leadership among peers
• Not replacing the utility grid (still connected), but replacing
  much of the utility supply to be more cost effective & reliable
• Increase “green energy” capacity from 0% to 100%
   – Tremendous green marketing opportunity
   – LEED Certification


                              For Official Use Only             2
                                          ?
                                  ?   ?




WHAT TO EXPECT IN THE FUTURE


          For Official Use Only               3
   Electric and Gas Price Trends




You can expect electric rates to increase 7% by 2020 and 15% by 2030.
You can expect natural gas rates to increase 56% by 2020 and 89% by 2030.

                                                  Source: DOE EIA Annual Energy Outlook 2010
                               For Official Use Only                                       4
                Electric System Reliability
                                               180          Outage Duration (SAIDI)*
  System Average Interruption Duration Index




                                               160

                                               140

                                               120
                  (minutes)




                                               100
                                                                                             At 106 minutes, US
                                               80
                                                                                             businesses lose $80B to
                                               60

                                               40
                                                                                             $150B per year in revenues
                                               20
                                                                                             due to electricity outages.
                                                0
                                                     2000      2005   2010       2015        2020    2025

*Reports on previous year’s data




Sources: Lawrence Berkeley National Lab, IEEE 1366, EIA data, EPRI

                                                                             For Official Use Only                         5
  From the 20th to the 21st Century
                                                                   25 M residential solar


                                                                            1 M PHEV/PEV
                                                                               10 M PHEV/PEV
                                                                                    50 M PHEV/PEV

                                                                      Consumer
  Generation            Transmission         Distribution
                                                                      Systems
  • 47%                 • 43%                • 34%
                                                                      • <1%
  • 17,342 units        • 164,000 miles      • 3 million mi
                                                                      • 12.3 M DG


                                                                                  2 M architectural wind
                                                                                    5 M building solar

500 wind parks
50 solar parks      5,000 distributed wind                        100,000 Buildings as PP
                      5,000 utility solar

Continued increase in     Prices increasing, in some regions        Changeover to more and      Consumer
  energy intensity         faster than gasoline at the pump           more digital loads         choices

                                          For Official Use Only                                            6
Renewables Growth (2004* – 2008)
    Renewables Global Status Report – 2009 Update (145 countries reporting)
    * Baseline – Bonn Renewables Conference 2004

• Grid connected PV now 13GW – 600% increase
• Wind now 121GW – 250% increase
• Total from all renewables now 280GW – 75% increase
      – Includes large increase in small hydro, geothermal, & biomass generation

•    Solar heating now 145 GWth – 200% increase
•    Biodiesel production now 12B liters/yr – 600% increase
•    Ethanol production now 67B liters/yr – 200% increase
•    Annual renewables investment in new capacity now
     $120B/year – 400% increase

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Business As Usual Results

                                                                 National Average Capacity: 47%




                  19%            50%            <2%             9%           20%*   <1%         20%*
                                                                                                    *shared




  Source: Energy Information Admin., Form EIA-860,
  “Annual Electric Generator Report,” EIA-906, &
  Annual Energy Outlook 2008                                                              % Portfolio Mix



                Why would we think this will work tomorrow?
                                                     For Official Use Only                                    8
     The Financial Electric System
       Robust      Additions             Fuel Purchased:                                Smart Grid
                                                                       Retirements
       Trends     for Growth               $80B+/year                                   Avoidance
                                                                         (2007-26)
        (2007)     (2007–26)                                                            (2007 – 26)

                                                               47%
                                           Generation
       $15B/yr      $300B                                                 $156B
                                 $480B
                                                               43%

        $6B/yr      $120B                 Transmission                     $12B
                                 $80B
                                                                                           $57B
                                                               34%
                                                                                        ($46-117B)
       $12B/yr      $240B                  Distribution                    $36B
                                 $240B                                                 Outages / PQ:
                                                                                     $80B - $150B/year
       $5.5B/yr     $110B               Consumer Systems                   $2B
                                 $220B                         <1%
                    $770B                                                 $206B
                                         Load Purchased:
Source: DOE/NETL Modern Grid Strategy                              Planned capital influx: $976B
                                            $340B/year
                                           For Official Use Only                                         9
20-Year Financial Comparison

• Consider capital spend, fuel cost, and business
  losses from poor reliability.

• Business As Usual strategy:
  – $5.3 trillion next 20 years
• Smart Grid strategy:
  – $2.9 trillion next 20 years



                                    Source: DOE/NETL Modern Grid Strategy

                       For Official Use Only                                10
WHY MICROGRIDS?


         For Official Use Only   11
 What is a Microgrid?
“A microgrid is a group of interconnected loads and distributed energy resources
within clearly defined electrical boundaries that acts as a single controllable entity
with respect to the grid. A microgrid can connect and disconnect from the grid to
enable it to operate in both grid-connected or island mode.”
Microgrid Exchange Group, October 2010

                                                                                            Many new things to manage!
                                                                         Rooftop PV Solar

                                          Utility-scale Energy Storage                  Switches &
                                                                                          Power
                                                                                        Electronics        Microturbine

There are federal and
                                                                                                              Energy
state incentives and tax                                                                                      Storage

credits for microgrids.




                               Ground PV Solar Array
                                                                                                            Distributed Generation
                                                             PHEVs
                                                                                            Home Energy System
                                         For Official Use Only                                                                       12
Smart Grid Characteristics

• Enable active participation by consumers
• Accommodate all generation and storage options
• Enable new products, services, and markets
• Provide power quality for the digital economy
• Optimize asset utilization and operate efficiently
• Anticipate & respond to system disturbances (self-
  heal)
• Operate resiliently against attack and natural
  disaster
                                            Source: DOE/NETL Modern Grid Strategy

                    For Official Use Only                                     13
    SG Characteristic Comparison
                                               BAU Central       DR, EE,      Renewables
Characteristic                   Microgrid
                                              Station Supply   Conservation    Standard
Enable active participation by
                                    X                               X
consumers
Accommodate all generation
                                    X                                             X
and storage options
Enable new products, services,
                                    X                               X
and markets
Provide power quality for the
                                    X                  X            X
digital economy
Optimize asset utilization and
                                    X                               X
operate efficiently
Anticipate & respond to system
                                    X
disturbances (self-heal)
Operate resiliently against
                                    X
attack and natural disaster


                                     For Official Use Only                             14
Why Microgrids?

• Savings: The microgrid portfolio of resources is
  tuned to the campus to provide economic savings
• Sustainability: The microgrid portfolio enables a
  hedge against fuel cost increases
• Stewardship: The microgrid enables deep
  penetration of renewables
   – Emissions reduction
   – Green marketing
• Reliability: The microgrid actively controls the
  network for better reliability
                      For Official Use Only           15
Microgrid Projects in the US

• 7 DOE cost-shared projects ($150M)
    – SDG&E / Horizon is one
    – 5 of the 7 are similar to 50 Pequot Ave
•   4 Military bases
•   University of California at San Diego
•   29 Palms, CA
•   Horizon (in development)
    – <confidential> sports venue (1.5 MW)
    – <confidential> 400,000sf Class A office complex (0.6 MW)
    – <confidential> 750,000sf Engineering complex (1.5 MW)
                         For Official Use Only              16
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THE PROBABLE FUTURE STATE
             For Official Use Only   17
North American Microgrid Market 2015


                   ~400



          >1,300
                                     >8,500




               >15,000


                                              Source: Pike Research

                   For Official Use Only                              18
   Market Size
                                                            2,000 US microgrids by 2015
                                                                    - Pike Research, Dec 2009
    Microgrid Capacity, World Markets: 2010-2015




Source: Pike Research
                                                         ~$2B annual US market by 2015
                                                                    - Pike Research, Dec 2009

                                 For Official Use Only                                     19
Successful Microgrid Design

  Integrate

Understand

  Optimize                                   See
                                               NOC
                                               Dashboard
       Act                                     Website




  Interface


              Physical devices / resources

                     For Official Use Only            20
Conclusions

• Business As Usual will kill us by 2030
• Microgrids will be essential to deep distributed
  renewables penetration
• It is likely to get worse before it gets better
• Market will be defined by electricity consumers
  not utilities or regulators
• Microgrids are the likely building block of the
  future electric system defined by the Smart Grid
  environment

                    For Official Use Only            21
Horizon Energy Group
•   Horizon Energy Group is actively involved in leading the transformation of
    the US electric industry to a Smart Grid through:
     –   Leadership in DOE’s Modern Grid Strategy and NETL’s Smart Grid Implementation Strategy
         teams
     –   Support to various policy and regulatory groups
     –   Design and implementation of a utility-scale microgrid with a team hosted by San Diego Gas
         & Electric
     –   Developing Smart Grid strategies and business cases with utilities and states
     –   Development of utility strategies, Use Cases, and architectures for distribution management
         and integration of renewables
     –   Participation in industry groups
•   Horizon Energy Group named in 2008 as a Company to Watch in the book,
    “Perfect Power” by former Motorola Chairman, Bob Galvin, and former EPRI
    CEO, Kurt Yeager.
•   Horizon listed in 2009 as one of the “Top 100 Movers and Shakers in the
    Smart Grid Movement” by GreenTech Media.
•   Contact: Steve Pullins, spullins@horizonenergygroup.com, 865.300.7395


                                        For Official Use Only                                          22

				
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