Utilities have come a long way from the days when distributed generation was only considered a threat to the industry model.
In New York, regulators are considering a plan to reinvent the electric utility and the grid it operates. Under the state's Reforming the Energy Vision (REV) initiative, utilities are being asked to consider how microgrids, distributed generation and increasing amounts of renewables might all fit together. The vision being developed calls for widespread resources and greater coordination, with utilities at the forefront of making that happen — at least initially.
New York utility Central Hudson Gas & Electric has broadly outlined a proposal to build, own and operate microgrids for customers with a total or aggregated load of at least 500 kW — a bold step towards the distributed energy future envisioned by regulators.
And as the industry evolves and innovation shifts fuel mixes and markets, the utility said it can see even smaller grids enabled by developing technologies.
What you need to know about Central Hudson's microgrid plans
Central Hudson's microgrid proposal was broadly sketched out in a $46 million rate request the utility filed in July.
The company planned to establish a microgrid program to give customers greater reliability and energy assurance, with the 500-kW limit as a starting point because "this level or higher is seen to provide operational benefits for the distribution system," Central Hudson spokesman John Maserjian told Utility Dive. Over time, microgrids on a smaller scale may be considered.
The microgrids would be designed, constructed, owned and maintained by Central Hudson. Customers would enter into a service agreement under which the cost for these facilities would be recovered.
The utility said it would reach out to local colleges, hospitals, prisons, and large residential or corporate campuses seeking the benefits of added resiliency. When dealing with larger state institutions and public schools, Central Hudson told regulators it would partner with the New York Power Authority (NYPA) to provide critical funding and resources through the agency's combined heat and power program. "Central Hudson does not anticipate a revenue requirement impact for the Microgrid Program," the company said in testimony.
The program would permit willing customers to form a microgrid by jointly establishing an agreement for Central Hudson to install generating capacity designed to meet critical power needs during an outage, the company said. And in addition to boosting reliability in severe weather, the microgrid installation could provide additional benefits, Central Hudson said, including the "integration of storage, local renewable and distributed energy resources and local demand response resources."
The cost of the microgrid would be included on subscribers’ utility bills under a tariff provision, Maserjian said, with the amount based on installation and maintenance costs. "Theoretically, microgrids may be able to provide power to the larger grid; however, operational and regulatory solutions must first be addressed to determine how this can be accomplished," he noted.
Right now, the utility has not yet determined if there will be caps or restrictions on the program. The microgrid plan could be considered as part of the utility's rate plan — or it could be taken up separately by state regulators, Maserjian said.
"Our proposal allows us to begin a dialogue with state regulators as to the best approach for microgrids and our other initiatives, and we anticipate that the REV proceedings may also shape our proposals, as well," he said.
The utility's proposal does not specify a fuel mix. The generation resources for any one site would depend on available resources, system requirements and budgets, according to Maserjian.
"Over time, technological breakthroughs may broaden the fuel mix," he said. "For example, high-capacity batteries may become commercially available and integrated with wind and solar as part of a microgrid scheme."
The evolving role of the utility
Central Hudson and other New York utilities have filed comments this week, delving into microgrids, distributed generations and other ambitious ideas the state is considering as part of the REV proceeding.
In comments reviewed by Utility Dive, the utilities were quick to argue that some functions related to microgrids are best left in the hands of utilities. But the REV straw proposal put forth by the New York Public Service Commission (PSC) staff envisions a future where third party distributed service providers could also operate microgrids.
There are a wide variety of ownership models for the electric generation and distribution infrastructure components that comprise a microgrid. Distributed generation facilities within a microgrid could be owned by a customer, a third party, or even the utility.
"However," the utilities noted in comments to the PSC, "when a microgrid serves more than one customer ... and operates within the surrounding electric distribution infrastructure, utilities are in the best position to own and properly operate such distribution infrastructure when it involves systems within the utility franchise area."
