Oncor had a problem: It needed a high degree of reliability at its System Operating Services Facility (SOSF) near Lancaster, Texas.

What it had, however, were occasional outages.

The building is key to maintaining the utility's system, but is also located at the end of the distribution line away from generation. The solution, developed between Oncor, S&C Electric and Schneider Electric, was a microgrid that is equal parts innovative problem solving and proof-of-concept.

The 1.25-MW system can run in full island mode, powered by nine sources of energy, or it can tie back into the wider grid. It can operate as a single grid or as four separate microgrids, and it makes economic and reliability decisions autonomously, determining whether to generate power, buy it or store it.

While the microgrid at Oncor's services facility solves a specific reliability problem, it is also a demonstration of how the wider grid is changing and what technologies are likely to power it within the next decade. Central to all of this is battery storage and distributed generation, both of which are focuses for Oncor. 

“This microgrid is autonomous,” said David Chiesa, director of microgrid business development for  S&C,  which handled the storage, switching and voltage aspects of the project. “Not only does it reconfigure itself, island itself and take itself back autonomously, it also makes that economic dispatch decision autonomously.”

How the Oncor grid works

The Oncor microgrid is powered on nine sources, with most coming from a trio of small diesel generators, for a combined 560 kW of capacity. A propane micro-turbine adds 65 kW; a carport solar array generates 106 kW; and a gas reciprocating generator's 45 kW round out the larger sources.

The system's self-healing abilities begin with a fault interrupter developed by S&C, which detects an outage and then tries to determine if it is temporary. If the interruption is a longer-term event, it automatically reconfigures itself and switches to an alternative power source.

The system's onsite energy storage includes a 200 kW Tesla battery which backstops the system with a capacity of 400 kWh, along with S&C's PureWave CES Community Energy Storage product with a 25 kWh capacity. Combined, the batteries help provide the voltage signal for the site, enable renewable integration and controls the microgrid frequency. 

Make, buy, sell or store?

The system's autonomous nature stretches beyond keeping the lights on. When not in island mode, when reliability is not the number one priority, the system is looking at both 15-minute and day-ahead data from the Electric Reliability Council of Texas, as well as weather forecasts, to solve a complex calculation: Should it make or buy energy? Use it or sell it?

“That autonomous decision making is pretty unique in the microgrid space," Chiesa said.

“If the price of power is very high then you want to max our your micro turbines and lower your overall purchase from the utility,” Chiesa said. “In this case, it's Oncor purchasing from Oncor. But at the same time, it proves that the process works.”

Storage prices will drive microgrid development

Last year Oncor commissioned a Brattle Group report on energy storage, which concluded installing up to 5 GW of grid-integrated, distributed electricity storage would be an effective, cost-efficient way to deal with the integration of renewable power. According to the report, storage could be installed at a cost of $350/kWh. 

There has been little movement on the aggressive storage proposal, in part because the economics may not quite be there yet. But as storage cost drops and distributed generation continues to proliferate, batteries and microgrids will undoubtedly play a major role. Don Clevenger, Oncor's senior vice president of strategic planning, said the company's strategic vision is to “transform the value of the grid through innovative, technology-driven and customer-focused energy solutions.  Battery storage and microgrids both advance this vision.”

Texas currently does not allow utilities like Oncor to own grid-scale battery storage, and legislators did not put forth any proposals this session to allow Oncor to pursue the plan, but Clevenger said via email the company expects “to see battery storage become economic and widespread by the end of the decade if all of the benefits of battery storage can be captured for the customer.”

Peak pricing determines microgrids' spread

The Lone Star state will likely be on the forefront of microgrid technology because peak power prices are so high. According Chiesa, summer peak prices now hit around $6,400/KWh and the expectation is for $9,000/KWh within the next couple of years.

“If you just do some simple math and figure out how much it costs to pay $6,000/KWh for a roughly 2-GW-requirement system, it's an unbelievable amount of money you can save by being able to avoid these peak generation costs,” Chiesa said. “One of the things we're doing at the SOSF facility is demonstrating this can be done.”

Chiesa told Utility Dive n anecdote about pitching a microgrid proposal to the San Diego Naval Yard, which was looking for solutions to load changes when large ships would connect to shore power.

“We had this great proposal laid out, and then we found out they were paying 5 cents/KWh [for electricity]. It kind of destroyed the economics associated with that project, and of course it went nowhere,” he said.

But on the flip side, Chiesa points to Hawaii where diesel generation has spiked power prices as utilities struggled to connect customers' rooftop solar systems to the grid.

“You could put microgrids and distributed generation all over the place and it makes absolute economic sense,” he said.

“You go and look where the price of power is highest. As the price of this technology comes down, specifically energy storage and solar, then you can do to places with lower cost of power and it still makes sense,” Chiesa said.

“Our industry is changing as well as our customers’ needs,” Oncor's Clevenger said. “No one can predict exactly what will be the customers’ future needs. Therefore, the grid needs to be as flexible and adaptable as possible and the only way to do that is through the deployment of technology like micro grids and battery storage.”

How big is utility-scale?

One important aspect of the microgrid project is showcasing the ability integrate diverse sources. As distributed generation grows on the Oncor system, microgrids may become more vital because of the dispersed nature of the resources.

While renewable resources in Texas are predominately wind – the state is the largest wind producer in the country, and in 2013 produced nearly 36 million MWh from the resource – solar is beginning to join the mix in the form of moderate-sized community projects.

“The utility scale projects are getting smaller,” Chiesa said. “It used to be 100 MW or 300 MW was what we called utility-scale. Utilities are really looking more towards the 5 to 25 MW now.”

Some of the shift has to do with the ease of siting small solar arrays, and the focus on keeping generation near population centers to minimize loss.

“Where are you going to get the 800 acres it requires to make 100 MW of solar all in one area,” Chiesa asks. “Downtown Dallas? No. Can you do it in the suburbs? Probably not.”

However, he points out you can possibly squeeze eight acres into relatively dense areas, to create a 1 MW system to provide power to a microgrid.

“You can actually do that in a lot of places. So now as you look at that, it's really the ease of permitting, zoning, siting, that drives the smaller sites that are so close to where the load centers are.”