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Rethinking Critical Infrastructure – The Role of Microgrids For Commercial & Industrial Sites

As a result of the many forms of disruption industrial companies face during the current crisis, many are demanding more resilience for their sites. Microgrids often come into play as part of this by enabling a greener and more reliable site infrastructure. Schneider Electric expert Andy McKenzie discusses the challenges site managers are facing today and investigates the future of more resilient, net zero carbon sites.

Andrew McKenzie, Microgrid Business Development Lead UK

Andrew is responsible for Microgrid business development in UK and Ireland has a deep understanding of the various microgrid business cases, based on his experience from managing and supervising microgrid feasibility studies, delivering energy efficiency programs and renewable energy generation projects for various clients across a range of sectors.

Markers on the floor are signs of change

social distancing markers on elevator floorHave you already returned to your workplace? Did it look and feel the same? While lockdown is loosening a little in some parts of the world, there is strong indication that life and work post-COVID will be dramatically different. This is especially true for the managers of industrial and commercial sites. Measures to throttle the spread of COVID-19 have transformed many of their everyday activities. Though markers on the floor may be the most visible signs of change, the process behind is often not as simple as a yellow tape: regroup of production lines, new routing to enter, navigate and exit a site and new design of office areas to accommodate for social distancing are some immediate actions being taken. But the need for readjustment goes much further than this—enabling more flexible and resilient operations long-term is a key item on any site manager’s agenda.

The business case for resilient sites

During the last several months, many companies experienced a new level of disruption. According to the analysis from the Business Impact of Coronavirus Survey of the UK’s Office for National Statistics, 64% of UK businesses reported a decrease in sales turnover outside of normal range, with 25% of businesses losing more than 50% of sales. Moreover, 65% of British employees were working remotely during the lockdown and 77% feel they have done well handling the remote work transition – meaning they are likely not going to go back to office full time. Consequently, UK power demand hit a new low in May, putting additional pressure on the grid, given embedded PV now stands around 14GW and fewer dispatchable plants are available to help balance the system. National Grid ESO reacted with a new footroom service called Optional Downward Flexibility Management (ODFM) from 7 May, paying people to use more power over the summer or to stop exporting it.

However, not all industrial sites went into lockdown. Some industries are experiencing disruption of a different kind because of increased activity due to the pandemic. Organizations like hospitals, data centers, pharma production or logistic centers often went into the opposite direction, with a need for extra electricity more indispensable than ever for these critical infrastructures.

What does this mean for the managers of industrial & commercial sites? The unexpected comes fast, and only agile resilience is adequate resilience. The crisis has accelerated many trends already underway, with digital solutions at the center. We see evidence of this coming in many forms: digital trainings for site staff enabled by augmented reality, remote maintenance and control across a site’s assets for energy supply, building management and IT infrastructure and even remote site audits that we recently conducted for our microgrid project development, supported by site managers with head cameras.

The role of microgrids for resilience

connected assets in a microgrid concept, solar, overhead viewMicrogrid installation was gaining pace prior to the global health crisis and is expected to grow as distributed energy prices drop and concerns continue to heighten about electric reliability. Guidehouse expects global microgrid capacity to reach 20 GW by 2028, up from under 5 GW in 2020. Among the variety of benefits microgrids are already driving to organizations using them today, the gains in resilience are triggering the most recent burst in project development. A microgrid’s ability to work parallel with the grid, or in an island mode, prevents millions in outage costs while keeping critical infrastructure running efficiently.

Beyond the worst case of an outage, site managers also need to remain vigilant on electricity security to safeguard vital assets amid the extreme volatility in energy markets. Microgrids are inherently decentralized, meaning they create, store, and distribute energy locally. When the main grid goes down, energy generated onsite is available immediately. Microgrids are also a highly digitized, flexible and efficient energy solution. Connected products allow a microgrid owner to feed energy to the main grid or island. Digital controls optimize energy demand and prevent premium prices for high demand or gain revenue with the described footroom services. This business case is only growing, as energy firms in the UK worry that the impact of extra balancing actions due to disruption will create “a high probability of Balancing Use of System (BSUoS) charges effectively doubling the total cost of electricity”. The winners for now, and likely in the near future, are flexible assets. The current situation foreshadows how the grid may look in five years’ time, when National Grid has committed to run solely on zero carbon sources whenever it can.

The ultimate goal: net zero carbon

While COVID-19 virus has taken center stage in the past month, attention around the other global emergency, the climate crisis, is making an impressive comeback. Whether inspired by the clear skies of every major urban area during the height of quarantine, or facing economic stimulus tied to green recovery regulation, now is the time to double-down on commitments to decarbonization and a clean and efficient energy future.

In the UK, the first major economy in the world to pass net zero regulation in 2019, the recent launch of a global campaign for mobilizing net zero support - 'Race to Zero' – is one of many examples of accelerated, green recovery. From the current crisis we’ve gleaned more data points around what the net zero ambition must look like. The COVID-19 crisis could trigger the largest ever annual fall in CO2 emissions of around 5.5% in 2020, more than during any previous economic crisis or periods of war. But even this would not come close to bringing net zero within reach without radical decarbonization efforts. Global emissions need to fall by some 7.6% every year this decade to reach net zero carbon—a trajectory the UK is likely to follow given its ambitious commitments.

microgrid city with solar panels In every scenario about this future net zero world, green electricity is key and is another powerful trigger for microgrids. Electricity in a microgrid generated from renewable energy sources such as solar or wind, and excess energy can be stored in a battery energy storage system. Using renewable energy sources reduces the carbon footprint, and the flexibility options provided by the microgrid intelligence will likely support the green business case.

Microgrids also resonate with two other big trends under green recovery: Hydrogen fuel and electric vehicles (EV). Hydrogen became the hottest buzzword in energy after the European Commission pledged to devote a significant part of its €750 billion recovery fund to support clean hydrogen gas. Companies can optimize the many uses of this gas, such as processes, CHP, mobility and more, in a smart decentralized environment through microgrids.

As businesses and municipalities evolve their EV infrastructure, microgrids provide flexibility in terms of power and cost savings that a conventional connection to the distribution grid may not. In return, EVs provide power and ancillary services under the right conditions to further maximize the benefit of the microgrid.

Not too long ago, microgrids were considered a thing of the future. But pushed by the pandemic, it’s becoming clear that they are a practical, strategic direction that many organizations are now considering to both improve resilience during recovery and to protect their business from future disruptions. If you want to learn more about what role microgrids and energy resilience can play to improve your company’s recovery, join our upcoming webinar.