Many people in the Midwest may still remember the Northeast blackout of 2003, which left around 45 million people without power, some for as long as two days. Occurrences as massive as that blackout are relatively scarce in the Midwest; generally power outage events are relatively localized and fixed within a few hours. In recent years, however, cities across the country have come to the conclusion that, for critical health care and industrial assets, waiting a few hours for power is not always a possibility. Cities have historically hardened these critical assets through a variety of strategies, including backup generators and underground wiring. But what if goals extend beyond resilience alone? What if the city, as many have in recent years, examines its emissions and discovers that the majority of its electricity demand is met through fossil fuel sources? What if it wants to change that? In many cases like this, when cities and businesses want to bolster resilience and decrease greenhouse gas emissions, the solution has been a microgrid.
A microgrid is a local energy grid that has control capability, allowing it to disconnect from a utility grid and operate autonomously. In almost all cases, microgrids remain connected to the greater grid via a point of common coupling until some event disrupts service on the main grid. When this happens, a microgrid disconnects from the grid and operates in island mode, remaining online.
A recent study conducted by a multidisciplinary team of students at the University of Michigan evaluated the feasibility of installing microgrids at a number of city-owned sites in Ann Arbor, Michigan. The project was advised by Adam Simon, an Associate Professor from the Earth and Environmental Sciences and the Program in the Environment, and Susan Fancy, Manager of Programs and Development at the University of Michigan Energy Institute. The team researched the solar and battery potential of sites selected from more than two hundred city-owned properties, including city hall, fire stations, parking structures, and the landfill. “Our study presents the City with cost-effective solutions to install microgrids at the municipal fire stations, ensuring resilience during times of emergency need,” said Simon.
Ann Arbor’s potential is promising; fire stations alone represent critical assets that could benefit from both enhanced resilience and energy savings. According to Simon, “Fire stations 2, 3 and 4 can be equipped with solar panels that produce more electricity annually than currently consumed at each of those locations, with a payback time of 10 years. Installing a battery at each station to provide a 6-hour emergency backup increases the payback time to only 13 years.”
Current state of Ann Arbor’s electricity environment
The city of Ann Arbor’s municipal operations have an annual load of approximately 45 GWh. Since Ann Arbor is not a municipal electric utility, Ann Arbor’s electricity fuel mix largely reflects local utility DTE Energy’s fuel mix, which means it will continue to include coal until DTE retires its last coal plant in 2050. “The City of Ann Arbor relies on their local utility for almost the entire current load,” said Simon, “but that doesn’t require the City to rely on the utility to take major steps to reduce, or offset, emissions produced by the utility’s current coal-dominated fuel mix. To wait for DTE to implement change is a passive strategy not becoming of a progressive city like Ann Arbor.”
From 2008 to 2016, DTE’s fuel mix decreased from approximately 77 percent coal to just over 60 percent coal, with the offset mostly met via increased nuclear capacity. Ann Arbor has shown progress in renewables integration for its city operations as well, achieving a 2010 municipal goal to use the equivalent of 20 percent renewable energy. Aside from renewable implementation goals, emissions reduction progress has largely been through efficiency increases, waste reduction, and decreased consumption.
Support for the Paris Climate Accord from local- and state-level governments coincides with widespread adoption of community climate goals related to emissions reductions and integration of renewables. Communities have taken it upon themselves to set standards for renewable energy generation through new policies and incentive programs, and microgrids represent a means of integrating renewables into the energy mix for the purpose of emissions reductions. In some communities, state goals have been a key driver for policy reform.
Municipalities’ increased interest in microgrids is mostly related to climate concerns, but there are other reasons as well. Installation costs for renewables (especially solar) have declined steadily for the past several years and are projected to continue decreasing. Currently, system costs for large-scale solar installations in southeast Michigan are around $1.75/Watt installed. If trends of decreased cost for solar installations, increased energy efficiency, and decreased electricity demand continue, solar-based microgrids will appear more and more attractive as an option for electricity generation.
Additionally, shifting regulatory environments may incentivize cities to take advantage of current, and possibly more beneficial, policies while they still apply. For example, the current net metering program will allow enrollment for the next year until a state-distributed generation tariff study is completed, and any applicants that successfully enroll in the program may continue to net meter for ten years.
The value of microgrids
Microgrids are not a new concept; many university, public school and government buildings have implemented resilient generation resources and remained online during natural disasters and grid outages. New York University’s campus microgrid enabled it to provide local electricity to the entire campus and serve as a shelter area during Hurricane Sandy. Other states on the eastern coast of the United States have explored microgrid implementation in at-risk areas for resilience of critical infrastructure. Locally, Eastern Michigan University’s cogeneration plant allowed the university to remain operational during widespread electricity outages due to high winds earlier this year. As Simon points out, “ensuring continuous electricity, most importantly to first responders, is among the most challenging aspects of dealing with these types of natural disasters.”
Landfill solar farms, an increasingly common means of driving emissions reduction progress, have also seen increased development across the country in a variety of regulatory environments. The city of Brooklyn, Ohio has planned a 4 MW installation to power county buildings in Cuyahoga County. Annapolis, Maryland is planning a 16.8 MW renewable energy park. In cooperation with a local utility, larger-scale solar farms on sites with large land footprints could be a key means of implementing microgrid solutions to power critical sites or shelter areas.
Installed microgrids also potentially represent progress toward the emissions reduction goals enacted by the city, which require 25 percent reduction from 2000 levels by 2025 and 90 percent by 2050. DTE’s goals are similarly aggressive, planning for 30 percent reduction by the early 2020s, 45 percent by 2030, 75 percent by 2040 and 80 percent by 2050.
Aside from emissions reductions, microgrids offer resiliency benefits for municipal operations. In the event of a larger grid outage, a site capable of islanding for a set period of time could remain online through stored battery power or solar output until grid power is restored. Assuming the cost of the installed system can be paid off within the lifetime of the panels, which is usually 20 to 25 years, there are also benefits from energy savings.
Barriers to implementation
Financing has been a major concern for residential installations, since the lack of tax incentives at the state level can diminish interest in privately-owned, small-scale solar systems. Even with the 30 percent federal tax rebate for privately-owned systems, solar panel installations can be expensive; costs are around $2.75/watt for smaller systems, diminishing to around $1.75/watt for utility-scale systems. Cost estimates vary greatly depending on the details of specific installations, especially according to panel type, geographical location, and weather conditions. “Financing is the most common excuse,” posits Simon. “However, the City could proactively work with DTE, or an independent third party, to finance and build the project, so there would be zero upfront costs to the City and those partners are financially incentivized because they receive tax credits on the project.”
Microgrid financing concerns could also be addressed via community solar programs but, as there are no laws enabling community solar in Michigan, this would require heavy collaboration with the utility and state regulatory commission in order to develop pilot programs in cities like Ann Arbor that are not municipal electric utilities and thus purchase their electricity from investor-owned utilities. For Ann Arbor, whose population is approximately 55 percent renters, community solar therefore represents a means of including sections of the population that either cannot afford to install solar panels on their house, do not own their own house, or are not adequately located for solar installation.
The tax status of solar panels in Michigan can also act as a barrier to widespread installations. Some uncertainty remains regarding whether or not solar panels should be assessed as personal property or real property, and solar systems do not qualify for exemption under Michigan state laws. With no tax exemption, energy savings realized through lowered installation costs are essentially nullified by a potential increase in property taxes as the payback period increases.
Ownership represents a less obvious potential barrier to implementation, as the power to run wires and distribute power to any entity other than the producer is restricted solely to utilities in Michigan. State law does allow for behind-the-meter generation of power for private use, but crossing the meter to either return energy to the grid or to distribute to another ownership entity would require a more complicated ownership structure, likely through a power purchase agreement (PPA).
Finally, regulatory changes could pose a problem for microgrids, depending on how evaluations of key programs proceed over the course of the next year. Michigan is conducting a state-level study on distributed generation, which encompasses the current net metering program, to assess an appropriate cost of service tariff. The net metering program in Michigan currently allows participating customers to carry over surplus generation credits at the full retail rate, which some opponents believe subsidizes distribution costs to customers that do not participate in the net metering program. If the new tariff is calculated to be less than the full retail rate, it could diminish energy savings and thus lower the rate of implementation of new renewable technologies.
At the federal level, an ongoing International Trade Commission case brought forth by Suniva and SolarWorld, seeking a $0.40/watt tariff on all imported solar cells and a minimum price of $0.78/watt on modules that use imported solar cells, could cause a lasting spike in price for solar panel installations if the ITC determines that harm was caused by current trade practices.
Opportunities for renewables in Ann Arbor
This study focused strictly on solar and battery installations at key municipal sites; however, future studies may explore small wind turbines, geothermal installations and expanded hydroelectric capabilities. Should the city implement solar using 56 of the 120 acres at the landfill, which represents a major opportunity for a large-scale solar farm, Ann Arbor’s electricity fuel mix mix could see a dramatic reversal from 60 percent coal to 80 percent solar; according to Simon, this is easy, low-hanging fruit. “The landfill is just open space with no other intended purpose,” he said. “Why not cover it with solar panels? There is no conceivable reason not to do it.”
The least restrictive scenario for Ann Arbor is one where state-level regulations are relaxed or pilot projects are negotiated with the utility. Reworking state policies is a long and slow process, and amendments to the existing framework are currently being explored; however, waiting for these changes to occur before taking action delays progression of new programs in the short term. Collaborating with the utility to develop pilot projects for programs like community solar at sites like the landfill and public schools is a realistic short-term goal, the research team felt. (this has been super fact-based but this paragraph reads as opinion- reword or incorporate as a quote.)
Longer-term goals may include exploring other generation sources and assessing specific sites for a mix that balances optimal output with resiliency and emissions goals. Future distributed generation and integrated resource programs in Michigan may allow for a resource mix that prioritizes a heterogeneous collection of resources feeding into the grid via utility interconnections, while also allowing core assets to island in the event of an emergency.
The microgrid team:
Adam Simon, Associate Professor, Earth and Environmental Sciences and Program in the Environment (PitE)
Susan Fancy, Manager, Programs and Development, University of Michigan Energy Institute
Nick Soberal, University of Michigan Energy Institute
Emma Forbes, student, College of Literature, Science, and the Arts – Department of Earth and Environmental Sciences
Will Arnuk, student, College of College of Literature, Science, and the Arts – Department of Earth and Environmental Sciences
Krysten Dorfman, student, College of College of Literature, Science, and the Arts – Department of Earth and Environmental Sciences
Ahana Shanbhogue, student, College of Engineering – Department of Civil and Environmental Engineering
Check out the microgrid team’s UROP poster here.