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Dr. Julio Romero Agüero
Vice President
Strategy & Business Innovation
Houston, TX
713-457-7606
© 2016 Quanta Technology LLC
Business Models and Roadmaps for
Microgrids
Page 2© 2016 Quanta Technology LLC
Microgrid Overview
Definition
Microgrid is an integrated system that includes multiple DG units
(alternative and renewable sources) serving clusters of loads and
consumers in a coordinated (controlled) fashion
Potential Benefits
Reduce/prevent outages
Increase energy efficiency (end-user efficiency, and system efficiency)
Reduce/displace fuel consumption
Simplify/streamline renewable integration
Decrease electricity cost (e.g. peak shaving) and/or create new
revenues
Improve reliability and power quality through real-time
monitoring/controls
Optimally manage resources
Ensure energy security and resiliency
Page 3© 2016 Quanta Technology LLC
Source: Sandia National Labs Energy Surety Microgrid TM
http://energy.sandia.gov/?page_id=819
Microgrid Types
Page 4© 2016 Quanta Technology LLC
Microgrid Benefit/Cost Vs. Complexity
Complexity/
Technology
Readiness
Benefit/Cost
Premium
Power
Resilient
Community
Hybrid System
(DC + AC)
Rural Systems
Low
High
High
Critical
Infrastructure
Foundational
Applications
Advanced
Applications
Page 5© 2016 Quanta Technology LLC
Microgrid Operations Sequence
Grid connected
Isolation & islanding
Restoration & island formation
Monitoring & operation
Synchronization & reconnection to
main grid
Page 6© 2016 Quanta Technology LLC
Microgrid Planning
LOAD ANALYSIS
Analysis of the data to obtain load profiles and identify restrictions
RELIABILITY ANALYSIS
Calculation of reliability parameters for all customers, determination of
customer categories
SYSTEM DESIGN
Circuit Topology, Operating strategies, Possible cases (base and advanced) for
microgrid development
GENERATION MIX
Selection of generation: PV, natural gas , wind turbine, energy storage systems, etc.
BUSINESS CASE
Detailed development of a business model for potential projects
CONTROL & COMMUNICATIONS
Potential communication architecture and associated requirements
Page 7© 2016 Quanta Technology LLC
Microgrid Major Components
Distributed Energy Resources (DG & DES)
Loads/customers
Automation (IEDs, sensors, substation/feeder automation)
Metering (AMI, PMUs, PQ meters)
Control (centralized, distributed)
Protection (basic, advanced)
Communications (dedicated or meshed networks)
Page 8© 2016 Quanta Technology LLC
Integration Challenges for Utilities
• DER ownership
• Utility/customer relationship
• Return on investments (rate base), tariffs, etc.Regulatory
• Bidirectional power flows
• Fault current contribution, protection
• Volt-VAR support
• Islanded operation
Technical
• DER technologies are still costly
• Uncertain/unverified DER lifecycle
• Evolving business modelsBusiness
Page 9© 2016 Quanta Technology LLC
Business Challenges
Economic justification, cost-effectiveness analyses
Approval & certification processes for introducing new
technologies
Permitting (site & environmental)
Regulatory requirements
Lack of guidelines and standard practices
Ownership and governance matters
Integration with existing DMS/EMS
Knowledge transfer and operations personnel training
Page 10© 2016 Quanta Technology LLC
Comparing Solutions:
Cost (capital + O&M)
Revenue calculations
Hard & soft benefits
Various governing (regulatory) environments
Cumulative cash flows graph
Year
Cu
mu
lati
ve c
ash
flo
ws (
$)
-20,000,000
-15,000,000
-10,000,000
-5,000,000
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Financial viability
% 14.3%
% 4.2%
% 12.6%
% 1.4%
yr 13.1
yr 6.4
$ 2,814,029
$/yr 310,016
1.14
2.59
$/MWh 63.57
$/tCO2 (30)
Equity payback
After-tax IRR - equity
After-tax IRR - assets
Pre-tax IRR - equity
Pre-tax IRR - assets
GHG reduction cost
Net Present Value (NPV)
Annual life cycle savings
Benefit-Cost (B-C) ratio
Debt service coverage
Energy production cost
Simple payback
Define cases:
Baseline (do nothing)
Basic/advanced cases
Mix ownership
Power Purchase Agreements (PPA)
Business Case Development
Page 11© 2016 Quanta Technology LLC
Generation Mix
Technology Mix
System Topology
Control & Operation
Customer classes &
Power Quality
requirements
Design Scenarios – Use cases
Page 12© 2016 Quanta Technology LLC
Business Model
Cost
Development
Capital Costs
Operations & Maintenance
Revenue
Recurring revenue
One-Time
Incentives
Savings
Avoided costs
System efficiencies
Reliability
Business Model Inputs
Page 13© 2016 Quanta Technology LLC
Savings Categories (Potential)
• Emissions reduction
• Clean power plan compliance
• Avoided T&D upgrade
Avoided Costs
• T&D loss reduction
• Enhanced voltage regulation
System Efficiencies
• Reliability improvement
• Asset overload relief
• Premium powerReliability
Page 14© 2016 Quanta Technology LLC
Existing Markets Future Possibilities
• Day-ahead energy market (dispatch market)
• Capacity market• Real-time energy market• Demand response market
Energy Market
• Market-based regulation4 second response to PJM signal
• Reserve market: - Synchronized reserve:
Online resources that can respond within 10 minute
- Non-synchronized reserve: Offline resources that can respond within 10 minutes
Ancillary Service
Market*
• Distribution Resource Aggregation
• Premium power (non-existing)
• Synthetic frequency reserve (non-existing)
• Day-ahead scheduling reserve• Reactive power
(non-existing)• Black-start
* Ancillary Service Market is paid based on performance
Participation in Energy Market
Page 15© 2016 Quanta Technology LLC
Cost Categories
• Permits
• Land agreements
• Purchase agreements
• Financing
• Training & standards
One time development
costs
• Engineering & project management
• Civil work
• Generation equipment
• Feeder upgrades or reconfiguration
• Controllers
• Communications
• Balance of system
• Installations
• Interconnections
• Commissioning and testing
• Indirect, contingency, risk
One time Engineering,
Procurement and Construction (EPC) costs
• Operations
• Fuel
• Service & maintenance
Recurring operational
costs
Page 16© 2016 Quanta Technology LLC
Development Roadmap (Example)
