Report Outlines Potential, Challenges of Clean Energy Microgrids

by Peter Maloney
APPA News
June 28, 2023

Clean energy microgrids can provide an opportunity to both enhance resiliency and decrease greenhouse emissions, according to a report by the National Association of Regulatory Utility Commissioners and the National Association of State Energy Officials.

The report, Clean Energy Microgrids: Considerations for State Energy Offices and Public Utility Commissions to Increase Resilience, Reduce Emissions, and Improve Affordability, outlines the benefits and challenges of clean energy microgrids and offers economic and cost considerations for clean energy microgrid development.

The report examines the necessary technological components of a clean energy microgrid and highlights current and future clean technologies that are becoming more cost effective and competitive.

“The NASEO-NARUC Clean Energy Microgrids guide offers states actionable policy and regulatory considerations to facilitate construction of clean energy microgrids by local governments, state institutions, mission-critical facilities and businesses,” David Terry, president of NASEO, said in a statement.

The report also includes policy and regulatory considerations for state energy offices and public utility commissions to assist in the deployment of clean energy microgrids.

As of year-end 2022, 687 microgrid sites with a capacity of 4,357 megawatts were installed across the United States. Most of the installations, 257, are in Texas followed by California, with 91, and New York with 68, according to a Department of Energy database cited in the report. New York leads in installed microgrid capacity with 662.5 MW installed. Texas is second with 645.6 MW installed, and California is third with 442.5 MW, according to the database.

The most prevalent technology for powering a microgrid is a combined heat and power plant, which accounts for more than 50 percent of all microgrids. Non-CHP combustion plants represent about 30 percent of total microgrid installations. Solar, wind, and hydro generation comprise less than 10 percent of installed microgrids.

In 2020, diesel and natural gas each accounted for 40 percent of the primary fuel of microgrids, which is higher than the 60 percent of fossil fuels powering the electricity sector.

However, the report noted that analysts predict that by 2025 wind, solar, hydropower, and energy storage will represent 35 percent of annual installed microgrid capacity, an increase the authors attribute to an increase in federal and state policies encouraging clean energy development, private sector investment in projects that provide a resilience value, lower costs, and increased funding streams.

“Over the past decade, State Energy Offices have partnered with energy providers, local governments, and utilities to develop microgrid roadmaps and facilitate microgrid installations that enhance resilience and reduce emissions,” Terry said.

Although challenges such as costs and technological limitations remain, State Energy Offices and public utility commissions have several pathways to support the deployment of clean energy microgrids, such as tariffs, incentives, grants, and the expansion of renewable portfolio standards and clean energy standards, the report said.