By Aaron Barter, Program Manager, Buildings and Community Energy, Advanced Energy Centre at MaRS.
The rising cost of electricity has many people worried these days. For large companies, the sticker shock should prompt business leaders to ask the question, “What are the alternatives?”
The falling prices of renewable energy technologies have made electricity self-sufficiency more affordable than ever before. For corporate electricity users, this prompts an interesting dilemma: having to decide between relying on a legacy grid system or investing in an alternative microgrid system.
Despite years of climate change warnings, companies are just now tuning into the changing energy world. That’s why dilemmas like this should act as crucial decision-making moments: leaders can either adopt an innovation mindset or risk being left behind by the competition.
The reality is that while embracing corporate sustainability does come with a feel-good green message, it makes long-term economic sense above all else.
The Advanced Energy Centre at MaRS recently published the The Future of Microgrids series, which examined the commercial viability of a variety of microgrid use cases in Ontario. The study, conducted in partnership with Navigant, explores how commercial facilities can reduce their energy costs and monetize the grid benefits of distributed energy resources such as solar PV or batteries.
There are several streams of value that corporate energy consumers can monetize in Ontario, including the flexibility of moving energy consumption off peak, using energy storage and providing an operating reserve for the Independent Electricity System Operator.
Likewise, commercial or industrial customers with over $700,000 of interruption costs per year (such as manufacturing facilities, data centres or industrial processors) could demonstrate a positive business case without any subsidy or incentives.
In our study, we examined the energy needs of both a large manufacturing facility (a 6MW Peak Class A industrial customer) with a 5MW/10MWh lithium-ion battery and microgrid control system, and a large corporate or university campus with a 1.5MW solar photovoltaic installation and the same battery system.
In both cases, the facilities’ large batteries allow them to operate critical systems during a network outage, providing insurance against extreme weather events and cyber-attacks. The facilities also use their energy storage systems to reduce electricity bills by avoiding Global Adjustment charges, which are projected to exceed $560,000 per megawatt in 2016.
And as of September 2016, facilities as small as 1MW can now benefit from the province’s Industrial Conservation Initiative, as well as from reducing Global Adjustment charges.
As technology costs continue to fall, the economics become more compelling for commercial facilities and large campuses, with these customers expected to see a net benefit of over $300,000 per year in 2025, increasing to $500,000 per year by 2035.
Microgrids for commercial and institutional customers were just two of the four use cases we examined through this series. The Future of Microgrids study also forecasts the commercial viability of these systems for Ontario’s residential and utility customer segments. To find out more and to download The Future of Microgrids series, follow this link.
About the Author: Aaron Barter is the Program Manager, Buildings and Community Energy, Advanced Energy Centre at MaRS. He leads the Community Energy Program at the Advanced Energy Centre, which examines systemic barriers to deployment of innovative technologies within local energy systems, and convenes industry to accelerate the deployment of microgrid solutions in Canada. He has launched initiatives focused on renewable energy deployment in Canada’s remote communities, net-zero redevelopment projects in urban areas, and microgrid applications within Ontario’s distribution network. He also works with emerging technology companies within the Ontario Network of Entrepreneurs to launch new partnerships in Canada and globally with support from Capgemini, Siemens Canada, Hydro Ottawa, and Ontario Power Generation.