Kickstart Your Federal Microgrid Project: Financing Opportunities and Best Practices
Fact sheet provides an overview and actionable next steps in the microgrid implementation process.
Mears, Richard [US Department of Energy (USDOE) Fe↗
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Kickstart Your Federal Microgrid Resiliency Project: Financing Opportunities and Best Practices
Recent high-impact events such as hurricanes and wildfires have resulted in the loss of utility grid power to federal sites, highlighting the need for energy system resilience. To sustain critical functions, site loads may need to operate during an electric grid outage or at least have power restored quickly after the event. A microgrid can provide reliable backup power to critical loads when electric utility power is interrupted, and may also provide value during normal operations.
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Financing Microgrids in the Federal Sector
Recent high-impact events such as hurricanes and wildfires highlight the need for energy system resilience. One potential impact of these events is the loss of utility grid power to federal sites, negatively affecting the ability to carry out their missions. Depending on the need to sustain critical functions, it may be important to continue operations during an outage of the electric grid, or at least have power restored quickly after the event. One approach to addressing this need is through a microgrid. Microgrids can provide a more reliable solution than the traditional approach of using a backup generator at individual buildings. A microgrid can enhance a site’s electrical power system during normal operations, as well as provide reliable backup power to critical loads when electric utility power is interrupted. Many times, certain components of a microgrid (and potentially the entire system) can be justified economically and paid for out of energy savings or avoided costs. In cases where savings can cover the project costs, one of several privately financed procurement mechanisms may be used to implement the project. However, it can be difficult to achieve enough savings and avoided costs to cover the entire microgrid system, so leveraging these avoided costs in combination with appropriated funds may be necessary to implement the full project. This paper explores procurement options and agreements that may be useful to federal agencies interested in implementing microgrids at their sites. Microgrid complexities, implementation considerations, and suggestions to get started are also discussed. This information will be most useful to agencies when they are exploring electric energy system resilience options and/or considering different procurement options to meet their needs.
32 ENERGY CONSERVATION, CONSUMPTION, AND UTILIZATI↗
Financing Microgrids in the Federal Sector
Recent high-impact events such as hurricanes and wildfires highlight the need for energy system resilience. One potential impact of these events is the loss of utility grid power to federal sites, negatively affecting the ability to carry out their missions. Depending on the need to sustain critical functions, it may be important to continue operations during an outage of the electric grid, or at least have power restored quickly after the event. One approach to addressing this need is through a microgrid. Microgrids can provide a more reliable solution than the traditional approach of using a backup generator at individual buildings. A microgrid can enhance a site’s electrical power system during normal operations, as well as provide reliable backup power to critical loads when electric utility power is interrupted. Many times, certain components of a microgrid (and potentially the entire system) can be justified economically and paid for out of energy savings or avoided costs. In cases where savings can cover the project costs, one of several privately financed procurement mechanisms may be used to implement the project. Procurement options available to all federal agencies include utility energy services contracts (UESC), energy savings performance contracts (ESPC), and utility services contracts (USC); other mechanisms such as a power purchase agreement (PPA), enhanced use lease (EUL), and utility privatization (UP) may also be useful to agencies that have the authority to use them. Implementing a microgrid in a comprehensive effort that also includes energy efficiency can provide an important savings component, while reducing power requirements for critical loads, thus reducing the cost of the microgrid and associated distributed energy resources (DER). However, it can be difficult to achieve enough savings and avoided costs to cover the entire microgrid system, so leveraging these avoided costs in combination with appropriated funds may be necessary to implement the full project. When a site is deciding if a microgrid is the best solution, activities early in the process include identifying critical loads and existing DERs, conversations with the local electric utility, and implementation options that work best for the agency and site. This paper explores procurement options and agreements that may be useful to federal agencies interested in implementing microgrids at their sites. Microgrid complexities, implementation considerations, and suggestions to get started are also discussed. This information will be most useful to agencies when they are exploring electric energy system resilience options and/or considering different procurement options to meet their needs.
24 POWER TRANSMISSION AND DISTRIBUTION↗
Overcoming Resilience Challenges on the Outer Banks of North Carolina
In 2021, the Town of Nags Head, located in the Outer Banks region of North Carolina, was among the first cohort of coastal and island communities to participate in the U.S. Department of Energy's Energy Transitions Initiative Partnership Project (ETIPP), which offers technical assistance and cash awards to competitively selected coastal, remote, and island communities seeking to transform their energy systems and increase their energy resilience. As a barrier island separated from mainland North Carolina, Nags Head experiences impacts from extreme weather events, including power outages, especially during hurricane season. To address challenges, the Nags Head ETIPP team sought to improve the town's disaster resilience by ensuring that critical facilities can remain powered during and after extreme events. With support from experts at Sandia National Laboratories, the National Renewable Energy Laboratory, and the Coastal Studies Institute, the community team identified the following goals for its participation in ETIPP: 1. Identify and prioritize critical facilities that, when powered during disruptions, support the town's resilience. 2. Analyze the potential for on-site solar photovoltaic (PV) and storage systems at 2-4 prioritized critical facilities owned and/or operated by the town. 3. Analyze the potential for interconnecting solar PV and storage systems at a cluster of public and privately owned facilities into a resilient microgrid. 4. Explore finance options and utility interconnection requirements and compensation mechanisms. 5. Summarize outcomes and next steps for town leadership.
25 ENERGY STORAGE↗
2022 Product Commercialization and Market Development Awardee: Bergey Windpower
In 2023, consumers will finance more than 80% of the residential solar energy systems they purchase, which they use as collateral (called "non-recourse loans"). Similar loans are not yet offered to fund distributed wind energy systems. To accelerate deployment of small wind systems, which power individual rural homes and farms, the United States will need to make consumer loans available at reasonable rates with modest downpayments and collateral requirements. A team led by Bergey Windpower Co. is creating new consumer financing options to reduce or eliminate the upfront cash needed to buy distributed wind energy systems. This new financing structure would decrease purchase costs for small wind turbines produced by Bergey Windpower and possibly other manufacturers. Product financing is instrumental in growing wind power market share, clean energy manufacturing, and installation jobs while reducing greenhouse gas emissions. Bergey Windpower's previous Competitiveness Improvement Project (CIP) awards have led to the development of affordable, high-performance wind turbines, microgrids, and components.
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User Objectives and Design Approaches for Microgrids: Options for Delivering Reliability and Resilience, Clean Energy, Energy Savings, and Other Priorities
In fall 2019, the National Association of Regulatory Utility Commissioners (NARUC) and the National Association of State Energy Officials (NASEO) initiated a joint Microgrids State Working Group (MSWG), funded by the U.S. Department of Energy (DOE) Office of Electricity (OE). The MSWG aimed to bring together NARUC and NASEO members to explore the capabilities, costs, and benefits of microgrids; discuss barriers to microgrid development; and develop strategies to plan, finance, and deploy microgrids to improve resilience. Based on member input, the MSWG developed two companion briefing papers to answer key questions about microgrids: (1) User Objectives and Design Approaches for Microgrids: Options for Delivering Reliability and Resilience, Clean Energy, Energy Savings, and Other Priorities and (2) Private Sector, State, and Federal Funding and Financing Options to Enable Resilient, Affordable, and Clean Microgrids. Read together, these resources provide readers with an understanding of both why and how customers—whether an investor-owned, cooperative, or municipal utility; federal, state, or local government entity; individual or group of residential, commercial, and/or industrial customers; or other organization—select, design, and pay for microgrid projects.
24 POWER TRANSMISSION AND DISTRIBUTION↗
Collaborating with Utilities to Meet Underserved Community Needs: A Guide to Equitable Commercial Solar and Solar + Storage Deployment
Communities of color and low-income populations dedicate a disproportionate amount of their income to pay for energy. They also experience more frequent and prolonged service disruptions, impacting community health and safety. When designed correctly, commercial solar + storage installations have the potential to ameliorate these issues. However, utility programs created to support such installations are frequently underutilized because communities often lack the time and resources needed to access them. Further, historically, few utilities have had the motivation and incentives or experience to account for this barrier. RMI provided process support to Solar Energy Innovation Network teams, and described their experiences in accessing these clean energy resources to support historically underserved communities in our latest report. The report also outlines the roles of key stakeholders (e.g., utilities, building owners, and community organizations) in supporting program delivery and recommended practices to collaborate to meet community needs. The report focuses on commercial solar and solar + storage resources, including solar + storage microgrids. These technologies can offer benefits to communities who do not own their own properties. When designed to act as a "resilience hub," they can also support communities in times of electricity disruption. The report includes a step-by-step guide to collaborating with utilities to implement programs for historically underserved customers. Utilities can support these projects with financing assistance, modernized rate designs, and, in the deployment phase, technical assistance for system design and interconnection.
14 SOLAR ENERGY↗
Clean Energy Microgrids: Considerations for State Energy Offices and Public Utility Commissions to Increase Resilience, Reduce Emissions, and Improve Affordability
In fall 2019, the National Association of Regulatory Utility Commissioners (NARUC) and the National Association of State Energy Officials (NASEO) initiated a joint Microgrids State Working Group (MSWG), funded by the U.S. Department of Energy (DOE) Office of Electricity (OE). The MSWG aims to bring together NARUC and NASEO members to explore the capabilities, costs, and benefits of microgrids; discuss barriers to microgrid development; and develop strategies to plan, finance, and deploy microgrids to improve resilience. This report, Clean Energy Microgrids: Considerations for State Energy Offices and Public Utility Commissions to Increase Resilience, Reduce Emissions, and Improve Affordability, focuses specifically on how clean energy microgrids can achieve both resilience and clean energy benefits. The paper provides an overview of the challenges faced by clean energy microgrids, outlines benefits that clean energy microgrids can provide, and details economic and cost considerations for the development of clean energy microgrid projects. Outlined in the paper are the necessary technological components of a clean energy microgrid, including generation, storage, energy efficiency measures, and smart controls. Current technologies are highlighted, along with potential configurations of clean technologies that are approaching cost competitiveness with commercially available options. The paper concludes with both policy and regulatory considerations for State Energy Offices and Public Utility Commissions to enhance the development and deployment of clean energy microgrids. Although it touches on the clean energy microgrids’ role in integrating distributed energy resources (DERs) into the larger grid, this is not the focus of this paper.
24 POWER TRANSMISSION AND DISTRIBUTION↗
Developing a Robust Market for CHP: A Plan for Fostering Economic Development, Business Competitiveness and Resiliency in the Mid-Atlantic Region
The Department of Energy’s Mid Atlantic Combined Heat and Power Technical Assistance Partnership (MA CHP TAP) was established to develop public-private partnerships to advance the technology, policies, and programmatic support for combined heat and power (CHP), including its application in microgrids, heat to power and district energy. The MA CHP TAP’s work includes education and outreach as well as technical assistance to a variety of stakeholders including end-users (commercial, industrial, institutional and more), state decision makers, electric and gas utilities, trade associations and non-profit organizations. This assistance includes evaluating the economic, energy, reliability and environmental value of proposed systems. The MA CHP TAP represents the multi-state Mid- Atlantic region and is the CHP expert in the region who provides fact-based, un-biased information on CHP, including technologies, project development, project financing, local electric and natural gas utility interfaces, and related state best practice policies.
20 FOSSIL-FUELED POWER PLANTS↗