In today’s rapidly evolving energy landscape, businesses face increasing pressure to enhance their energy efficiency, reduce costs, and achieve business operations reliability while contributing to sustainability efforts. Two innovative solutions that have gained prominence recently are energy storage systems (ESS) and microgrids. These technologies not only transform how energy is managed but also the role of energy in a business’s strategy. In this article, we delve into the intricacies of energy storage and microgrids, exploring their unique benefits to businesses and communities and their role in shaping the future of energy consumption.
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Before we explore their applications, let’s get aligned on the basics of what energy storage and microgrid systems entail.
As the name implies, energy storage systems store supplied energy to be released for use later. These systems are designed to bridge the gap between energy generation and consumption, enabling excess energy to be stored when demand is low and released when demand is high. Spurred by the IRA, battery deployment has grown 300% in the last two years in the US and is predicted to increase exponentially. The primary equipment in an ESS is the battery and the inverter, which are coupled either externally or within a single form factor to provide grid-level AC electricity. Check out our previous article on Energy Storage Terms and definitions for further background.
Microgrids are a buzzword these days, but not often fully understood. As we discussed in our Microgrid Explained post, the Department of Energy definition of a microgrid is:
The key components of a microgrid include:
Microgrids can be as small as a single building and as large as a whole community. Microgrids are distinguishable from solely solar-plus-storage systems in that the equipment must have the ability to isolate (i.e. islanding) from the grid (if grid-tied) and manage the power quality (voltage and frequency control), which is usually the grid’s responsibility.
Key components and energy flow of a microgrid.You may be wondering why all the hype around energy storage. How will this help my community or business? There are various use cases for energy storage, each with benefits that must be considered and prioritized for any system. It should be noted that since microgrids include energy storage, they also have these use cases, but microgrids go further.
Peak Demand Management: Also referred to as “Peak Shaving,” businesses are often subject to peak demand charges at high rates, which can be caused by equipment start-up, business energy usage timing, or any number of things. This shows up as short-duration, high spikes in your electricity usage. Energy storage can provide the source of electricity to offset these spikes to limit the demand the grid sees.
Load Shifting: Also referred to as “Time of Use” operation or “energy arbitrage,” the energy storage charges up when electricity is cheap (like during peak solar times) and discharges when rates are higher, often in the late afternoon/evening time frame. By shifting energy consumption to off-peak hours, businesses can capitalize on lower electricity prices, resulting in significant cost savings over time.
Power Quality: Whether you have integrated renewables or are near the end of the powerline, maintaining good power-quality is essential for business operations. Poor voltage and frequency regulation can lead to damaged or offline equipment. Variable renewables, such as solar and wind, are not only varying by the hour but by the minute, which can be mitigated with energy storage.
Regulatory Compliance and Sustainability: Energy storage supports businesses to meet regulatory requirements and sustainability goals by optimizing energy usage and reducing carbon emissions. Be aware that regulatory and sustainability programs and tax credits can impact the design and equipment selection to receive the full benefit.
Grid Services and Revenue Generation: In markets that allow it, energy storage systems can provide grid services such as frequency regulation, earning additional revenue for the facility owner. This is anticipated to become more commonplace as utilities seek ways to manage their own renewable energy sources and grid electrification.
Ask yourself, do I want to have power independent from the grid? If your answer is yes, then you want a microgrid. If your answer is “Why might I want that?”, then consider the following use cases for microgrids.
Energy Resilience: Microgrids offer the ability to operate independently from the main grid during outages or disruptions, ensuring continuous power supply for critical operations. What would happen to your operations if power went out for 5 minutes? 5 hours?
Safety Critical Backup Power: Microgrids are a necessary solution when electricity is required for safety-critical operations. These systems are often characterized by their fast response to loss of grid power and load-sharing capabilities.
Remote and Off-Grid Locations: In remote areas or locations with unreliable grids, microgrids provide a reliable, localized energy solution.
Energy Independence: Whether it be for sustainability goals or energy security reasons, microgrids can provide the reassurance that comes with energy independence.
The choice between an energy storage system or a microgrid depends on the specific goals of the end users and the characteristics of the application.
Design: The desired use case drives the design of the system, particularly as it impacts the sizing and available functionality. The ESS is usually limited to a single connection point within the electrical system. On the other hand, a microgrid must integrate with all aspects of generation, storage, and load. As such, early feasibility assessments and an understanding of project goals are essential for an effective design.
Equipment: The key equipment for an ESS includes the battery, battery inverter, and associated battery management system (BMS). In a microgrid, grid-isolation switches are needed along with grid-forming inverters (also referred to as bidirectional inverters). A microgrid controller is also essential and can be coupled or independent of the BMS. Both systems need the appropriate safety equipment, disconnect, relays, monitoring, and remaining balance of system components.
Capital Costs: Energy storage systems generally have a lower upfront cost compared to microgrids. Microgrids involve more significant capital investment due to the need for diverse energy sources, components, and distribution networks.
Long-Term Savings: Both energy storage and microgrids can lead to long-term cost savings. Energy storage systems reduce peak demand charges and energy costs over time. Microgrids provide energy resilience and backup power, minimizing losses during outages and potential downtime.
Energy storage systems and microgrids are transformative solutions, revolutionizing how energy is managed, consumed, and generated. While energy storage focuses on optimizing energy usage, reducing costs, and integrating renewables, microgrids prioritize energy resilience, backup power, and localized energy control. Each approach has its unique value proposition and impact on the system design, upfront cost, as well as long-term cost.
Contact Mayfield Renewables to learn how our team of expert consultants can support your energy storage and microgrid projects. Learn how Mayfield works with both manufacturers to align their products and messaging to these different use cases and works with developers to select the appropriate products with all engineering considerations in mind.
Modularity and standardization are often cited as ways to drive down microgrid prices. But what else should you explore to ensure you get the most cost-efficient, high-performance microgrid energy storage system? Ask your potential supplier these questions before you buy.
1. How easy and expensive is it to scale storage capacity to cover our potential future needs?
Make sure the solution you choose deals with the uncertainty of future demands in a sensible way. Ideally, it meets your current capacity expectations and can be scaled up easily and efficiently – potentially even more cheaply in the future.
As costs for energy storage are on a downward trend, according to BloombergNEF and other analysts, future purchases are likely to be less expensive.
“Some developers buy oversized energy storage systems just to be on the safe side. That often wastes money,” cautions Lars Kruse, Energy Storage Director at intelligent battery energy storage system producer XOLTA.
For example, he explains, the physical footprint of each 79 kWh XOLTA battery “building block” is just 73 cm x 85 cm – more like LEGO® bricks than the larger DUPLO®-sized products others sell. And upscaling the electrical size matches the compact physical size of the XOLTA battery rack itself.
The physical footprint of each 79 kWh XOLTA battery ‘building block’ is a convenient 73cmx85cm. There is no need to overinvest in storage capacity.
“It’s much more convenient,” he says. “You just select the size you need now, and when and if you need more capacity, it’s easy to scale up by small increments over time. You don’t have to over-invest.”
With competitive price and timely delivery, OMMO sincerely hope to be your supplier and partner.
2. How agile are you?
Standardization clearly helps keep costs down. However, small- to-medium-sized microgrid developers, in particular, can often benefit from the ability to adapt standard solutions to meet their specific needs. Transparency on the supplier’s part also makes the process go more smoothly.
“Since customers don’t always know exactly what they need or want, strict standardization is not necessarily in the developer’s or the customer’s best interests,” says XOLTA’s Bendt Iversen, Business Development Director. As he points out, XOLTA’s BAT-79 battery energy storage system can be used for microgrids as-is or can include developer-specific modifications.
“Our engineering service allows some adaptation of our system to meet a project’s specific requirements,” Iversen says. “Sometimes it’s the little change that makes the big difference to a project.”
Adds XOLTA Energy Storage Director Kruse: “We can grant access to battery data and control at a level where others do not appear to. There’s lots of transparency regarding what the product does from a software standpoint, too.”
What’s more, he explains, XOLTA’s extensive in-house expertise enables them to be more agile than most manufacturers. The battery rack with HVAC, LiBAL BMS, site controller and intelligent Cloud solution all are created onsite. “We don’t have to depend on others, which makes us able to serve customers quickly,” Kruse asserts.
Extensive inhouse expertise enables XOLTA to be more agile than most manufacturers. The battery rack with HVAC, LiBAL BMS and site controller are all created onsite.
3. How committed are you to renewable energy storage?
As microgrids transition from fossil fuel dependence to the inclusion of more and more renewable energy sources, it’s important to think intelligent energy storage of both into retrofits and new projects. Where do your potential energy storage partner’s loyalties lie? And how much experience do they have with renewable energy?
The chances of a good working relationship and successful project increase when all parties have the same core values.
Global research analysts Wood Mackenzie believe that microgrids will become increasingly reliant on renewable technologies. Reflecting on their U.S. microgrid research, released in July 2020, analyst Isaac Maze-Rothstein says: “Through our five-year forecast we are optimistic that solar, wind, hydropower and energy storage will grow to account for 35% of annually installed capacity by 2025.”
Wood Mackenzie’s forecast takes into account how the coronavirus will impact microgrids over the next five years.
While some energy management activities have been put on hold during the pandemic, energy management is “poised to prevail,” according to the Deloitte Resources 2020 Study. Among Deloitte’s findings: 44% of businesses in the U.S. have considered implementing a microgrid, up 9 points from 2019.
4. Where do the product’s components come from?
Regardless of the cost of the energy storage solution you’re considering, make sure you find out where the components come from and where the product itself is manufactured. Are you truly getting good value with what appears on the surface to be the cheapest solution?
Don’t settle for anything but top-tier components and assembly. Also, make sure that inverters are grid compliant and certified in markets you are targeting.
5. How easy is your storage solution to install and service?
At the risk of stating the obvious, even the cheapest product is too expensive if it is difficult to install, breaks down frequently or takes a long time to repair. Make sure the energy storage solution you’ve got your eye on has a good track record on all counts.
Ask for details regarding installation, service and repairs. And don’t hesitate to contact some of the supplier’s previous customers to hear about their experience with the product and people. The most useful reviews come from those who don’t have anything to lose by being honest.
Easy installation makes a big difference for the establishment of a microgrid
6. How will you treat my project and me?
If your potential supplier resembles David more than Goliath, make sure they have excellent credentials and secure financial backing. You want them not only to be great at their job now, but also to be around long-term.
If they’re one of the big players, listen to your gut when you look at their credentials. Your project deserves individual attention to detail, agility and engaged support from the supplier’s staff. Be certain they walk the talk.
7. Does your company write self-promotional articles like this with the hope of getting new partners?
Guilty as charged. That being said, we at XOLTA do believe in – and practice – everything we’ve written here. And we sincerely hope the information will help you as you do your research.
Just let us know if you have any more questions. We wish you the best of luck as you develop your microgrid!
Does this describe you?
You . . .
If so, you might want to get to know XOLTA.
About XOLTA
Scores of XOLTA intelligent battery energy storage systems are at work in locations around the world. Headquartered in Denmark, XOLTA offers solutions for microgrid projects ranging from 79 kWh up to roughly 2 MWh energy storage capacity. Currently, we’re working on microgrid projects in Afghanistan, Africa and Greece.
XOLTA is a division of LiTHIUM BALANCE, a pioneer and global leader in battery management systems. That’s why safety, performance and reliability are built into all XOLTA batteries. XOLTA’s owner, Sensata Technologies, is also one of the world’s leading suppliers of sensing, electrical protection, control and power management solutions.
If you want to know more about this and other topics directly from end users of energy storage technologies join us at one of these annual events: The Energy Storage World Forum (Grid Scale Applications), or The Residential Energy Storage Forum, or one of our Training Courses.
The company is the world’s best Microgrid Energy Storage supplier. We are your one-stop shop for all needs. Our staff are highly-specialized and will help you find the product you need.