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There Is A Smart, Sustainable Way To Solve The Energy Crisis -- So Why Is It Essentially Illegal?

On a recent Thursday in April, NRG’s Station A group, a product development team working toward renewable energy solutions in San Francisco, turned on its prototype microgrid for the very first time. Housed in the decommissioned Potrero Generating Station -- the first fossil fuel plant built in the city and the last to be shuttered -- Station A’s existence is “poetic,” says Robyn Beavers, NRG Energy Senior Vice President of Innovation.

Poetry might not immediately come to mind when describing an energy system. But the search for “an elegant solution to a complicated problem,” as Beavers puts it, points toward the microgrid, and taps into a very basic, natural beauty.

This “complicated problem” she speaks of, otherwise known as the energy crisis, does not refer to one specific issue or industry. Instead, Beavers is pointing out an inevitable truth: the manner in which we consume energy is simply not sustainable. According to the Global Economic Symposium, fossil fuels (an umbrella term for power-producing coal, oil and gas) supply 80 percent of our energy needs.

However, these fuels are finite resources. Not only will we run out when the time comes, but the environmental impact of burning them, and the socio-political insecurity that comes with extracting coal, oil and gas from various places around the world, means that we are quickly approaching a time when we need to figure out alternative long-term solutions.

Switching to renewables is one of the many paths scientists are exploring. However, this does not solve the question of distribution. And as technological innovation continues, and we learn more about the “hows” of harnessing energy, microgrids could be the key to protecting and conserving our resources.

But one could also argue that the development of the microgrid runs contrary to the human desire for connectivity. After all, a microgrid -- the blanket term used to define any unique, individualized energy operation that doesn’t rely on the larger public system -- is often disconnected from the rest of the energy network. Although it is capable of contributing excess renewable energy to a broader grid, as well as drawing from it when resources are low, the purpose of the microgrid is to contain and distribute electric power on a small, local scale. And yet microgrids could be what connect us when we need it most. They can deliver energy to larger systems in the aftermath of disasters and provide small, water-bound countries with affordable, renewable power options. However, logistical, bureaucratic and economic fears are creating significant obstacles for microgrid development.

In a recent blog for The Huffington Post, BuildingIQ’s CTO, Peter Dickinson, explains that operating a microgrid is comparable to using a building as a container for the renewable, unused energy floating around our world. “The building itself can be treated as a storage device,” he writes. “When efficiently utilized, a building's infrastructure -- all bricks, concrete, steel and wood -- can serve as a resource. A building's mass can trap cooling and heating, keeping a building comfortable during interruptions to renewable output.”

Dickinson’s analogy only refers to one type of microgrid out of several -- and only one of the ways it can completely change our energy future. According to Beavers, microgrids offer an entire subset of energy production. “‘Microgrid’ is an umbrella term, not a specific term,” she says. “It’s about enabling distributed energy systems in a more intelligent and balanced way.”

Beavers says that microgrids can fall into three different categories: An “island” of energy, where the system is not connected to the grid at all; a primary source of energy, where the larger grid is a backup system; or a secondary source of energy, where the microgrid only kicks in once the larger grid has failed.

Microgrids as fail-safe systems have been around for a while; hospitals, universities and large corporations have been implementing their own energy systems for years, ensuring continuous power when the larger grid fails. During the aftermath of major natural disasters, such as Hurricane Sandy, microgrids of this sort show their importance; not only are functioning hospitals and universities vital to communities, but by employing a backup microgrid, they can often give back any excess energy during these times of emergency, as well.

However, as more communities around the U.S. and companies like Google and IBM investigate microgrids as a solution for their energy needs, a mix of drawbacks and obstacles are beginning to surface. Public utilities in a number of states have voiced concerns over private microgrid creation.

According to Michael Burr, founder of the Microgrid Institute, many of these concerns revolve around operational and engineering capabilities and safety issues. “The operational aspect of microgrids is something the utilities are not familiar with,” Burr says. “Engineers’ whole job is making sure the grid is safe and reliable. Anything that tries to use the grid in ways it wasn’t built to do give them cause for concern.” You can think of this compatibility issue in terms of computers: trying to install iOS 10 on a first-generation Mac could cause serious damage to the hardware.

While safety considerations rightly urge caution, some utility companies may have other motives for not hopping on the microgrid bandwagon: they see personal grid development as an economic threat. Beavers explains that in some places there has been significant legal ramifications when individuals try to create microgrids in public utility territory, rendering them essentially illegal.

“This pushback can be justified by franchise laws that were established for very different reasons, historically,” she explains. “If you cross the street where public utilities have their infrastructure, they can charge you a lot of money or prevent you from doing that … there has been a lot of policy prevention around trying to slow the growth of these distributed energy markets.”

Burr acknowledges this consternation between large-scale public utilities and private, local considerations as a legitimate threat toward the sustainability of the current model. “The whole trend represents a challenge to the existing legacy utility business model,” he explains. “This opens the door to possibilities in the future where customers choose something other than the standard utility offering. The more that happens, the more customers leave the public utility.” He cites Hawaii, where electricity costs are high and solar power is abundant, as a market where microgrids are a promising alternative -- and thus a legitimate threat -- to the larger public offering.

However, Burr explains that his example represents an extreme environment, and that “we are a long way from anything like that becoming a problem for a vast majority of utility.”

In fact, he claims that the major issue surrounding microgrid development is less about public versus private development and more a question of ownership. “One of the biggest issues involves ownership and financing models, especially in terms of a community microgrid,” Burr says. Dealing with rates, tariffs and pricing structures can be nearly paralyzing for the energy community to deal with.

Beavers echoes this sentiment of uncertainty. “This world is so new, and still fuzzy for a lot of people,” she explained. “There are so many reasons that people can say ‘this doesn’t work.’”

But thanks to people like Beavers, Burr and other microgrid advocates, the roadblocks are slowly clearing and this type of smartgrid is becoming a legal reality. In tandem with the U.S. Department of Energy, the Microgrid Institute is conducting research on microgrid creation for the community of Olney, Maryland. Burr says that the way they are dealing with questions of ownership is actually by using infrastructure created by Pepco, the public utility provider in Maryland.

According to Burr, microgrids are simply a microcosm of the overall utility grid. “[They] bring together other technology and resources to keep the local grid [in] balance,” he explains, adding that the benefits of microgrids are not an inherent threat to public utility, but can actually be an avenue for these companies to investigate new technologies that can work on a larger scale. Not only do these custom grid solutions utilize renewable energy sources, but they are custom-made for the communities they serve.

While inertia and fear of the unknown have stagnated the development of microgrids until recently, the direction of innovation is clear. Now, many experts including Burr see an exciting future ahead: “It’s more about the technology than is it about the regulatory environment,” he sums up. “When the technology is finally affordable enough to serve a very broad range of customer needs -- that is the microgrid nirvana.”

NRG Energy is committed to finding the most economically and ethically responsible options for sustainable energy. To learn more, visit Generation Change.