New York — Citing an increase in power outages, Silicon Valley manufacturing firm JSR Micro said Thursday it will install a microgrid system that can power its operations if the power grid fails, a solution that could proliferate in the coming years.
"The quality of our manufacturing, and therefore the reliability of our electricity supply, are fundamental to the success of our, and our customers', operations," Eric Johnson, president of JSR, said in a statement. "We're taking a major step in ensuring continuity of our electricity supply with the Bloom Energy microgrid," he said.
The Bloom Energy microgrid will supply 1.1 MW of power as part of a system designed to provide 99.99% availability and enable JSR Micro to continue operations during grid outages, according to the release. The microgrid is expected to be operational by the end of 2018.
Based in Sunnyvale, California, Bloom provides grid-independent power for critical loads in data centers and manufacturing facilities with the use of natural gas-powered fuel cell systems. California ranks highest among US states by number of power outages, according to Bloom's statement.
MICROGRID PROLIFERATION
As microgrid technology advances, with some systems incorporating energy storage components, private companies, universities and the military are increasingly looking to microgrids as a way to increase reliability.
"From what I see, we have yet to round the corner on deployment of microgrids, but that should happen in the next few years," Professor Greg Mowry, director of Minnesota's University of St Thomas Renewable Energy and Alternatives Laboratory, said in a phone call Friday.
"First, storage significantly helps microgrids by making them more stable and the ability to store energy pairs well with renewables," he said. "Second, new inverter standards from the Institute of Electrical and Electronics Engineers are really important for helping microgrids proliferate. By 2020, these standards will help microgrids interact with the main grid," Mowry said.
However, microgrids target a relatively small population compared to centralized power stations, the cost of which are often spread across thousands or millions of utility customer bills. So while microgrid technology is advancing, the cost model can be a challenge because the costs are spread among a smaller customer base, Mowry said.
The US Department of Energy's Office of Electricity has a portfolio of activities that focus on microgrid development and implementation. These initiatives include the Department of Defense Environmental Security Technology Certification Program that issues an annual solicitation for proposals from the federal government, academia and industry for technology demonstration projects. One such project is the Portsmouth Naval Shipyard Microgrid and Ancillary Services project is a microgrid with a battery energy storage system that can be integrated with onsite generation to bolster electric service reliability at the base, while providing ancillary services to ISO New England. Net energy cost reductions were observed due to revenue received from providing frequency regulation to the grid.
"The potential for broad implementation of this system across US government installations is promising," the ESTCP website concludes.
The Smart Grid Demonstration Program that emerged as part of the American Recovery and Reinvestment Act in the wake of the 2008 economic and financial crisis facilitated a $10 million investment across six projects with utilities and technology companies.
MARKET OUTLOOK
Bloom Energy launched an initial public offering with shares beginning to trade on the New York Stock Exchange on July 25. In a research note initiating coverage of the company on August 20, Bank of America Merrill Lynch highlighted risks associated with "exposure to shifts in technological preferences with declining renewables and battery storage cost curves driving competition in the distributed generation space."
Bloom's gas-fired fuel cell systems are being marketed principally towards commercial users in "relatively higher cost tariff markets," like California and the northeastern ISOs, the bank said. The technology has an 11-13cent/kWh levelized cost of electricity today, but anticipated cost reductions are expected to help the fuel cells "improve" against the 2017 US average commercial price of 10.7cents/KWh, according to the note.
The estimated value of the global microgrid market was $14.6 billion in 2017, Bloom Energy spokesman David McCulloch said in an email Friday. The market will reach $23.1 billion by 2022, growing at a compound annual growth rate of 9.7%, he said.
"Regarding regulation, although we generally are not regulated as a utility, federal, state and local government statutes and regulations concerning electricity do influence the market for our product," McCulloch said.
"These statutes and regulations typically relate to electricity pricing, net metering, incentives, taxation, competition with utilities, and the interconnection of customer-owned electricity generation," he said.
