American microgrid developers are turning to standardization amid mounting demand for projects and an increasingly complex mix of assets.
- The top line: Standardization could cut deployment times and improve financing for microgrids, which is vital for a sector facing rapid growth in the coming decade.
- The current take: Dan Power, a research analyst with Guidehouse Insights, said it can be “years” between a customer expressing interest in a microgrid to its first operation: “A lot of times, those projects then lose financing, or they run into other issues, and they’re abandoned. We’re seeing standardization being used as a method to address that.”
By the third quarter of 2023, there were around 9.2 gigawatts of installed storage capacity in the United States, according to Guidehouse Insights’ Microgrid Tracker. Between now and 2032, Guidehouse Insights says capacity is expected to grow by 16.9% per year.
To get there, though, microgrid developers will need to attract new capital and integrate a growing range of technologies. And several believe that standardization could be vital in achieving these aims.
In light of expected growth, BoxPower, Scale Microgrid Solutions, and Schneider Electric have all taken steps to adopt standardized product designs, Power said. BoxPower has a container-based system that includes solar power, batteries, inverters, monitoring and control software, and the option of backup generators.
Scale’s Rapid Response Modular Microgrid, or R2M2, design has similar ingredients, integrated and tested before deployment. Scale says the R2M2 can be commissioned in less than a year, compared to an industry average of 18 to 36 months. Schneider Electric, meanwhile, has a system called EcoStruxure Microgrid Flex that comprises battery storage, a control unit, and software for power management, monitoring, and optimization.
The Flex configure-to-order offering also incorporates standardized design software and what Schneider calls “tested validated documented architectures” to control distributed energy resources. The company says the Flex approach reduces project time and engineering hours, improving the return on investment for projects.
Overcoming complexity
Jana Gerber, Schneider Electric’s North America microgrid president, said the company views standardization as key to overcoming project complexity and scaling up deployment: “In the microgrid industry, they always say: ‘If you’ve seen one microgrid… you’ve seen one microgrid,’” she joked.
Schneider Electric is installing “tens, maybe hundreds” of microgrids a year, Gerber said, but aspires to thousands. For this, deployment times must be shortened from months to weeks or even days.
“There’s a lot of opportunity to scale, mature, and drive speed,” she added.
Scale Microgrid has been working on standard designs for seven years, said vice president Duncan Campbell, who added that current procurement difficulties have accelerated that process. Scale’s approach to standardization involves pre-selecting components such as batteries and solar panels.
“It just means narrowing down the solution space to a fixed number of options,” Campbell said. “If you completely understand everything about those products, you’re just placing another order. Things are going to move faster. If you’re actually procuring in advance, then you have an opportunity to move a lot faster.”
Standardization also helps developers deal with the complexity of having to accommodate a growing range of assets and use cases, allowing engineering teams to spend their time on the novel parts of a project.
For instance, Gerber said that vehicle electrification is a particularly “huge trend” that has absorbed Schneider’s attention. In October 2022, Schneider announced a unique vehicle-to-building microgrid project in Oakland, California, in which fuel cell and battery electric buses provide backup power for the air conditioning system of a public library.
But incorporating electric vehicles into microgrids entails an extra layer of complexity because they may only be available for charging and discharging at certain times. Gerber said tools such as artificial intelligence could help address this added complexity.
“We’re definitely using AI, and that’s helping a lot with optimization,” she said. “From knowing when to discharge, when to recharge, [to] what may be coming from a weather event or otherwise, it will continue to drive into microgrid operations.”
New sources of demand
Even microgrid developers that have traditionally focused on specific technology niches are having to deal with changing requirements. Enchanted Rock, which specializes in natural gas-powered microgrids for backup power and grid support, is seeing demand for cleaner fuels.
“We have the only reciprocating engine that’s been certified to a California standard, but we’re also decarbonizing the fuel through renewable natural gas and hydrogen blending,” said chief commercial officer Allan Schurr.
Like Schneider Electric, Enchanted Rock is embracing AI, specifically for predictive maintenance and condition-based monitoring. Separately, the use of AI at large could drive a move towards DC-based microgrid infrastructure, according to Razvan Panati, vice president of strategic microgrids and EV charging infrastructure at Bloom Energy.
“The advent and rapid adoption of generative AI has triggered a huge demand for large data centers,” he said. “These data centers will eliminate all unnecessary conversion losses from the power source to the rack. Supplying and distributing DC power will reinvigorate the DC microgrid topic and, with that, a number of supporting products will be re-innovated: DC breakers, DC-DC converters, solid-state transformers, etcetera.”
Guidehouse Insights’ Power said DC was being considered as a way to simplify microgrid designs incorporating solar, storage, and EV charging. But Campbell, at Scale, said such projects were still far from being mainstream.
“It’s a really nice idea, but in practice, nobody’s doing it because switchboards, transformers, and all that stuff are hard to get,” he said. “It’s one of those it’s-a-matter-of-time kind of things.”
Attracting capital
And then there’s the question of money — microgrids have historically been both more complicated and more expensive to develop than many anticipated.
Having standard designs could help the sector tap into sources of funding beyond government grants and similar financing instruments that have supported many early projects, said Power.
“Utilities are seeing the benefits of microgrids, but they often struggle to rate base them because they’re serving a defined portion of their customers and regulators sometimes don’t like that,” he said.
In theory, microgrids could benefit as new sources of capital flow into cleantech. (Non-equity funding of clean energy technologies made a major jump in 2023, reaching 30% of the capital stack.)
However, Power said, private financiers can be hesitant to put their capital into microgrids because they “are very complicated and some of the revenue streams are not well understood to people from outside the industry. There is no agreed-upon value of resilience.”
