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Utility Distribution Microgrids

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This publication has been discontinued on October 23, 2014.

Abstract

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Electric utilities' approaches to integrating distributed energy resources using microgrids have varied widely in recent years. Some companies view utility distribution microgrids with a skeptical eye at best, and at worst as an existential threat to their traditional business models. Meanwhile, a handful of utility innovators are moving forward with microgrid projects despite significant institutional bias and regulatory obstacles, leveraging a wide range of smart grid technologies and utilizing new architectures to pursue creative solutions for the integration of renewable energy, the improvement of grid reliability, and the reduction of peak load. These early adopters are heralding a future in which microgrids will become a more prevalent part of the distribution utility landscape.

North America represents the largest market for all microgrid segments in terms of aggregate capacity, including utility distribution microgrids. Key drivers of microgrid adoption in the region include pockets of poor power quality and the structure of behind-the-meter markets for distributed energy resources. Pike Research also anticipates that the Asia Pacific region will be a world leader in terms of utility distribution microgrid revenues, due in large part to the rapid growth of renewable distributed energy generation and the interwoven relationships between municipal governments, state-run grids, and government-owned distribution utilities.

This Pike Research report analyzes the global market opportunity for utility distribution microgrids, including applications for investor-owned utilities, public power entities, and remote utility networks. The study includes a comprehensive assessment of the market drivers and challenges, technology issues, and economics of operating microgrids in grid-tied utility environments around the world. Key industry players are profiled in depth, and market forecasts for capacity and revenue are provided by utility type and region through 2018.

Key Questions Addressed:

  • Why are government utilities more advanced with UDMs than private utilities?
  • Which key hardware components are necessary for utility distribution microgrids?
  • Which developers and vendors are focused on this microgrid subsegment?
  • What are the key market drivers for utilities to move forward with microgrids?
  • How does one measure the benefits of UDMs for utility grid operations?

Who needs this report?

  • Utilities
  • Microgrid technology vendors
  • Smart grid hardware and software companies
  • Systems integrators and consultants
  • Government agencies
  • Investor community

Table of Contents

1. Executive Summary

  • 1.1 Utility Distribution Microgrids: Overview

2. Market Issues

  • 2.1 What Is a Microgrid?
  • 2.2 Why a Microgrid?
  • 2.3 Microgrid Market Overview
    • 2.3.1 Pike Research's Five Microgrid Market Segments
  • 2.4 An Inventory of Microgrid-enabling Technologies
    • 2.4.1 Distributed Generation
    • 2.4.2 Islanding and Bi-directional Inverters
    • 2.4.3 Smart Meters
    • 2.4.4 Distribution Automation
    • 2.4.5 Substation Automation
    • 2.4.6 Microgrid Control Systems
    • 2.4.7 Smart Transfer Switches
    • 2.4.8 Advanced Energy Storage
    • 2.4.9 Other Optimization and Integration Controls
  • 2.5 Virtual Power Plants versus Microgrids
    • 2.5.1 When Does (or Will) a VPP (or DA and SA) Become a UDM?
    • 2.5.2 The Business Case for UDM
    • 2.5.3 SWOTs for Customer and Utility Distribution Microgrids
  • 2.6 Current UDM Opportunities
    • 2.6.1 Utility-specific Drivers for Microgrids
      • 2.6.1.1 Remote Feeder Lines
      • 2.6.1.2 High Penetrations of Solar PV
      • 2.6.1.3 Premium Power for High-value C&I Customers
      • 2.6.1.4 Economic Deferrals of Substation Infrastructure
      • 2.6.1.5 Hedge Against Purchased Power Volatility
    • 2.6.2 IMBY Instead of NIMBY
    • 2.6.3 Smart Grid Renewables Integration
    • 2.6.4 Climate Change Mitigation
    • 2.6.5 Decline of Nuclear Power
    • 2.6.6 Convergence of IT and Utility Power Markets
    • 2.6.7 Trends Toward Real-Time, Time-of-Use Pricing
    • 2.6.8 Current Unstable Geopolitical Trends
    • 2.6.9 Increasing Frequency of Natural Disasters
  • 2.7 Implementation Issues for UDM
    • 2.7.1 Historic Hostility from Distribution Utilities
    • 2.7.2 Rate Base/Rate Case Funding Challenges for IOUs
    • 2.7.3 Which Stakeholders Benefit Most from Microgrids?
    • 2.7.4 Lack of Comprehensive Microgrid Policy Frameworks
    • 2.7.5 Plug-and-Play Offerings Extremely Limited
    • 2.7.6 UL 1741 Safety Standard
    • 2.7.7 IEEE DER, Islanding, and Smart Grid Standards
    • 2.7.8 Physical and Cyber Security Benefits and Concerns
    • 2.7.9 Evolving Global and National Security Standards

3. Technology Issues

  • 3.1 The Evolution of Electric Grid Infrastructure
  • 3.2 The New Microgrid Paradigm
    • 3.2.1 Basic UDM Principles
    • 3.2.2 Remote UDM Subsegments
    • 3.2.3 Pros and Cons
      • 3.2.3.1 UDM Pros
      • 3.2.3.2 UDM Cons
    • 3.2.4 Commercial Time Horizon for UDM
    • 3.2.5 Cost for UDM
  • 3.3 Microgrid Component Cost Breakdown
  • 3.4 Microgrid Control Systems
    • 3.4.1 Basic Principles
    • 3.4.2 Pros and Cons
      • 3.4.2.1 CERTS Pros
      • 3.4.2.2 CERTS Cons
    • 3.4.3 Commercialization Time Horizon
    • 3.4.4 Cost Ranges
  • 3.5 Smart Inverters
    • 3.5.1 Pros and Cons
    • 3.5.1.1 Pros of the Entire Family of Smart, Bi-directional Inverters
    • 3.5.1.2 Cons of the Entire Family of Smart, Bi-directional Inverters
    • 3.5.2 Commercial Time Horizon
  • 3.6 Advanced Energy Storage Technologies
    • 3.6.1 Pros and Cons
    • 3.6.2 Commercial Time Horizon
    • 3.6.3 Smart Switches
      • 3.6.3.1 Basic Principles
    • 3.6.4 Commercialization Time Horizon
  • 3.7 Virtual Power Plants
    • 3.7.1 DR-VPP Parameters
    • 3.7.2 Cost of DR-VPP
    • 3.7.3 The Pros and Cons of DR-VPPs
      • 3.7.3.1 Pros of VPPs
      • 3.7.3.2 Cons of VPPs
    • 3.7.4 Commercialization Time Horizon

4. Key Industry Players

  • 4.1 Overview of Key Industry Players
  • 4.2 Leading Private Utilities
    • 4.2.1 DONG Energy
    • 4.2.2 American Electric Power (AEP)
    • 4.2.3 San Diego Gas & Electric
    • 4.2.4 DTE Energy Company
  • 4.3 Government-owned Utilities
    • 4.3.1 Sacramento Municipal Utility District
    • 4.3.2 BC Hydro
  • 4.4 Large Grid Automation Vendors
    • 4.4.1 ABB
    • 4.4.2 Siemens AG
    • 4.4.3 Toshiba
  • 4.5 Systems Integrators
    • 4.5.1 Horizon Energy Group
    • 4.5.2 General Microgrids
  • 4.6 Smaller Software Innovators
    • 4.6.1 Power Analytics
    • 4.6.2 Viridity Energy
    • 4.6.3 Green Energy Corporation
  • 4.7 Key UDM Component Providers
    • 4.7.1 Petra Solar
    • 4.7.2 S&C Electric Company
    • 4.7.3 Xtreme Power

5. Market Forecasts

  • 5.1 The Global Microgrid Market Landscape
    • 5.1.1 Setting the Proper Context
    • 5.1.2 Will UDM Follow the Exponential Growth Model?
  • 5.2 Segmenting the UDM Market
    • 5.2.1 IOU Grid-tied UDM
    • 5.2.2 Public Power Grid-tied UDM
    • 5.2.3 Remote UDM
  • 5.3 Growth Scenarios
    • 5.3.1 Base Scenario
    • 5.3.2 Average Scenario
    • 5.3.3 Aggressive Scenario
  • 5.4 Analysis by Geography
    • 5.4.1 RPS, TOUs, and Utility Revenue Decoupling
    • 5.4.2 IOU UDM Segment
      • 5.4.2.1 IOU UDM Segment in North America
      • 5.4.2.2 IOU UDM Segment in Europe
      • 5.4.2.3 IOU UDM Segment in Asia Pacific
      • 5.4.2.4 IOU UDM Segment in Rest of World
      • 5.4.2.5 IOU UDM Case Study: NEDO's Sendai Project
    • 5.4.3 Public Power UDM Segment
      • 5.4.3.1 Public Power UDM in North America
      • 5.4.3.2 Public Power UDM in Europe
      • 5.4.3.3 Public Power UDM in Asia Pacific
      • 5.4.3.4 Public Power UDM in Rest of World
    • 5.4.4 Remote UDM Segment
      • 5.4.4.1 Remote UDM in North America
      • 5.4.4.2 Remote UDM in Europe
      • 5.4.4.3 Remote UDM in Asia Pacific
      • 5.4.4.4 Remote UDM in Rest of World
        • 5.4.4.4.1. Remote UDM Case Study: Bella Coola, British Columbia

6. Company Directory

7. Acronym and Abbreviation List

8. Table of Contents

9. Table of Charts and Figures

10. Scope of Study, Sources and Methodology, Notes

List of Charts and Figures

  • Total UDM Capacity by Region, Average Scenario, World Markets: 2012-2018
  • Grid-tied UDM Annual Benefits by Region, Average Scenario, World Markets: 2012-2018
  • Planned Microgrid Capacity by Market Segment, World Markets: 2Q 2012
  • Smart Grid Renewables Integration Revenue by Technology Grouping, World Markets: 2012 and 2018
  • Wind Integration Energy Storage Revenue by Technology, World Markets: 2012-2018
  • Solar Integration Storage Revenue by Technology, World Markets: 2012-2018
  • Worldwide Announced Storage Capacity for Electricity Markets: 4Q 2011
  • Total Microgrid Capacity by Segment, Average Scenario, World Markets: 2011-2017
  • Total UDM Capacity, All Scenarios, World Markets: 2012-2018
  • Microgrid Capacity by Region, World Markets: 2Q 2012
  • Investor-owned Utility UDM Vendor Revenue by Region, Average Scenario, World Markets: 2012-2018
  • Public Power UDM Vendor Revenue by Region, Average Scenario, World Markets: 2012-2018
  • Remote UDM Vendor Revenue by Region, Average Scenario, World Markets: 2012-2018
  • Investor-owned Utility UDM Capacity, All Scenarios, World Markets: 2012-2018
  • Public Power Grid-tied UDM Capacity, All Scenarios, World Markets: 2012-2018
  • Remote UDM Capacity, All Scenarios, World Markets: 2012-2018
  • Grid-tied UDM Annual Benefits, All Scenarios, World Markets: 2012-2018
  • Super Grids vs. Microgrids
  • The Smart Grid Today and Tomorrow
  • Palm Meadows Community Microgrid in India
  • VPP Conceptual Diagram
  • UC-San Diego Microgrid Nets > $11,400 in Benefits per Day
  • World Nuclear Power Generation Trends
  • Increased Frequency of Natural Disasters
  • List of Microgrid Stakeholders per Lawrence Berkeley National Laboratory
  • Overview of Microgrid Stakeholder Benefit Functions per Lawrence Berkeley National Laboratory
  • DER Only and Full Microgrid Scenario Stakeholder Benefit Tallies per LBNL
  • Current Electric Grid Topology and One Way Relationships
  • Today's Bi-directional and Increasingly Complex Power System
  • The History and Evolution of Distributed DC Power
  • T&D, Microgrid and Smart Grid Relationships
  • Microgrid Payback Periods Linked to Market Penetration Percentages
  • Cost Breakdown for Alaska Wind-Diesel Remote UDM
  • CERTS "Droop Frequency Control" Diagram
  • Centralized/Distributed Microgrid Controller for DOD Applications
  • "Smart" Inverter Transforms Customer Microgrid into Utility Friendly VPP
  • Denmark's Cell Controller Project
  • Architecture of Cell Controller UDM/VPP
  • Community Energy Storage Program at AEP
  • SMUD RES Portion of SolarSmart Homes Anatolia III Project
  • BC Hydro's Smart Grid Pyramid (with Microgrid)
  • Powercorp/ABB Powerstore Flywheel Technology
  • VPP Diagram from Siemens, Founder of VPP Supply Concept
  • General Microgrids: Summary of Distributed Renewable Energy Future
  • UC-San Diego Microgrid Topology
  • FREEDM Microgrid Topology
  • Fisher-Pry S Curve for Microgrids
  • RPS States in the United States with Solar or Distributed Generation Set Asides
  • States with IOU Residential Real-Time Pricing or TOU Rates
  • States in the United States with Utility Revenue Decoupling
  • Topology of Sendia Microgrid in Japan
  • Topology of Bella Coola Remote Microgrid
  • List of Tables
  • Planned Microgrid Capacity by Market Segment, World Markets: 2Q 2012
  • Smart Grid Renewables Integration Revenue by Technology Grouping, World Markets: 2012 and 2018
  • Wind Integration Energy Storage Revenue by Technology, World Markets: 2012-2018
  • Solar Integration Energy Storage Revenue by Technology, World Markets: 2012-2018
  • Worldwide Announced Storage Capacity for Electricity Markets: 4Q 11
  • SWOT Analysis for Customer-owned Microgrids
  • SWOT Analysis for Utility Distribution Microgrids
  • DONG Energy SWOT Analysis
  • AEP SWOT Analysis
  • SDG&E SWOT Analysis
  • DTE Energy SWOT Analysis
  • SMUD SWOT Analysis
  • BC Hydro SWOT Analysis
  • ABB SWOT Analysis
  • Siemens SWOT Analysis
  • Toshiba SWOT Analysis
  • Horizon Energy Group SWOT Analysis
  • General Microgrids SWOT Analysis
  • Power Analytics SWOT Analysis
  • Viridity Energy SWOT Analysis
  • Green Energy Corporation SWOT Analysis
  • Petra Solar SWOT Analysis
  • S&C Electric SWOT Analysis
  • Xtreme Power SWOT Analysis
  • Investor-owned Utility UDM Capacity by Region, Base Scenario, World Markets: 2012-2018
  • Investor-owned Utility UDM Capacity by Region, Average Scenario, World Markets: 2012-2018
  • Investor-owned Utility UDM Capacity by Region, Aggressive Scenario, World Markets: 2012-2018
  • Public Power Grid-tied UDM Capacity by Region, Base Scenario, World Markets: 2012-2018
  • Public Power Grid-tied UDM Capacity by Region, Average Scenario, World Markets: 2012-2018
  • Public Power Grid-tied UDM Capacity by Region, Aggressive Scenario, World Markets: 2012-2018
  • Remote UDM Capacity by Region, Base Scenario, World Markets: 2012-2018
  • Remote UDM Capacity by Region, Average Scenario, World Markets: 2012-2018
  • Remote UDM Capacity by Region, Aggressive Scenario, World Markets: 2012-2018
  • Investor-owned Utility UDM Vendor Revenue by Region, Base Scenario, World Markets: 2012-2018
  • Investor-owned Utility UDM Vendor Revenue by Region, Average Scenario, World Markets: 2012-2018
  • Investor-owned Utility UDM Vendor Revenue by Region, Aggressive Scenario, World Markets: 2012-2018
  • Public Power UDM Vendor Revenue by Region, Base Scenario, World Markets: 2012-2018
  • Public Power UDM Vendor Revenue by Region, Average Scenario, World Markets: 2012-2018
  • Public Power UDM Vendor Revenue by Region, Aggressive Scenario, World Markets: 2012-2018
  • Remote UDM Vendor Revenue by Region, Base Scenario, World Markets: 2012-2018
  • Remote UDM Vendor Revenue by Region, Average Scenario, World Markets: 2012-2018
  • Remote UDM Vendor Revenue by Region, Aggressive Scenario, World Markets: 2012-2018
  • Grid-tied UDM Annual Benefits by Region, Base Scenario, World Markets: 2012-2018
  • Grid-tied UDM Annual Benefits by Region, Average Scenario, World Markets: 2012-2018
  • Grid-tied UDM Annual Benefits by Region, Average Scenario, World Markets: 2012-2018
  • Grid-tied UDM Annual Benefits by Region, Aggressive Scenario, World Markets: 2012-2018
  • Total UDM Capacity by Region, Base Scenario, World Markets: 2012-2018
  • Total UDM Capacity by Region, Average Scenario, World Markets: 2012-2018
  • Total UDM Capacity by Region, Aggressive Scenario, World Markets: 2012-2018
  • Total Microgrid Capacity by Segment, Average Scenario, World Markets: 2011-2017
  • Microgrid Capacity by Region, World Markets: 2Q 2012
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