1. NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC. Microgrids: A Growing Trend in the Power Industry Dr. Brian Hirsch Senior Project Leader – Alaska National Renewable Energy Laboratory USAEE Conference - Anchorage, AK July 29, 2013

2. Microgrids – Alaska Context 2 Energy is EXPENSIVE: up to $10/gallon & $1/kWh; highly variable throughout state Very limited economies of scale within communities, BUT ~200 communities + remote industrial operations Remote, challenging logistics – limited transportation, communication, infrastructure, human and physical capital, etc. Heat is not optional, and consumes more primary energy than electricity Some relative success stories in terms of high penetration wind-diesel hybrids, e.g., Kokhanok, Kongiganak, Kwigillingok, Kodiak Icing in Nome

3. Village of Ugashik Hybrid Performance Monitoring Project Working with ACEP at UAF, AEA Monitoring performance of wind-diesel-battery hybrid system to determine relative contribution of various RE inputs and diesel savings for system optimization Results replicable for other projects in region and beyond Very windy site (class 5), but PV performed as well as wind on kWh/kW installed basis, and better on a $/kW installed basis with current pricing 51% 34% 14%

4. Ugashik Hybrid Power: Wind, Solar, Diesel, Battery 4

5. Microgrids in Broader Context What is a microgrid? o “group of interconnected loads and distributed energy resources that acts as a single controllable entity with respect to the grid. It can operate in both grid-connected and island-mode” [Office of Electricity, DOE Microgrid Workshop Report, 2011 San Diego, CA] o “Best hope for developing world”, according to UN 5 What is energy security? US Navy: o “having assured access to reliable and sustainable supplies of energy and the ability to protect and deliver sufficient energy to meet operational needs” o 2008 Defense Science Board Task Force on DoD Energy Strategy described vulnerability of the nation’s electric power grid o The number of large blackouts at a national level is growing in number and severity Miramar had an eight hour outage in September 2011 o Training missions were canceled and planes grounded o Most personnel (both military and civilian) were sent home o Marines needed to man electric gates, traffic lights and other facilities o Food spoilage in mess halls and commercial outlets Source: IEEE 1547.4

6. Background 6 MCAS Miramar Outside San Diego, CA Primarily flight training and operations Peak loads are summer afternoons o 14 MW peak, 7 MW avg, 5 MW min Track record of successful EE and RE projects Critical loads are Flight-Line and supporting facilities o 6 MW max, 3.5 MW avg, 2.5 MW min Electrical configuration allows for centralized control point Microgrid Design Criteria Operate for at least two weeks Power critical loads upon loss of utility grid Incorporate as much renewable energy as feasible Phased approach to include entire base in the microgrid Redundant fuel sources important to enhance reliability Demonstration project for the Marine Corps and DoD

7. Summary NREL completed NZEI assessment in 12/2010 MCAS Miramar energy projects to date: o Numerous energy efficiency projects o 1 MW of solar PV plus solar parking lot and street lights o Solar thermal pool heating o 3 MW landfill gas PPA o ESTCP energy storage project o Currently approximately 50% renewably powered Miramar received funding to perform microgrid assessment in 03/2011 o NREL worked with Miramar to complete a conceptual design plan report completed on 09/2012 o Awaiting ECIP funding request for microgrid implementation 7

8. NREL’s Approach to Microgrid Design 8 Differentiating Characteristics: – Integrates into 24/7 operations – Can optimize on economics or surety – Focuses on fuel diversity – Expands/contracts to provide energy for all load coverage spheres – Phased approach can allow for gradual addition of components over time  Load prioritization and migration with added generation Continuously Optimized Reliable Energy (CORE) Microgrids

9. CORE Microgrid Design Process 9 Step 1:Evaluation of Existing Reports NZEI Assessment Existing Energy Management System Existing Generation Existing Generation Energy Surety Plan Step 4:Installation and Monitoring Inform RFP/Cost Estimating Selection of Integrator Independent Verification & Validation Independent Verification & Validation Construction Step 2: Data Gathering Grid Infrastructure Generator Specifications Generator Specifications Load Profiles Grid Operations/Valuing Energy Security Grid Operations/Valuing Energy Security Step 3: Design Analysis Communication/ Cyber security Detailed Electrical Model Modeling &Studies: Power Flow Dynamic Stability Short-Circuit Modeling &Studies: Power Flow Dynamic Stability Short-Circuit Financial Analysis Controls CORE Microgrid Design Process is replicable o Currently being applied at the USAFA o Identifies potential solutions for acceptable levels of risk and economic value streams

10. Modeling Overview Modeling is needed because Microgrids present unique design challenges o Self regulation for voltage and frequency o Advanced controls and protection schemes o Fossil fuel and alternative energy generation resources o Need to analyze start up sequence What do you Model: o Electrical distribution system, generation equipment, loads, and control system response Use the model to simulate operating scenarios and predict performance o Microgrid start up, feeder loss, faults, different generation options Modeling conclusions can be used to inform o Generation type/sizes, supervisory controls, operating procedures 10

11. Modeling Summary and Recommendations A minimum of 4 MW of diesel is recommended o This is needed for adequate load pick-up As expected, an all-diesel solution would work The 4 MW diesel, combined with 2 MW gas may work o Transient voltage/frequency excursions would be larger, and would likely require subdivision of feeders and/or auxiliary assets for transient support It is unlikely that an all-gas solution could work without energy storage and/or load control due to large load steps The best solution for cost and performance may be a hybrid system, with PV, diesel, LFG, storage, and natural gas o Optimization needs to be done as part of formal design 11

12. Capital costs were estimated for a variety of scenarios o Selected design ~$25 M o Excludes costs associated with cyber security certification Revenue streams from peak shaving, demand response, and offsetting grid purchases o Offsetting grid has most value but has operations and air permitting challenges o SDG&E demand response program is established revenue stream and increasing need for the utility Operation and maintenance costs still need to be estimated o Will vary substantially based on selected O&M scenario Most scenarios don’t have a positive NPV o Still a better value than a system that can only be used for backup power (diesel) o Energy security value Financial Analysis 12

13. Lessons Learned 13 CORE microgrid design process identified a workable solution to inform an RFP with performance specifications and verification and validation options o An acceptable level of risk is needed to determine the appropriate costs for a given level of increased reliability o Continuous operation decisions related to revenue streams impact the design –Single fuel generators are cheaper and more functional option than dual fuel options Microgrid operations decisions are critical and heavily influence design o Operating and maintenance responsibility decisions are complex and may need to be determined as the project evolves Cyber security certification will be a challenge Demonstration microgrid projects are needed at DoD sites: o Further develop the technology, identify applications, and determine total costs o Commercially available technologies are out there

14. Microgrid Market Is Global Phenomenon 14 Microgrid Capacity by Region, World Markets: 2Q 2013 (Source: Navigant Research)

15. Five Primary Market Segments 15 Microgrid Capacity by Segment, World Markets: 2Q 2013 Source: Navigant Research

16. Microgrid Capacity Scenarios 16 Microgrid Capacity by Forecast Scenario, World Markets: 2013-2020 Source: Navigant Research

17. Microgrid Capacity: North America is Global Leader Now, and Projected 2020 17 Microgrid Capacity, Average Scenario, World Markets: 2013-2020 Source: Navigant Research

18. Microgrids, but NOT micro dollars 18 Microgrid Revenue by Forecast Scenario, World Markets: 2013-2020 Source: Navigant Research

19. Large Obstacles Remain 19 Policies: No integrated approach, in part because of diversity of applications, resources, settings – No “one size fits all” Costs: wholesale power is still cheap; energy storage and niche/small generation is still expensive Technology: Advanced controls, smart grid, system integration still evolving Value Propositions: All energy is not created equal (surety, reliability, power quality), but is often priced the same

20. Examples of campus microgrids BC-Hydro/British Columbia Institute of Technology (BCIT) microgrid: http://www.bcit.ca/microgrid/ http://www.bcit.ca/microgrid/ University California San Diego campus: http://ssi.ucsd.edu/ Illinois Institute of Technology: http://www.iit.edu/perfect_power/ http://www.iit.edu/perfect_power/

21. Thank You and Questions? 21 Brian.hirsch@nrel.gov or 907-299-0268