There is a lot of excitement over decentralizing electric power as renewable energy becomes more accessible. Throughout our history, the US has had one central utility with a monopoly on electricity, but that is changing, quickly. What’s more is electricity prices are always increasing, so renewable energy technology is now achieving “grid parity” in certain places.
Microgrids have emerged as a popular solution as people have taken solar and other clean energy production into their own hands. Microgrids allow communities, institutions, or individuals to power smaller communities and decentralize power from utility providers. According to Navigant Research, the microgrid market will reach 0 billion by 2020, up from .3 billion in 2013.
“Microgrids are democratizing power — cities today are realizing that they need to provide the power to the people, who want to choose their electricity supply, and choose their provider. You never had this option before,” said Arjun Gupta, a system design engineer at Urban Green Energy, which provides renewable energy solutions for commercial clients around the world and works on projects in the micro grid space
However, as more and more communities and companies (including Google and IBM) try to embrace this elegant solution for their energy needs (as Germany and the UK have already done) public utilities in a number of states have voiced concerns over private microgrid creation.
Utility companies see personal grid development as an economic threat. In some places there have been significant legal ramifications when individuals try to create microgrids in public utility territory, rendering them essentially illegal.
“The whole trend represents a challenge to the existing legacy utility business model,” Michael Burr, founder of the Microgrid Institute 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.
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.