Microgrids: A Critical Component of U.S.

Energy Policy

May 20, 2010

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Galvin Electricity Initiative Background

Started by former Motorola Chairman Robert Galvin in response to the 2003 Northeast Blackout

The initiative’s goal is to develop, demonstrate and open source an improved design for the delivery of electric power, a design that: will not fail the consumer, or “Perfect Power” is based on smart microgrid, or consumer focus is a journey of continuous improvement

The Galvin Initiative is developing prototypes of smart microgrids

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Consumers Have the Right to:

Reliable power

Choose electricity service and participate in markets

Access electricity pricing and usage data

Hold their supplier to performance standards

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Investment Paid for byEliminating Waste

Waste TypeWasted $,

BillionsWasted,$/MWh

Fuel Cost ~ $140 ~ $40

Outages/Repair ~ $100 ~ $25

Wasted Capital ~ $40 ~ $10

Emissions Cost ~ $65 ~ $15

Water Cost ~ $5 ~ $1

Total Waste ~$350 ~ $90

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5

Microgrid Transformation

Area SubstationLocal Substation

Central Power

Transmission

Area Substation

Smart Switch

Renewable, waste heat, no carbon

Natural Gas

Smart Switch

Microgrid

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Microgrids Concept

Backup, CHP, Solar, UPS

Rapid PrototypingIIT Smart Distribution Prototype

Smart Switch

Smart Loop

Smart Meter

10 MW

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Naperville Microgrid

Outage Duration (minutes) per Customer, 1996 - Present

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Innovative Policies and Programs

Community choice aggregation

Clean energy long-term property assessed financing (PACE)

Energy districts

Allow local government to build, own and operate new smart microgrids

Allow local governments to invest in and direct utilities to make smart grid improvements

If all else fails—municipalize

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Investment and Impacts Estimates

MetricInvestment$ millions

Source Energy,mmbtu

Carbon,Tons,

Delta Cost, ~$/MWh

Grid Reliability Improvements 100 70% improvement 12Community Aggregation -29% -38%

Wind, 30MW 60 -13% -9% 2CCCT, 20 MW 60 -6% -20% 8Bio-energy, 5MW 30 -10% -9% 2Lower cost and revenue -15

Clean Energy Financing, PACE -26% -31%Solar PV, 7.5 MW 60 -2% -2% 9Efficiency/DR/Home Automation 50 -20% -16% -8Cogeneration , 15MW 30 -4% -9% 0Storage/DG, 10MW 20 0% -4% 0

Total 410 -55% -69% 10

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Federal Policy Reform Ideas

Federal reliability and performance metric standards

Make the consumer principles in EISA 2007 mandatory

Federal matching of low interest loans for local governments to direct smart microgrids

Encourage FERC to expand consumer choice and ISO markets that value consumer participation

Ensure new legislation like cap and trade values consumer participation