Benefits of microgrids, and why do businesses need them?

Economic benefits of microgrids

From sustainability to economics, microgrids offer benefits for many businesses.

A microgrid is a small electricity grid where electricity is produced, distributed and consumed. Microgrids can be independent from the main grid or connected to it. They can be large enough to serve an entire island, but small scale microgrids serving a single campus or industrial facility also exist.

Three factors have made microgrids an increasingly popular option within the power generation eco-system.

First, the trend of deregulation that energy markets have experienced in many countries has resulted in options and opportunities for electricity consumers. In the past, the owners of local generation resources may have faced steep administrative requirements. In many cases, interconnecting these resources to the main grid would not have been allowed at all. Or, the electricity tariff structure was such that there was no incentive for consumers to invest in such resources. Today’s regulatory environment is far more favorable to owning and operating non-utility assets. In the United States, for example, the Federal Energy Regulatory Commission now requires transmission grid operators to open their markets to the owners of energy storage resources located on microgrids.

The significant decrease in the price of solar panels has led to a solar boom.
Click the image to take a closer look at how the decrease in the price of solar panels has led to a solar boom

Second, wind turbines, solar panels and energy storage systems have become far more affordable than they were in the past. In the case of solar panels, their price has dropped off a cliff, decreasing by a factor of almost 10 in the past 15 years.

Finally, advances in intelligent grid management software, controls systems, power electronics and other electrical components have made it possible to build, operate and maintain a small-scale grid without a large staff, and with a degree of flexibility not possible on a large-scale grid.

As a result, microgrids are within reach of many companies and institutions who want to benefit economically from operating their own generation, or to be more sustainable by using renewable resources, or have a more reliable and resilient system than grid-only supply.

Sustainability oriented benefits of microgrids

Many organizations install a microgrid in order to enable the integration of solar and wind power to their energy mix.

In the era of looming climate change, sustainability and corporate social responsibility are driving factors. With each year that passes, more and more organizations seek to embrace renewables in greater quantities. Often this is not possible without a microgrid.

On their own, solar arrays and wind turbines help to cut down emissions from electrical generation. Their intermittency, however, limits their effectiveness. At times they may provide more power than needed. At other times, not enough or none at all. Integrating intermittent resources in a microgrid along with energy storage and a firm generation resources is often the easiest way to maximize the usefulness of solar and wind assets. The other way is to interconnect solar and wind assets to the main grid and receive a payment in return for the excess power. This simply shifts the problem of balancing intermittent resources onto the main grid operator. The abundance of solar systems in many parts of the world however has resulted in grid operators being reluctant to accept excess power. The alternative, building a microgrid, does not require the authorization of the main grid operator.

Economic benefits of microgrids

Microgrids grant their owner a great deal of flexibility in optimizing their energy costs.

At any given time, multiple resources may be available on a microgrid to meet the electric demand coming from the microgrid’s consumers. These resources may include solar and wind resources, diesel fired generators, natural gas fired generators, energy storage, an interconnection to the main power grid, and maybe even demand response resources or fuel cells. (Demand respond resources are electric loads that can be turned off on demand. If your utility pays you to turn off your AC when asked to do so, then you are part of a demand response resource). Using the cheapest resource at any time and actively anticipating future load and generation inevitably leads to significant savings. Microgrids can ensure their owner spends the least amount possible on electricity, while ensuring continuity of supply.

Additionally, smart microgrids can also reduce the amount of investment needed in generation assets as well as reduce the cost of maintaining them. For example, an island microgrid might require a set of six generators to be online or available at all times, although only five usually operate. The sixth generator is simply present in case of demand peaks. The presence of an energy storage system effectively connected to the same microgrid can eliminate the need for this sixth generator. The energy storage takes care of the demand peaks.

Resiliency benefits of microgrids

No main grid is immune from power outages or shortages. For critical facilities such as military bases and hospital campuses, operating a microgrid is an insurance against grid outages. This is also the case for industrial facilities which may not be critical, but stand to lose economically from a temporary interruption or loss of electric power.

In some cases, microgrids actually improve the resiliency of the local grid as well. One way microgrids can do this is by providing black-start service to the main grid in the event of a main grid collapse—basically, generators located on the microgrid provide electricity to help restart large nearby power plants. Microgrids also support the main grid in an indirect way. If extra load is catered for locally on a microgrid, the main grid is less likely to require upgrades to cope with an area’s overall increased load.

Cummins' involvement in microgrids

Cummins is a leading provider of diesel and natural gas power generators, digital solutions and control systems; and has partnered with businesses ranging from greenhouses to healthcare facilities in their efforts to build microgrids. Recently, Cummins’ investments in energy storage and advanced microgrid control technologies has boosted its capability to provide critical microgrid components, and deliver complete microgrids tailored for each business’ unique needs.

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Aytek Yuksel - Cummins Inc

Aytek Yuksel

Aytek Yuksel is the Content Marketing Leader for Cummins Inc., with a focus on Power Systems markets. Aytek joined the Company in 2008. Since then, he has worked in several marketing roles and now brings you the learnings from our key markets ranging from industrial to residential markets. Aytek lives in Minneapolis, Minnesota with his wife and two kids.

Cummins Custompaks are being used for water management as Thailand struggles with its water crisis

CustomPak on site

Water crisis

Sixty Cummins Inc. CustomPaks are in service in Thailand as part of a critical water management plan aimed at easing the country’s water crisis – a crisis that has caused enormous economic and social damage and stirred conflict among communities.

Over the past several decades, Thailand has continually faced water problems caused by severe drought. Water reserves in dams and reservoirs are insufficient while water resources are often contaminated with toxins caused by urban communities and the industrial and agricultural sectors.

Severe flooding is a threat, too, at a time when the realities of climate change are hanging over the country.

As a result, the allocation of precious water resources, which must be shared among various stakeholders including new and existing industry, large and small agriculture, and cities and villages has become a flashpoint.

Kittithanapat Engineering Co. (KTP), has been involved in the water management system since 1996, working closely with authorities such as the Royal Irrigation Department, Department of Water Resources, Bangkok Metropolitan Authority and others.

CustomPaks on site

600 hp CustomPaks

To help KTP meet its often urgent requirements, Cummins DKSH (Thailand) has recently supplied 60 Australian-built CustomPaks – 45 powered by Cummins’ X15 engine rated at 600 hp, and 15 powered by the QSL9 rated at 325 hp. These fully self-contained powerpacks are emissions certified to Tier 3.

The CustomPaks are coupled to hydraulically-driven, large-volume submersible water pumps sourced by KTP from US company Moving Water Industries (MWI); KTP is the exclusive distributor in Thailand for these MWI Hydroflo pumps.

Prior to Cummins’ involvement, KTP was using another diesel engine brand but service support wasn’t up to the standard required.

Long-serving KTP engineer Kittisak Thanasoot says Cummins DKSH’s reputation for technical and aftersales support along with the reliability of the Cummins product were a key reason behind KTP’s decision to specify the CustomPaks for the Royal Irrigation Department.

The ability of Cummins DKSH to respond to short delivery times was also important.

“Supplying large quantities of high horsepower diesel engines for emergency situations such as flash flooding can be a challenge for KTP,” says Kittisak Thanasoot.

“Responding to the needs of the government agencies to manage such problems in a timely manner and with least impact on communities, KTP has found the answer in our partnership with Cummins DKSH.”

Power, pride and passion

Parked semi truck

The switch back to Cummins power has been beneficial for iconic New Zealand company Uhlenberg Haulage. It's all about whole-of-life costs.

Uhlenberg Haulage is closing in on 60 years in business, having been founded in 1966 by Mike and Carol Uhlenberg.

Based in Eltham, Taranaki, in New Zealand’s North Island, the operation is today owned and operated by their sons Chris, Daryl and Tony Uhlenberg.

Describing the Uhlenbergs as “old school family truckies”, Daryl talks about the company’s time-honored journey with a definite tone of pride, especially the work of his parents in laying the foundations for what is today an iconic fleet in its own right.

Cummins Inc. made its debut in the Uhlenberg fleet in 1971 with an NH250 powering a second-hand Kenworth K923 used in logging. A second Kenworth, a new W924 with a Cummins NTC335, followed soon after hauling an LPG tanker.

The Uhlenberg operation today comprises 40 prime movers and a variety of trailing gear to cater for the myriad of a jobs the fleet is involved in.

A number of Peterbilts feature in the fleet although Kenworth is now the brand of choice with six new units to be delivered over the next 12 months to cater for business growth.

Cummins’ X15 Euro 5 engine rated at 550 or 600 hp is the preferred power specification, with 18 red engines currently in the fleet.

Uhlenberg family in front of truck

Whole-of-life support

“The switch to Cummins has been a very good experience for us. We have nothing but praise for the Cummins organization,” says Daryl.

“The whole-of-life picture is the key thing for us and we’ve got that nailed with the support we get from Cummins – parts availability, scheduled maintenance, life expectancy and in-frame rebuilds.

“So the red engines turn up, we run them to life, which is 900,000 to 1.2 million kilometers, and then Cummins does an in-frame overhaul in a timely manner. If there’s an issue, parts and support are close by.

“The support we get from Cummins Palmerston North is fantastic, second to none.”

Daryl recently looked under a Kenworth that was in the workshop for a service and was surprised to see no oil leaking from the one-million-kilometer X15. “I remember when I was a fitter we had to wear a raincoat when working under a truck,” he jokes.

Fuel agnostic

Acknowledging that the push to decarbonize is now “very real”, Daryl likes the idea of Cummins’ fuel agnostic concept where one base internal combustion engine, optimized to run on diesel, can also be customized to run on ultra-low and zero-carbon fuels like renewable natural gas and hydrogen.

“My father was a pioneer of linehaul trucking in New Zealand and he always embraced new technology. He was never scared of it,” he says.

“I tend to be a little more cautious but I can see where a 500 hp natural gas or hydrogen engine would work for us in short haul applications,” he admits. “We’re certainly willing to look closely at these alternative fuel technologies when suitable infrastructure is in place.”

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