Microgrid Projects Attract Innovative Financing Models

Developers and consumers are showing increasing interest in microgrids, those small networks of electricity users that are usually connected to the larger grid, but that can typically fully separate from that larger grid during emergencies. That means they can be more resilient. They can also improve the larger grid’s overall efficiency and reduce energy costs.

And because microgrids are often powered by renewable energy, they are more sustainable and can help reduce overall greenhouse gas emissions. These factors especially are drawing even more attention to microgrids from users and investors looking for sustainability. In fact, this growing sector — like many other sustainable technologies — is also attracting an increasing amount of financing, often through new and creative ways.

CleanTechIQ has been tracking many of these new projects and innovative financing models that are driving the development of microgrids forward.

Navigant Research counted 1,681 microgrid projects worldwide as of the end of 2016. At mid-year 2017, that figure was up to 1,842. That’s nearly 10% growth over just six months, especially reflective of large capacity increases in the commercial and industrial segment, which added more than 2 GW of microgrid capacity during the second quarter alone.

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All indications are that these  figure will continue to grow, with C&I consumers expected to be the fastest growing segment. That’s because companies are seeking stable power solutions beyond what the grid can provide — and the resiliency of a microgridis often the solution they are seeking.

Here’s a run-down of some of the most interesting microgrid projects, developers, financing models and fundraising recipients in recent months.

The Empire State Is a Microgrid Leader

Through its Reforming the Energy Vision (REV) initiative, New York wants to let distributed energy play an integral role in the state’s energy markets.  To that end, energy storage and microgrid projects are a key part of the initiative. Indeed, the state government says microgrids will support its goal to reduce greenhouse gas emissions 40% by 2030.

In March, the New  York State Energy Research and Development Authority announced $11 million in funding for 11 microgrid projects through its New York Prize Community Microgrid competition. The program is part of REV and is providing up to $40 million in state funding to support feasibility studies for up to 30 community microgrid projects across the state. New York’s Green Bank will provide $50 million in financing assistance to build out the projects.

Utilities Drive New Microgrid Projects:

The New York Power Authority will partner on three of the microgrid projects, including a co-generation plant and microgrid that will supply 90% percent of the power for the 98-acre Empire State Plaza in Albany. The project is expected to save more than $2.7 million in energy costs and prevent more than 25,600 tons of greenhouse gas emissions each year.

Another notable project is the Buffalo Niagara Medical Campus (BNMC) microgrid, which received $950,000 in NYSERDA funding. A total of $1.8 million has been invested to date in energy-related projects through BNMC, primarily centered on the development of a potential microgrid and two REV demonstration projects with National Grid.

In one of them, National Grid is working with Brooklyn-based startup Opus One Solutions to field-test a distributed system platform (DSP) to test how microgrids and distributed energy can integrate with grid operations. The $4.8 million, two-year effort will start with several BNMC buildings, and linking them with two to six distribution feeders serving the campus.

Opus One, which develops software that integrates distributed energy resources to better manage the grid, received venture capital funding last October from Energy Impact Partners and is gaining traction in other microgrid projects.

In September, it announced that it will lead a $16.4 million multi-utility project to link three widely dispersed microgrids in Toronto, Nova Scotia and upstate Maine into a “transactive energy” framework that will merge distributed energy from both sides of the meter using a technology platform for real-time monitoring.

Brooklyn’s Microgrid Projects

Like Opus One, LO3 Energy is a Brooklyn-based start-up and is working with Siemens Digital Grid and startup financer next47 to test a microgrid in Brooklyn. Under the test program, neighbors with and without solar photovoltaic systems are buying and selling solar power from each other on a so-called blockchain platform that automatically documents each transaction.

The program is going international, with the announcement this month of a project in Australia with Yates Electrical Services that will be modeled after the Brooklyn project, using LO3’s peer-to-peer trading platform.

Demand Energy

In April, Demand Energy started construction on a microgrid that integrates solar PV and battery storage under utility Consolidated Edison’s new demand management incentive program. The project is the first lithium-ion battery approved for behind-the-meter use in a multi-family residential building in New York City.

Demand Energy, which Enel Green Power North America acquired in January, secured a $1 million 10-year project loan for the project from the New York City Energy Efficiency Corporation.

Amtrak, Siemens to Build Profitable Microgrid

Amtrak intends to build a $31 million community microgrid for its operations at Penn Station in Manhattan and Sunnyside Yard in neighboring Queens. Amtrak’s partners in the project — which received NYSERDA funding — include Siemens and Viridity Energy, which develops software to control and aggregate behind-the-meter batteries to create virtual power plants. (Viridity was acquired by Ormat Technology in January.)

The microgrid will incorporate five distributed energy resources, including a combined heat and power unit, natural gas reciprocating generators, a solar PV array and a zinc air battery storage unit. It’s expected to generate $10 million in annual revenue, mostly by selling electricity to Amtrak and Consolidated Edison, offset by an estimated $7.2 million in annual costs.

Anbaric Gets Major Institutional Funding for Microgrid Projects  

Anbaric, a developer of clean energy transmission and microgrid projects, said in March that it’s pairing with the Ontario Teachers’ Pension Plan to create a new development company, Anbaric Development Partners. The new company will develop clean energy infrastructure projects in North America.

The pension, with $130 billion in assets, will own 40% of the new firm, which plans to build $2 billion worth of projects, including transmission lines and microgrids.

In 2015, Anbaric started working with Exelon Corp. to develop municipal and commercial microgrid projects in New York, ranging from 10 to 200 megawatts. Exelon, meanwhile, is also developing a microgrid controller technology that allows microgrids to “talk” to each other, an early step toward the futuristic “grid of microgrids” concept being developed by Chicago utility Commonwealth Edison.

New Business Models for Corporate Projects

Panasonic’s Denver Smart-City Microgrid

Panasonic and Xcel Energy are teaming up with real estate developer L.C. Fulenwider at a 400-acre smart city development near Denver International Airport. One of the first projects at Peña Station Next will be a microgrid energy storage solution for the airport, to be owned by Xcel Energy and serviced by Panasonic.

The project is intended to prove the efficacy of high-capacity batteries in a microgrid. It’ll be powered by a solar microgrid in conjunction with 2 MWh lithium ion storage batteries by Younicos.

Panasonic is the primary equity shareholder; the engineering, procurement, and construction contractor; the solar module supplier; and the operator for the microgrid’s solar installations.

Schneider Electric’s No Money Down Model 

In April, Duke Energy Renewables announced its first microgrid project is operating on the Schneider Electric Boston One Campus, the company’s North American headquarters in Andover, Mass.

The microgrid was built by Schneider Electric and REC Solar, a subsidiary of Duke Energy Renewables. The microgrid was funded through the innovative “Microgrid as a Service” (MaaS) business model, which adds resiliency and sustainability with no upfront costs. Duke Energy is the project’s investor and owner.

The microgrid is expected to generate more than 520,000 kilowatt-hours of electricity each year. It includes a solar array as well as a natural gas generator.

Schneider Electric is also working with Engie Lab and Nanyang Technological University (NTU) to develop a renewable microgrid demonstrator in Singapore.

Bridgeport Microgrid Gets Bank Financing

In December, the city of Bridgeport, Conn. announced new natural gas microgrid generators to supply cleaner energy to several municipal buildings starting this summer.

The project obtained $3.5 million of construction financing from First Niagara Bank and term debt financing from the Connecticut Green Bank. It was also awarded a $3 million grant from the state Department of Energy & Environmental Protection, and also received $2 million in funding through the State Bond Commission.

Innovative Developers Raise Funding for New Projects

Enbala Power Networks

In February, Toronto-based Enbala Power Networks, which specializes in energy resource management, raised $12 Million in Series B financing. The investment round was led by ABB Technology Ventures; other investors were National Grid, GE Ventures, Chrysalix Venture Capital and Obvious Ventures.

Enbala provides software to create controllable and dispatchable energy sources. It aggregates available customer loads, energy storage and renewable energy sources to form a network of energy resources.

The company plans to use the funding to build out its software packages and accelerate a partner project between ABB and Enbala, where the two companies will work on new capabilities to integrate distributed energy resources into ABB’s microgrid solutions.

Convergent Energy + Power

In December, energy storage project developer Convergent Energy + Power received a strategic investment from Statoil Energy Ventures, which followed a strategic investment by GXP Investments, the non-regulated affiliate of Great Plains Energy, in November.

The growth funding follows non-recourse project financing the company received in October, when SUSI Energy Storage Fund and CJF Capital financed 12 MW of energy storage projects that Convergent Energy developed across two grid connected projects in Ontario.

It also won a contract to deliver a 35 MW, 140 MWh energy storage system to Southern California Edison in October and has previously been a partner in a New York microgrid demonstration project.

The company says it had 70 MW and $200 million in contracted energy storage projects as of early this year.




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