Best stock to invest in – Microgrids: The Electric BTM Line

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by Joeseph McCabe, P.E.

Which vendors at Intersolar 2016 in
San Francisco supply the best behind the meter self generation
microgrid solutions?
 I’ve asked similar
questions about

owned inverters, storage,
microgrids at

previous Intersolars. This year I looked into the
microgrid highest value propositions for photovoltaics (PV).

What is a microgrid, and why they are coming of age

A microgrid is a distinct electric system
consisting of distributed energy resources which can include
demand management, storage and generation.  Loads are
capable of operating in parallel with, or independently from,
the main power grid.
For this evaluation a
microgrid is defined as an isolated circuit that can have a
utility feed for battery charging only which provides a high
value for a commercial or industrial electricity consuming
. In this case a facility can receive
energy, demand and power factor values from a self generating
microgrid and use the utility to charge batteries in times when
self generation may not be available. Self generation can come
from many generating technologies including fossil fuels,
biomass digesters, anaerobic digesters (like at breweries), wind
and solar PV. Low cost solar and storage are driving new
opportunities for these microgrids.

Microgrids are not new for the solar industry,
which has been doing off grid and island systems since before
grid interactive inverters were
available in

the 1990’s. If structured properly microgrids can provide clean,
low cost, uninterruptible, reliable and resilient electricity.

Example behind the meter microgrid

Consider a server farm that needs to expand its
capabilities with a new room of servers. The facility could pay
the local utility to increase its electrical service capacity,
and then pay a lifetime of additional $/kWh energy and $/kW

fees. Or the facility could install a solar
electric system with batteries and if it has natural gas, the
facility can generate combined heat and power (CHP). The heat is
used to air condition the servers with absorption chillers.
Multi-port microgrid solutions are now being offered by

vendors for these purposes.

As a facilities decision maker, pick a CHP that
can supply your air conditioning requirements with absorption
chillers. Add a PV system that supplies the electricity for your
process for most of the year. My favorite flavor PV system would
be integrated with a
parking structure.
Also pick
 an electrical storage system that
can safely provide the power needed for times when the sun isn’t
shining and for when your CHP unit will not be in an economical
operating zone. The microgrid will supply clean power and adjust
for various loads turning on and off. They can even turn loads
on and off for you in a scheduled energy/demand management
Day and hour ahead weather forecasting can

be integrated. A battery charging circuit tied into the local
utility can put more DC electricity into the microgrid at the
most economical times. In fact a microgrid can be all DC energy
reducing conversion to AC losses. And of course any original
utility circuitry feeds can remain as a backup to a new
microgrid circuit.

Economic value

Energy economic evaluation is straightforward in
today’s PV market, coming in at an onsite cost of $

to 0.10 per kWh for larger experienced
installer systems (my own utility has
$0.056/kWh PPA system
). This would be
compared to the utility bill $/kWh which vary widely but are
typically above $0.06/kWh for commercial and industrial
accounts. April 2016
EIA average

estimates are $0.101/kWh for commercial and
$0.064/kWh for industrial across the USA. Demand charges ($/kW)
can be reliably eliminated from utility bills with a microgrid.
CHP systems typically achieve total system efficiencies of 60 to
80 percent. Expensive
 power factor charges
can be reduced from utility bills by
addressing the facility equipment that is is causing power
factor problems, and isolating that/those circuits with a
microgrid solution. Whole facility can address these expenses
with power factor correcting capable inverters, often a standard
function on newer inverters.

Power factor is a correction billed by the utilities for power
delivered by alternating current. It varies when certain
equipment causes the apparent power to differ from the true
power, this difference is a measure of kVAR.
 can be analogized with a mug of beer.
The actual beer fluid represents the power in kW, and the foam
represents the wasteful
kVAR, the kVA
being the actual amount of work the utility needs to provide in
the form of the total volume. Reducing power factor is like
reducing the foam in the mug of beer. I have seen power factor
representing 50% of a hospital’s electric bill.

Regulation can also change economic value. The federal

Investment Tax Credit (ITC) of 30% applies to the cost of
storage, if and only if the storage is charged by the PV system. If

you are interested, contact me for an industry white paper
regarding these values. 

Utility regulations

The regulatory environment for microgrids is
beginning to be developed.
 is a perfect time to
explore microgrid opportunity with low cost PV and new battery
solutions which were being discussed and demonstrated at the
Intersolar event.
Any microgrid solutions will
most likely be grandfathered in before any new regulations. The
California Energy Commission and the California Public Utilities
Commission (CEC & CPUC) recently held a conference call to
begin a microgrid workshop process. Regulators should keep
behind the meter regulations to a minimum because they provide
an excellent source of electricity for facilities. In other
words, regulators should keep their hands off our collective
BTMs unless invited.

The brand new Rule 21 in
California outlines functionality required for all new grid
connected distributed generation. It is a tariff that describes
the interconnection, operating and metering requirements for
generation facilities to be connected to a utility’s
distribution system. These same equipment standards enable a new
class of products that are isolated, or strategically connected
to the grid. I am choosing to look at non-exporting microgrid
because it is easier from a regulatory environment. At some
point I predict the utilities will be asking facilities for
access to these isolated microgrids for addressing the
utilities’ demand response programs. At which point it should be
easier for the utility to pay for and certify the dispatching

Which companies will benefit?

Various support equipment and services are offered by vendors
which are forming strategic relationships with system solution
providers. Original equipment manufacturers are teaming with
system suppliers along with boutique software companies to
supply such systems to the electric utility industry and end
commercial and industrial electric users.  A few vendors at
Intersolar that seem well-placed to address the example scenario
are Ensync, Greensmith, software company Geli, a multi-port
microgrid company called Ideal Power (NASD: IPWR),

and system integrators who take other vendor wares and integrate
solutions like Gexpro (a part of Rexel (OTC:RXEEY)).

Photos below are from the 2016 Intersolar
exhibits and should be self explanatory:

New company relationship
were announced at this year’s
Intersolar event by Ideal Power and
sonnen (European

residential battery storage company new in the USA), as well as
between Gexpro and Geli. Greensmith announced new products for
pre-engineered packaged solutions under

1 MW with up to 4 hours of battery
backup. Larger systems like a large 20 MW installations are
still custom builds for Greensmith. Ensync is combining fast
lithium-ion batteries with slower flow batteries to address both
immediate intermittency and longer term demand reduction

Facilities managers who want to save money on
electric bills or are trying to meet environmental goals can
begin an exploration into microgrids by choosing an existing or
future electric service circuit for a microgrid.  

do this they need to determine the

hourly, monthly and yearly load profiles on the circuit. Then
start stacking the latest distributed generation options to
determine if there is a viable behind the meter microgrid


For the first time, this year Intersolar showed us behind the
meter microgrids. In
this article we
have defined an economical microgrid which can be used as an
example to build your own microgrid solution and have presented
a few of the companies supplying solutions in this space. Low
cost solar and storage solutions have enabled this new class of
on-site solution. Regulations are currently minimal for
facilities to install self generation equipment. These behind
the meter microgrids will become increasingly important for
tomorrow’s electricity industry because they have become cost
effective for commercial and industrial electricity users.

No Disclosures

Joseph McCabe is an international
renewable energy industry expert with 20 years in the
business. He is a Solar Energy Society Fellow, a Professional
Engineer, and is a recognized expert in developing new
business models for the industry including Community Solar
Gardens and Utility Owned Inverters. McCabe is a mechanical
engineer, has a Masters Degree in Nuclear and Energy
Engineering and a Masters Degree of Business Administration.

Joe is a Contributing Editor to
Alt Energy Stocks and can be reached at energy [no space]
ideas at gmail dotcom.  Please contact Joe for permission
to reprint.

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