Tom Poteet, Vice President of Corporate Development at Mesa Solutions, examines how microgrid costs can both drive and stifle microgrid projects.
Tom Poteet, Vice President, Corporate Development, Mesa Solutions Source: Mesa Solutions
People usually focus first on what a microgrid is, what it does, and what it costs. Here's a much better first thought, “Yes, we could get a microgrid, but why would we want one?” The answer to this second question is more different than you might think. The reason for this is that every location and every electricity consumer is slightly different.
To find out the “why”, a potential microgrid champion can focus on one of several goals:
—We need a power solution that is routinely more reliable than the standard utility service.
—Our function is so important that in the event that our otherwise reliable utility service fails, we need a fail-safe standby solution.
—Supply inquiry fees are our top cost that we need to mitigate.
—We want to use the incentives of our liberalized electricity market.
—We want to use renewable raw materials.
We want all of that.
Source: AdobeStock, courtesy of Mesa Solutions
So you've looked at the categories above and figured out where you are in the spectrum of power demands. Now you need to think about your organization's stance on these issues:
- Do we have capital that we would like to spend in advance on a new power solution?
- How much risk are we comfortable with for a potential reward?
- What contract term would we agree on?
- Are we ready to let our load be controlled in order to achieve maximum optimization?
- Does our interest in renewable energies go beyond economic considerations?
You may be wondering, “Why can't this be easy? Shouldn't microgrids already be plug-and-play? ”The answer is, well, sort of. Generation sources, energy storage and control systems communicate much more communicatively with each other than they did five years ago, but that is not the same as knowing which resource mix is exactly the right one for your individual requirements. You still need someone to help you figure that out. Once you've had fairly clear thoughts on the issues above, it's time to start evaluating certain cost options. It is important to work with a knowledgeable partner / provider to find the right mix.
Here at Mesa Solutions we have a lot of inquiries about solar, so let's start with that. Even if the cost of manufacturing solar materials and solar modules continues to decrease (regardless of supply shortages), the cost of an installed set of ground-based modules is still around $ 2,000 per kilowatt in many parts of the contiguous United States. A good designer can take your specific location and calculate an estimate of the amount of kilowatt hours you can expect annually from such an array. At this point a cost-benefit discussion can take place. Interestingly, customers sometimes say something like “provide the solid power solution I need and then spend $ X of my ESG budget on solar panels”. Our team always shows you the economic efficiency, which depends not only on the microgrid elements but also on the fuel costs and the electricity costs at your location.
Natural gas generators can be purchased for around $ 700 to $ 1,000 per kilowatt for free on board (FOB) USA. The rental costs vary widely and depend on the number of annual hours of the planned term, the maintenance requirements as well as the telemetry and remote control functions.
Source: AdobeStock, courtesy of Mesa Solutions
The cost of microgrid control depends, among other things, on how many elements you need to control. Controllers generally cost between $ 50,000 and $ 90,000 for up to 30 items. The costs increase from then on and can reach the order of $ 500,000. For many common scenarios, it may be possible to control the microgrid with just the generator controller, so this is an important question that needs to be resolved early on.
The battery costs vary depending on the current discharge rates, ie normal or fast, and the desired length of discharge time. But a good budget number to keep in mind is $ 300 to $ 400 per kilowatt for one hour of normal discharge time.
The bundling of all of these costs is a conversation in itself. The most typical arrangement looks like an upfront capital lease that covers the cost of all equipment installed, as well as ongoing maintenance and data services. These contracts are often referred to as “microgrid as a service”.
If your organization is considering a microgrid – and you have the resources to do so – it's a good idea to visit a microgrid site and see one in action. But if you can't see a microgrid, at least make sure you're working with partners who understand your needs and look after your trust.
Tom Poteet is Vice President of Corporate Development at Mesa Solutions, a power solutions company. Mesa specializes in the manufacture, sale, leasing and operation of natural gas and liquid propane powered mobile and stationary generator sets and microgrids.