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EV-charging microgrids are worth more than the sum of their parts. Here’s why

Scale Microgrid Solutions says pairing electric trucks with solar, batteries and backup power can help fleet operators, financiers and utilities alike.
By Jeff St. John

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A driver recharging a Volvo VNR Electric truck
This electric truck will be part of a 30-vehicle fleet charged by a solar-plus-battery microgrid being built in Southern California. (QCD)

One thing that’s become clear about electric vehicles is that their higher upfront costs compared to gasoline vehicles can be more than made up for by EVs’ lower long-term fueling and maintenance costs — as long as there are financing mechanisms that can help pull those future savings into the present.

Scale Microgrid Solutions thinks the same concept can be applied to microgrids that combine solar panels, batteries, backup generators and EV chargers: The long-term financial benefits make the upfront costs worth it if the right financing is available. And Scale is willing to put its money down to prove it.

Take its project in La Puente, California, where Scale has partnered with EV-charging provider InCharge Energy to build a microgrid for transport company Quality Custom Distribution. Over the next year, QCD will be deploying 30 new Volvo electric trucks, and it needs high-voltage direct-current EV chargers to keep them powered up for their daily deliveries to restaurants and cafes across the Los Angeles region.

Those chargers could more than double the peak grid load at QCD’s warehouse, which would require local grid upgrades that could take months or years, depending on the grid-expansion project backlogs faced by utility Southern California Edison.

But QCD won’t have to worry about that, because Scale is installing 1.45 megawatts of rooftop and carport solar PV and 3 megawatt-hours of battery storage that will provide more than enough power to keep those new charging loads within the site’s existing grid limits, said Tim Victor, Scale’s electric vehicles project lead.

That same on-site generation capacity could also keep QCD’s refrigerated warehouses running during grid outages, he said. In case of emergencies, Scale is installing a 1.5-megawatt gas-fired backup generator to ensure that power flows during unexpectedly cloudy days or other potential shortfalls in solar and battery supply.

All told, it’s an infrastructure investment of about $8.5 million, Victor said. State and regional grants are paying for about $1.4 million of that cost, leaving $7.1 million to be covered — and QCD is paying for none of it upfront.

Instead, Scale will finance the project with a portion of the $300 million in project-finance funding it secured in 2020 from private equity firm Warburg Pincus, and QCD will pay it back with fixed annual payments through a 20-year microgrid-as-a-service agreement, he said.

We said [that] this makes economic sense upfront,” Victor said. And if you add in all the other values” — such as providing on-site energy resiliency and allowing QCD to move ahead on its fleet-electrification goals on schedule — it really makes sense.”

QCD will still pay its utility bills on top of those annual payments, he said. But those bills will be much lower than they would have been without the solar and batteries to defray the increased power draw from its electric trucks.

And moving forward with the microgrid eliminates the uncertainty of having to wait for the utility to upgrade its grid to provide enough power for chargers, Victor noted. The costs of waiting for grid upgrades are hard to quantify, but they’re emerging as a potentially serious barrier to expanding the market for electric vehicles.

Meanwhile, Scale will manage all the pieces of the microgrid to optimize energy consumption and meet the uptime agreement it’s made with QCD, he said. That agreement ensures QCD’s electric trucks get charged on schedule, its solar-battery systems keep steadily reducing utility costs, and its warehouses are protected from potential multimillion-dollar losses that could be caused by extended grid outages.

Shane Blanchette, QCD’s senior director of operations, highlighted how this combination of values makes the microgrid plan a relatively easy choice for the company’s truck-electrification plans. Everything came together and made sense,” he said. If you gave me a crystal ball and said, Pick an area across the country where everything would fall into place,’ this is an ideal scenario.”

The business case for EV-charging microgrids 

Similar logic is driving a boom in solar- and battery-backed EV-charging installations in places where electrifying transport is a public-policy imperative or a corporate-sustainability goal. And while some of the upfront costs of installing these grid-bolstering solar-and-battery systems are being borne by fleet owners or defrayed by government grants, an increasing portion is being incorporated into financing agreements like those Scale has inked with QCD.

Some of these microgrid-as-a-service projects are being carried out at massive scale, such as the 5.6-megawatt electric-bus depot being built for Montgomery County, Maryland by AlphaStruxure, which is a joint venture of electric equipment giant Schneider Electric and private equity giant Carlyle Group. Another example is the battery-backed 200-megawatt EV-charging hub being planned near the Port of Newark in New Jersey.

Other projects are being rolled out in a more modular fashion, such as the all-in-one combos of solar, batteries and EV chargers being designed for fast-food restaurants and auto dealerships. The same concept is also being applied at the residential scale, most notably with the partnership between Ford Motor Co. and leading U.S. residential solar installer Sunrun to enable Ford’s electric F-150 Lightning pickup trucks to provide backup power to homes.

EV charging is becoming an important driver for installing distributed solar and batteries, given the time and money that can be saved by supplying power onsite rather than pulling charging power from the grid. Distributed-energy providers such as EDF Renewables North America and Enel X are increasingly integrating EV charging into their operations.

Our objective is to have a platform with high levels of functionality and reliability,” Giovanni Bertolino, CEO and president for North America at Enel X Way, said in an April interview. This is one of the biggest challenges that operators will face.”

Victor also emphasized that reliability is paramount. Fleet operators making the switch to electric vehicles are moving from an existing supply chain of fuel to a utility. That’s inherently a risk.” But microgrids can dramatically lower those risks.

California, the state with the most aggressive goals for electrifying transportation, also has some of the highest risks of blackouts, with wildfire-prevention outages over the past three years leaving millions of customers in the dark for hours or sometimes days at a time. Stand-alone diesel generators can help prevent the risk of losing millions of dollars of refrigerated goods to extended power outages, but they can’t earn money when the grid is up and running, while solar and batteries can, Victor said.

Time-of-use utility rates that charge more for electricity used during peak afternoon and evening times also boost the value of batteries that can store plentiful midday solar power for use during periods when the state’s grid faces the greatest stress, he pointed out. Adding the financial rewards available from California’s Low Carbon Fuel Standard, which offers higher credits for charging EVs with carbon-free power, significantly increases the value of on-site solar, he said.

How EV-charging microgrids could take the pressure off utilities 

Scale’s first EV-charging microgrid project, announced in January, is with electric-bus manufacturer Proterra and the Santa Clara Valley Transportation Authority, south of San Jose, California. It will provide 1.5 megawatts of solar and 4 megawatt-hours of battery storage, with room to scale up over time to meet the transit agency’s growing electrification needs, Victor said.

Flexibility is an important factor for fleet operators that aren’t sure how long it might take for their utility to approve the grid upgrades necessary to meet their EV-charging needs, he added. QCD’s La Puente facility now uses about 1 megawatt of electricity at peak. The sixteen 180-kilowatt chargers InCharge is installing could more than double that site’s electricity draw to 2.5 megawatts, he said.

Scale and its partners designed the mix of solar and batteries to keep that maximum load under 1.7 megawatts, which is below the rating of the grid transformer serving the site, he said. Since we aren’t requesting a new service or upgrade, we don’t have an estimate on what [Southern California Edison] would have told us is the cost or time to upgrade the service,” he said — but such a big upgrade could take years to move through the utility’s list of grid upgrades.

Southern California Edison has one of the country’s biggest utility incentive programs for medium- and heavy-duty EV-charging infrastructure, with $356 million dedicated to laying the groundwork for charging at least 8,500 vehicles over the next three years.

At the same time, studies indicate that the amount of money being directed to expand California’s power grid isn’t likely to keep pace with the uptick in electricity demand that will result from the massive growth in EVs mandated by state policies. That means that microgrids like those Scale is building are an important tool to provide enough electricity for EV charging, at least until utility grids can catch up, he said.

QCD’s La Puente site, for example, is part of a much bigger complex of logistics operations in the area east of Los Angeles, many of which may be looking to switch to electric trucks in the coming years. Southern California Edison may well identify that cluster of trucking depots as an important target for grid upgrades in the longer term, while also seeing the value of encouraging more solar and batteries there in the shorter term.

My take is [that we should] deploy distributed energy now, and over time build this very collaborative type of grid where you have more energy at the edges that allow you to optimize the entire system,” Victor said.

Jeff St. John is director of news and special projects at Canary Media. He covers innovative grid technologies, rooftop solar and batteries, clean hydrogen, EV charging and more.