Housing developers and utilities join forces to create the next generation of microgrids

Solar power, batteries and electric vehicle chargers are increasingly part of the new home landscape. So why not turn new housing developments into microgrids?

An array of technical and regulatory challenges must be solved for utilities and communities to share the costs and benefits of orchestrating these distributed energy resources as grid resources. But a number of pilot projects around North America are showing that the results can add up to more than the sum of their parts.

One example is Altona Towns, a development in the city of Pickering, Ontario. The 27-townhouse project, built by Marshall Homes, features six homes with Level 2 electric vehicle chargers and two homes that have their own Tesla Powerwall batteries. But the community also shares a nearly 30-kilowatt rooftop solar system owned by the condo corporation managing the individually owned homes, and a 666-kilowatt-hour lithium-ion battery system that’s owned and controlled by municipal utility Elexicon.

Toronto-based startup Opus One Solutions provides the underlying control architecture for this community microgrid. The company has developed technology that’s managing renewables on the grid in New York, California, Illinois and the U.K. as well as in Canada. Its GridOS platform balances the interchange of power between the central solar and battery system and household loads including EV chargers, both to lower the cost of everyday utility bills and to provide backup power during grid outages.

It also provides Elexicon with visibility and control over the central battery and the low-voltage lines connecting to its local grid substation, said Falguni Shah, Elexicon’s vice president of technology and innovation.

“Everything is providing services to the grid,” she said. ​“The microgrid energy management software is always talking to everything, and it is visible to our headquarters as well.”

The combination demonstrates that ​“assets that are owned by multiple entities can come together harmoniously and save everybody money,” said Hari Suthan, Opus One’s chief of strategic growth. ​“We’ve brought all the pieces together in a nontraditional way to solve these problems.”

Microgrids: From utility threat to utility opportunity

The rise of ever-cheaper distributed solar power and battery storage are often seen as threats to utilities, robbing them of electricity sales and creating disruptions on the edges of their grid. At the same time, structures to allow utilities and customers to coordinate how these distributed energy resources interact with the grid at large could play a vital role in integrating a class of distributed energy assets that’s expected to grow to hundreds of gigawatts in scale in the U.S. over the coming decade.

“I think there’s been a significant trend where utilities have moved from the standpoint of seeing this as a big threat to where they see it as an opportunity,” said Louis Maltezos, executive vice president at Ameresco, a major microgrid developer.

Most of Ameresco’s microgrid projects, like others being financed by billions of dollars from infrastructure investors such as the Carlyle Group or Macquarie Investments, are centered on on-site generators, combined-heat-and-power systems and solar-battery systems that largely replace the need for utility electrical service.

But one of Ameresco’s most recent projects, a 5-megawatt solar array and 15-megawatt-hour battery at the Spring Valley Campus of Colorado Mountain College in Glenwood Springs, Colorado, is being carried out in partnership with rural electric cooperative Holy Cross Energy.

“They’re working with us and this customer site to optimize the location and the use of this system so it’s a win-win-win,” Maltezos said. Holy Cross offers the college campus a reduced-cost rate structure to pass on the value of the solar energy generated on its property. The co-op also retains control over the battery to store and shift energy to meet on-site and broader grid-balancing needs.

Holy Cross is also engaged in another pilot combining distributed solar, batteries and EV charging in Basalt, Colorado featuring a novel renewables control technology developed at the National Renewable Energy Laboratory. Heila Technology, a Massachusetts-based startup with software that coordinates distributed energy resources for several commercial customer microgrids, is providing its technology for the Basalt project, as well as a pilot project with utility Southwestern Electric Power Co. in Louisiana.

Heila CEO Francisco Morocz described one of its latest projects in Tampa, Florida as ​“what the future will look like” for distributed microgrids. The 37-home solar- and battery-equipped subdivision is being developed by Lennar Homes in partnership with Emera Technologies, a business unit of Canadian-based utility holding company Emera, which also owns local distribution utility Tampa Electric.

The benefits of integrating distributed energy with the grid

Emera Technologies’ BlockEnergy system combines software, hardware and batteries in a single unit to be deployed at individual building sites. The system has been tested at New Mexico’s Kirtland Air Force Base, and it is part of what CEO Rob Bennett described as the company’s latest focus on enabling distributed energy ​“at the grid edge.”

“The best place to begin trying to solve our future carbon problem is by solving the current load growth issues we have today, particularly in new residential development,” he said. That means adding solar and batteries to new homes, which can provide up to four-fifths of the community’s electricity needs in sunny climes like Florida.

It would be nice if utilities could reduce the size of the grid interconnection serving that new subdivision to take its on-site power generation capacity into account, he said. But that requires some level of utility oversight and control to assure it’s going to be available at all times. At the same time, utilities may want to be able to use batteries to capture excess solar power that might otherwise flow back up that same grid interconnection, to avoid expensive grid protective equipment to deal with that eventuality, he said.

“Without thinking out a microgrid type of approach, if you connect a new community with 5,000 homes and put solar on every home…that can create some serious problems for the utility,” he said. By networking all those homes and their distributed energy into a microgrid, by contrast, ​“you have no negative impact on the system and…that energy [will be] optimally shared between homes, [which] lowers the cost for everybody.”

That’s the goal of the Fairmount Heights microgrid project being undertaken by Emera Technologies, a Maryland-based affordable housing nonprofit, and Pepco, the Exelon utility serving Maryland and Washington, D.C. That project will link six new homes set aside for first-time homebuyers earning less than 80 percent of median area income. The community solar will be owned by a third party, and the BlockEnergy units and underlying grid infrastructure owned by Pepco.

This structure ​“will be a mini-grid amongst our broader distribution grid,” said Lindsay North, a principal business program manager with Pepco’s Utility of the Future group. The BlockEnergy system will ​“allow the energy amongst each of the homes and the batteries to be uniquely shared amongst the homeowners,” as well as offering Pepco the tools to ​“better balance distributed energy with the needs of the distribution grid.”

Clean energy and grid resiliency

The utility-community microgrid model is still in its infancy, with a multitude of financial and regulatory hurdles to overcome before it can achieve more widespread adoption. Only a handful of the higher-end solar- and battery-equipped housing developments being built around the country are actively engaging in partnerships with utilities. Projects aimed at median or affordable housing have relied on grant funding to cover the extra costs involved.

But the idea of turning distributed energy resources from grid disruptors to grid stabilizers is playing a role in government- and utility-funded pilot projects around the world. In the United States, the Department of Energy has supported work ranging from computer simulations of ​“transactive energy” systems between autonomously interacting distributed energy resources, to real-world deployments of ​“connected community” projects that combine high-efficiency homes, electrical appliances and solar, batteries and EV charging.

As governments set increasingly aggressive carbon-reduction mandates, utilities are eager to find ways to tap the growth of distributed solar to help meet those targets. At the same time, the increasing threat of grid outages from climate-change-intensified wildfires, heat waves, winter freezes and coastal hurricanes has boosted the urgency of adding on-site resiliency to these projects.

In Ontario, several major outages over the past two decades and the province’s carbon-reduction and renewable energy targets are forcing utilities including Elexicon to plan ahead for how they’ll manage the solar, batteries and EVs being deployed in response, Shah said.

But utilities are also eager to use these resources to solve other problems they face, like reducing the grid investments to support the peak energy demands of new subdivisions, she said. These distributed energy resources could also help augment the grid-balancing tasks such as frequency regulation, now served by utility-scale power plants and batteries, to manage the growing share of solar and wind power on the transmission systems of Ontario’s Independent Electricity System Operator.

“On the other side, the customers get the benefits of greenhouse gas reduction, reliability during outages, and they can get extra bill credits as well,” Shah said. As Elexicon begins to tap into the flexibility of microgrids to reduce peak grid demands or mitigate voltage fluctuations that may arise from the grid’s increasing supply of renewable energy, customers can start to earn payments for those services too.

The regulatory pathways to broader adoption

There’s a long way to go to get from today’s utility rate structures to this futuristic vision, however. At present, most of these shared-resource microgrids have to create workarounds to utility rate structures that don’t account for these arrangements.

“There are no rules or policies right now” in Ontario for sharing community solar among individual utility customers, Shah said. ​“We have created an interim solution for how to pay the renewable energy credits to our customers.”

Craig Marshall, president and founder of Marshall Homes, the developer of Altona Towns, said the resulting bill structure will shave about one-tenth off of homeowners’ utility bills.

“We had to come up with quite a document to detail how we were going to get around the fact that Toronto doesn’t have net metering for condos,” he said. At the same time, this first-of-its-kind experience has given Marshall Homes and its building trades and financial partners more experience on how to structure similar projects in the future. ​“Next time, it will be quite a bit easier — the contracts are all ready to go.”

Pepco used existing Maryland community solar structures to simplify the billing structures for the future tenants of the Fairmount Heights project, North said. But it will be exploring other options over the three-year pilot period, looking at ​“how to manage the additional solar installations on a specific feeder and provide a tool to manage voltage and other distribution grid needs,” she said.

State utility regulators still have a lot of questions to answer before shared microgrid projects like these can move from pilot projects to full-scale commercial implementation. California’s fire-prevention grid outages have prompted efforts to standardize the rules for building community microgrids. But that effort, now more than three years in the works, has yet to yield a structure that has satisfied both utilities and the independent developers interested in investing in such projects.

But Opus One’s Suthan sees the dynamics of falling prices for solar, batteries and EVs driving more and more regulators and utilities to embrace models to integrate them into the grid. State and federal ​“grid-interactive buildings” policies could make this kind of integration a part of the mainstream, as is starting to happen with mandates like California’s requirement for new homes to have solar panels.

“There are a lot of pilots around the world,” Suthan said. ​“The question is when this [will] start to create a domino effect where this becomes part of the building code.”

(Article image courtesy of Opus One)