With Microgrids Poised for Major Growth, Here’s What IPPs and EPC and Developer Firms Must Know

President Biden recently signed the Infrastructure Investment and Jobs Act into law.

With Microgrids Poised for Major Growth, Here’s What You Must Know

President Biden recently signed the Infrastructure Investment and Jobs Act into law. This bipartisan legislation will provide more than $65 billion for clean energy transmission and grid updates - the largest such investment in American history. The money will be used to update grid infrastructure and make it more resilient to renewable energy sources.

Microgrids will need to play an important role in this transition. These distribution networks can incorporate a variety of possible renewable energy resources, like solar energy. These resources can be optimized and aggregated into a single system. In 2021, the U.S. installed 979 MW of renewable energy microgrid capacity, and created around 17,290 jobs, according to a recent report from Guidehouse. Analysts are forecasting that the national market will nearly triple over the coming 10 years.

This growth has been facilitated by progress being made at the state level. Between 2015 and 2021, 23 states passed legislation promoting microgrid deployment, including Texas and California, the two largest state electric power markets. For instance, the California Public Utilities Commission (CPUC) recently updated a tariff that allows for a greater range of locations where PG&E can build the electric distribution infrastructure needed for microgrids.

Wide range of benefits of microgrids

What is the reason for the growing appeal of microgrids? There are many reasons, but some of the most compelling benefits include:

#1. Improves electric reliability

One of the most immediately noticeable benefits of microgrids is their ability to island themselves from the larger grid at the point of common coupling (PCC). This allows microgrids to continue operating even if the central grid fails. While disconnected from the traditional utility power grid, the microgrid system can still balance loads and generation, providing greatly enhanced electric reliability for its customers.

#2. Boosts resilience against extreme weather

Reliability is how well a system can maintain power. The grid's resiliency is how quickly it can avoid outages or recover from them if they do happen. With extreme weather on the rise, IPPs need to make sure they have the ability to deliver power when traditional sources go down. In 2020, U.S. power outages increased by 73% because of events like hurricanes, heatwaves, windstorms, and wildfires. In most cases, Microgrids can restore power quickly and customers barely notice an outage. This ensures consistent electricity especially during difficult times.

#3. Serves as a power source for critical services

Besides restoring power to all customers, microgrids can also focus on restoring power specifically for critical services. When the power goes out during an extreme weather event, those who need it most, like first responders and other critical services, cannot afford to not have it. Utilities and IPPs also benefit from installing microgrids for their central headquarters. A microgrid that can island itself allows utilities and IPPs to keep their operations running, giving them the ability to restore power faster for customers during massive outages.

#4. Creates new, well-paying jobs

The Guidehouse microgrid study found that the deployment of renewable energy microgrid assets will create around 500,000 new jobs over the next decade. Additionally, for every $1 million invested in renewable energy microgrid assets, 3.4 skilled jobs are created and $500,000 in additional economic benefits are generated.

Microgrids are set to play a critical role in the clean energy transition.

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