The following is a contributed article by Tim Lukes, co-CEO and founder of Unison Energy.
The consensus among scientists is that global society needs to reach net-zero carbon emissions by 2050 in order to stay below the critical 1.5°C global warming threshold. But there is little consensus on exactly how to meet that target, especially for commercial and industrial facilities that must balance cost and energy resiliency with sustainability goals.
A recent McKinsey report suggests that to help society reach this goal, facilities must quickly electrify, implying they would leverage renewables from the grid while relying on clean fuels for high-heat processes. However, there are some complications with this approach.
While renewables are on a strong growth trajectory, they are not likely to supply a majority of power across the U.S. in the near future. Currently, solar and wind account for only 8.4% of U.S. electricity production. Significant growth remains before they will eliminate the 23.5% of U.S. electricity that comes from coal and the 38.4% from natural gas.
Second, as renewables produce a larger percentage of grid power, the grid must also incorporate significant excess storage capacity or conventional generation to counterbalance solar and wind intermittency — but the associated high price tag of under-utilized assets is a strong deterrent. The same is true for individual facilities, although few sites have the necessary funds or space for sufficient solar generation and storage.
A microgrid that incorporates a combined heat and power system can achieve 60-80% system efficiency, compared with about 38% grid efficiency. These cogeneration systems use waste heat to replace most or all of the site's boiler production, potentially reducing a facility's carbon footprint by 25-60%, depending on the site's thermal loads and the grid's generation mix in the state. At the same time, microgrids provide critical energy resiliency.