Jeff St. John, GreenTech Media
The past decade has seen an evolution in the microgrid market aimed at bringing the benefits of emergency backup generation — and in some cases, the clean-energy value of solar and batteries — to a class of customers that can’t afford the complex, site-specific engineered systems of the past.
“Modular microgrids,” built around standard technology platforms like fossil-fueled generators, combined-heat-and-power systems or battery-backed solar systems, and offering customers low-cost, long-term contracts for the energy and resiliency they provide, have been an important step in expanding the potential market.
Now leading microgrid developer Schneider Electric and “sustainable energy” private equity investor Huck Capital are expanding this concept, with an “energy-as-a-service” provider of microgrids for small and medium-sized commercial and industrial (C&I) buildings.
The new company, 5D Energy, which has received lead investment from Inclusive Capital Partners' Spring Fund, promises to offer no-money-down solar, battery and on-site generation systems of up to 5 megawatts. Customers will pay them off via long-term power-purchase agreements for energy that’s cheaper than what they can get from their utility or the competitive energy market.
To make that work, Schneider Electric will provide prefabricated “energy control centers" — the power conversion and control devices going into buildings, in other words — to ease installation and interconnection complexities. It will also manage commissioning and ongoing operations via its EcoStruxure cloud computing platform.
To realize the return on investment demanded by private equity investors, the new company will analyze and optimize the value of existing C&I energy tariffs and rebate structures and seek out additional revenue from demand response programs, wholesale energy market capacity or ancillary services, and managing customers’ demand charges or coincident peak charges.
“We’ve worked very hard to develop sophisticated modeling tools to optimize the investments,” Mark Feasel, Schneider Electric’s president of smart grid, said in a Monday interview. “You’ve got to automatically understand if this thing will pencil.”
That’s particularly true for the small and medium-sized C&I market, where customers lack the in-house expertise to manage the interplay of grid interconnection and self-supply regulations, on-site solar and backup power values, and market revenue opportunities that will make or break each project. It’s also an imperative for a company that will be aggregating the energy flexibility of multiple sites to seek out revenue opportunities that might escape individual microgrids.
Schneider Electric is already operating large-scale microgrids via a similar energy-as-a-service model with private equity investor Carlyle Group, including showcase projects such as New York City’s JFK Airport. It's worked in a similar fashion with utilities including Duke Energy and NextEra.
But “to really change the energy landscape, it’s not just about the 10 biggest...energy infrastructure projects,” Feasel said. “You have to be able to attack the everyday buildings.”