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Commissioner Cheryl A. LaFleur of the Federal Energy Regulatory Commission (FERC) delivered an inspiring keynote address at the opening of IDEA’s Microgrid 2.0 conference: Advancing Industry Growth, reflecting on the many changes impacting energy markets including expansion of renewables and distributed resources, increasing environmental pressures, and expanding interest in energy resiliency.

Commissioner LaFleur emphasized the transitions in energy supply and infrastructure throughout the nation driven by “the tremendous growth in the availability and affordability of domestic natural gas,” renewable and distributed energy technologies, and the “growing recognition of the environmental impact of energy use and delivery, especially growing recognition of climate issues.” The established energy market is now being asked to handle a mix of resources with different cost characteristics, variability, and constraints, forcing regulators at the federal, state, and local level to adapt the current regulatory structures to accommodate these complex changes.

Energy storage, for example, provides a unique service that may not fit in the standard distribution, transmission, and generation characteristics of the grid. Last February, FERC constructed “new rules requiring organized market operators to allow storage to bid in and participate for any service it was technically able to provide.” Although it seems simple, Commissioner LaFleur stressed the difficulty of crafting this rule because it must determine how many services storage can provide at one time and how the money would be distributed. 

“It seems quite clear that distributed resources can be aggregated and bid into the market and contribute great value. But since, in many cases, they are behind the meter, states must figure out who gets the first bite of the value. Do states get the first bite of the value? Does the wholesale market get the first bite of the value? How are we going to figure out who pays what, to whom, in a sensible way?”

Commissioner LaFleur noted that microgrids “are particularly well adapted for some of the challenges that we’re seeing right now.” Local microgrids and district energy can provide black start capabilities, frequency response, load shifting and other services which support both the grid and regional markets. Microgrids may be able to offer these services at a lower cost than central resources, which frequently run inefficiently at part load in order to maintain regional grid stability.    

The increase in activities at the state level to set carbon targets and incorporate cleaner energy have also shaped our energy resources. Microgrids, especially those with combined heat and power (CHP), have the flexibility to incorporate renewables, reduce peaks, and reduce the environmental footprint of energy. Princeton, after establishing their energy master plan over 10 years ago, has reduced 25,000 metric tonnes of carbon dioxide through the operation of their microgrid while saving $6 million dollars a year. This case study “defies the notion that if you’re going to do it cleaner, it’s going to cost more money.”

Resiliency has always been an important characteristic of district energy systems, especially in institutions, medical centers and hospitals, where it is critical for power and heating and cooling to always be available; “you don’t want someone on the operating table when you lose power.” As we experience more major storms and natural disasters, resiliency is becoming a more important consideration in our energy systems. In the face of major weather events, prisons, hospitals, military bases, universities with thousands of students and faculty on campus, and other facilities do not always have the capability to evacuate and must be robust and resilient. Throughout Superstorm Sandy, Princeton’s microgrid received national attention for its ability to island from the grid, keep the lights on, maintain comfort conditions for critical research and provide an area of refuge for the community and first responders.

In closing, Commissioner LaFleur reflected on the complex overlay of commercial interests, policy interests and fuel interests impacting the ongoing debate. “But then you start to identify what are the things that we’re really worried about.  Is it starting up again after a storm? Is it black start? Because a microgrid can help with that. Is it having to shed load quickly so that you don’t destabilize a region? Because a microgrid can help with that. Is it fast start in a highly dynamic market? A microgrid can help with that. I think as we start to really parse the attributes we are seeking, distributed district energy and microgrid technologies can be tremendous contributors.”

“As an industry, you will continue to refine what you're doing and find new synergistic ways to meet the customer's load that you're serving, along with heating and cooling, and the increasingly complex energy management systems that link it all together, the applications will grow from the obvious, like an island or military base, to the less obvious places where there's a lot of load together with different needs that can work together. And so I think you're very well positioned to help us in a lot of ways and I have high hopes for the future of this sector.”

For more details, please visit here to view Commissioner LaFleur's keynote address.