Microgrids and M2M

by Bill Ingle, Beecham Research Ltd.

Beecham Research Ltd. is focused exclusively on the $45-billion machine-to-machine (M2M) market and views microgrids from that perspective, lying within the energy service sector, one of nine sectors tracked by Beecham.

M2M is primarily about remotely monitoring assets of all kinds.

The technology has existed under other names for decades in manufacturing automation—where wired transmission control protocol/Internet protocol (TCP/IP) networks were installed in aircraft manufacturing plants and programmable logic controllers (PLCs) communicated with plant floor machinery in the ’80s—and in the generating plants and substations of electrical utilities. Supervisory control and data acquisition (SCADA) is another example of M2M technology.

Smart metering—upon which so much attention has been focused recently—is an M2M application, while large, wireless phone carriers recently have begun to focus on cellular M2M opportunities.

M2M is everywhere and growing, with billions of connectable devices of all kinds constituting a massive, overall addressable market. M2M satellite networks compete with wired and wireless terrestrial networks as conduits for M2M data, including the ever-growing and all-encompassing Internet. What does M2M accomplish? Efficiency and cost savings, whether in the tracking of fleets or cargo containers, the electronic movement of money or the monitoring of power usage, among many other applications.

Microgrids—one term of many, including distributed generation and decentralized generation or decentralized energy—are typically small, local networks of power generators frequently employing alternative energy sources such as solar and wind power. Distribution is over short distances, sometimes just within a single home or commercial building.

Microgrids defy the traditional pattern of the aging grid, a pattern unchanged since Thomas Edison’s day in which electrical power flows from large, centralized generation facilities through sometimes thousands of miles of inefficient powerlines prone to line loss to local distribution networks.

Smart grid initiatives and the related stimulus spending are intended to address aging grid concerns, part of a complex and dynamic situation connected with the large and intertwined issues of climate change, politics, geopolitics, economics, energy resources (including a greater use of renewable energy sources) and local and regional issues. This complexity is turned into near chaos in the U.S. with multistate and federal regulation periodically swept by waves of deregulation and more regulation. The situation isn’t entirely different elsewhere—Europe’s grid in some places dates to the ’50s, and it, too, is subject to regulation varying within different political boundaries.

In this context, microgrids can be seen as a disruptive development not so unlike the appearance of personal computers in corporate IT environments using the earlier mainframes and minicomputers, or the appearance of blogs and free online news aggregators, much to the consternation of traditional new organizations. Personal computers are now in millions of homes, not just in business environments of all sizes; newspaper readership is declining. The adoption of microgrids might, in time, follow similar patterns.

Technology changes attitudes and usage patterns; business models and regulators eventually follow. Microgrids address the concerns of different users. They may satisfy the requirements of companies and high-technology manufacturers requiring reliable and consistent power for computers, servers and other equipment that can’t afford disruptions and don’t wish to risk reliance on the aging grid. Similar concerns may apply to military bases and hospitals.

They may provide solutions for those who ardently believe in using alternative energy sources, who may not view the creation of huge solar- or wind-powered generating facilities—their power transmitted through miles and miles of transmission lines—as favorably as much smaller facilities, even as small as a single home. They may even be off-the-grid enthusiasts.

Richard Perez, an alternative energy researcher at the University of Albany, estimated that there were 200,000 off-grid U.S. households in 2008, a number growing by one-third every year, while another 30,000 homes remain connected to the grid but supplement their electrical supply with microgrid technologies.

Cost is always an issue, regardless of philosophy. A traditional power plant is costly Building one requires years of planning and dealing with endless regulatory issues and authorities. Microgrids—much smaller and simpler—have their own cost issues.

A microgrid might be based on cogeneration or waste incineration in a single building or several buildings but often relies on solar and wind power technologies.

The costs of these continue to decrease as manufacturing volumes increase even as ever-newer, more efficient technologies become available while these industries are often subsidized by tax incentives.

Storing unused electricity is primitive, bulky and expensive but necessary, considering that the wind doesn’t always blow and the sun doesn’t always shine. Inverters are part of the cost equation, too.

One storage solution that can also reduce long-term costs is the ability to sell unused electricity back to the grid (and use the grid when necessary), but this can’t be done without regulatory approval. This is not so much an off-grid situation as a sometimes-on, sometimes-off situation, depending on circumstances.

Approval is growing and already exists in some states—for example, California, Connecticut and New Jersey—and foreign countries such as Germany, but is meeting strong resistance from traditional utilities in many locations.

Germany’s feed-in tariff (FIT), paid for by a surcharge on all customers’ bills, simplifies the purchase by utilities of microgrid-generated electricity fed back into the grid by standardizing pricing. This incentive of a guaranteed price above market value has accelerated solar panel installation.

California, Florida, Indiana, Minnesota and Michigan are either looking into FITs or, in some locations, have already implemented them.

Back to M2M

Remote monitoring can save costs, whether in traditional utility models or microgrids.

Both use machinery that require maintenance, increasingly focus on monitoring demand at various levels, and both must distribute any electricity they generate. The substations and related equipment of traditional utilities are increasingly monitored using a variety of communication technologies, while a microgrid may also have the equivalent of a substation, even if greatly reduced in size.

Additional microgrid M2M monitoring opportunities center on energy storage while the use of remote sensing technologies for measuring the carbon output of traditional fossil fuel-fired plants will increase.

Large companies such as Google continue to develop portals where consumers can view their energy consumption patterns, assuming an Internet-enabled smart meter has been installed.

Before long, monitoring a microgrid likely will be a similar experience. The equivalent of a monitoring and control center will be displayed on a computer monitor or monitors, accessible anywhere via the Internet.

The aging U.S. grid gradually is changing to include within the old patchwork of thousands of generation plants, thousands of miles of transmission lines and a great variety of companies and regulatory authorities, smart upgrades and systems including millions of smart meters, large-scale renewable energy generating facilities and a growing number of microgrids.

Every part of this will benefit from the remote-monitoring technologies of M2M.


Bill Ingle is an editor and senior analyst at Beecham Research Ltd. Reach him at bingle@beechamresearch.com.

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at Jennifer.Runyon@ClarionEvents.com.

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