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Daedalus was the mythical great architect and artificer of the classical world. Today, embedded intelligence is enabling the most profound changes in the way we create and use buildings since his day.

Building Intelligence meets the Intelligent Building. The Intelligent Building negotiates with the Intelligent Grid. How will this transform how we interact with the physical world?

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« From our Fathers... | Transactive Energy and Farm to Plug »
Tuesday
May312016

New Capital for Storage-Based Microgrids

In my last post, I talked about Transactive Energy, and the Farm-to-Plug movement. This model relies upon storage, which is not just batteries. Storage is any means to relocate power in time to create reliability and additional market opportunities. Storage is kinetic batteries as well as chemical batteries; some new kinetic storage has losses of less than 5% per month. Storage is hydrogen paired with fuel cells, enabling renewable-based re-generation.

We should maintain a distinction between pre-consumption and storage. Pre-consumption starts with strategies such as cooling a building before the price goes up, or making ice to support the day’s cooling.. Pre-consumption has many of the same the same day to day characteristics of storage, but it limited to only some power needs cannot provide the resilience that storage adds.

Microgrids that include storage command a premium price today. Storage prices are dropping, but remain high. Storage-based solutions are best for sites and customers that need some sort of premium service. A potential customer who will pay a premium for renewable-based reliability and resilience is the ideal early adopter for this suite of technologies.

A customer who is willing to pay a premium to avoid short outages is a customer who will not accept longer outages. Storage is the most expensive component of a storage-based microgrid. A technical developer who presents the customer with a design providing the amount of reliability that they need will face a customer in sticker shock. The daunting up-front costs lead to months of indecision.

Fortunately, there are new business models developing, ones that will provide the customer with access to capital at prices that compete with the access to capital the traditional utilities have. Large funds are now ready to buy storage-based microgrids upon completion, selling service to the customer/host over the life of the asset. The technical developer may well be able to get a long term maintenance contract from the owners of the microgrid fund. The barriers to proceeding, the barriers to getting to yes, can now be addressed.

This market is just developing. For example, it is just beginning to attract secondary capital markets willing to fund any construction project with a commitment in hand from the microgrid asset REITs. These are then driving conversations about widespread transactive energy trading platforms.

Now is the time for microgrids containing storage. Go through your portfolios of stalled projects and consider which ones could be freed up by these new market forces. Look to refreshing older projects with a dose of storage.

And drop me a line of the want to discuss this.

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