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07 Apr 2021

Future Energy Solutions: Microgrids vs Established Utilities

Luke Baker

As we accelerate toward a net-zero future our energy mix is irrevocably changing. This shake-up however is also bringing with it another fundamental question. Could the reliance on national energy suppliers be broken and are we moving towards more of an interdependent energy network?

Businesses energy goals

In trying to address this question, we must look at business and how their needs are evolving. The key goals for business have always been to have a reliable and resilient electricity supply. There are however three key changes that we are seeing taking place.

Firstly, increased awareness of the potential risks of a national grid, which was illustrated back in August 2019 when a power cut affected almost a million people

Secondly, there is increasing pressure coming on business from shareholders, customers, employees and governments to reduce their carbon footprint and renewables play a critical part.

And finally, the rapidly dropping price of renewable energy installations. This is giving businesses and property owners the ability to, for the first time, evaluate their relationship with the national grid, a relationship that has remained unchanged for the last 150 years in the U.K.

Introducing the Microgrid

And this is where we introduce the microgrid. A Microgrid just means a small, freestanding grid. It can consist of several buildings or one small building (sometimes called a “nanogrid”). A lot of businesses actually have an infrequently used microgrid in place already. This is of course the backup generator, used when there is a power outage. 

Microgrids that are completely self-reliant and operate on an ongoing basis are currently rare. There are some exciting examples being worked on, however. One, in particular, is in central Ireland where Siemens and Partners are planning an all renewable, 300-MW microgrid for a new business park. The early feasibility study suggests the 300 MW needed for the site will come from a combination of wind, solar, waste to energy, and anaerobic digestion. There are also plans to use batteries and hydrogen, produced from the wind farm’s off-peak electricity, for energy storage. 

Business as power generators

What is more common is companies investing in their own renewable energy installations like solar and wind, whilst relying on the grid when the sun or wind isn’t doing its thing. There are a number of companies leading the way, one is Ikea whose total ownership and commitments now include 920,000 solar modules on its sites and 534 wind turbines in 14 countries, in addition to over 700,000 solar panels currently under construction in the US. Another interesting example is Thames Water who produced 22% of its 2018/2019 electricity needs through sewage (281GWh), wind (5GWh) and solar power (12GWh). Who knew our sewage could be so useful?

As we continue to see the price of solar and wind installations reduce we will start to see more companies and collectives of companies invest in this renewables infrastructure.

The future

The future is undoubtedly going to be a more decentralised energy network with multiple companies and households producing their own energy and feeding excess back to the grid. Completely isolated microgrids, however, are unlikely to ever make commercial sense. You just need to look at Scotland as a country, it has a tenth of the population of the U.K. but produces 25% of our renewable energy due to its abundant wind energy. 

This evolution of a fully decentralised system however will depend on the necessary infrastructure investments from the National Grid to ensure energy flows and stores can take place. The good news here is that Ofgem recently announced £40Bn in grid investment, whether this is enough remains to be seen.

The other force that will dictate this evolution will be that of energy storage, with lithium-ion battery prices continuing to fall. The recent announcement of a 640MWh battery storage project in London to support the grid is a great example of the markets reacting to exactly this need for storage on an increasingly intermittent renewables supply. 

Whether we see business outside of the Apples and IKEAs of the world invest in their own renewables and batteries remains to be seen, but what is for sure is that renewables will bring cheaper electricity for all. What’s more, the U.K. has one of the best environments in Europe to take advantage of this renewables revolution and that is undoubtedly going to be good for business. 

If you’d like to learn more about how companies are innovating to net-zero check out the Reset Connect Sustainability Ambassador Interviews. We are finding out first hand how much commercial value there is in businesses becoming sustainable. You can also sign up for our newsletter to be informed when the new videos are out and receive the latest articles and sustainability inspiration.