The Emerging Role of Microgrids in Decarbonizing C&I Properties

Sept. 15, 2021
Microgrids can maximize the use of clean, renewable energy by reducing electricity bills and ultimately driving decarbonization goals.

Through a culmination of political, scientific, and societal developments, the decarbonization movement has arrived. As expectations for eradicating carbon emissions mount and net-zero emissions timelines established, all eyes are on the commercial and industrial (C&I) sector to play a leadership role.

Commercial buildings’ energy usage generate 16% of all U.S. carbon emissions, and this represents a tremendous opportunity for decarbonization investments. The large rooftops and existing carports of commercial buildings make prime real estate for improvements like solar panels. Yet, while solar in C&I is becoming utilized by some – and the strides of big-box retailers like Amazon, Walmart, and Apple have set a precedent for all companies to follow suit – solar alone is not enough to support large-scale emissions reductions. Creating C&I holistic clean energy systems, however, can.

The Value of Microgrids for C&I Businesses

Microgrids can maximize the use of clean, renewable energy by reducing electricity bills and ultimately driving decarbonization goals. Because energy consumption can be one of the biggest operational costs for many C&I property owners, the ability to reduce, predict, and control monthly expenditures is a welcome scenario. Microgrids also provide greater resilience, enabling businesses to maintain continuity and prevent revenue or productivity losses in the event of power outages.

Microgrid 101

At the most fundamental level, microgrids bring together all the elements of a distributed energy resource (DER) system (i.e., solar PV, battery storage) into one cohesive solution. A variety of energy sources can be integrated into a microgrid system, depending on the needs of the building. Solar PV and energy storage tend to be the most common elements of microgrids in the C&I sector, thanks to their growing affordability and accessibility, but some microgrids can accommodate a mix of energy sources. This includes options to integrate with traditional sources, like a generator and the electric grid. Microgrid controllers are also often integrated to smartly manage all components of the system.

Depending on its purpose, a microgrid can have various levels of interaction with the electric grid:

Grid-tied

With a grid-tied microgrid, businesses retain a physical connection to the local utility grid yet optimize use of the renewable energy generated during the day by solar and stored by the battery once the sun goes down. The business can then draw power from the grid as needed. Should the grid go down for any reason, the microgrid can “island” to maintain operations uninterrupted.

Remote

Remote, or off-grid, microgrids are disconnected from the utility grid entirely and are in constant “island” mode. They can meet the needs of businesses in locations without nearby electrical infrastructure and where developing grid ties would be prohibitively expensive.

Networked

A networked microgrid consists of multiple DERs connected to the same utility grid circuit in order to share resources and energy loads. Smart cities and community microgrids would fall into this category.

Creating a Renewable Ecosystem

Not only are renewables becoming more popular among C&I properties for the financial advantages, but also new regulations favoring solar and storage solutions will likely soon make it the standard.

The California Energy Commission recently advanced requirements for solar and storage equipment to be installed on all newly constructed commercial properties. Thanks to innovative financing models, ranging from requiring little to no capital outlay for commercial-scale microgrids to broadening the types of commercial properties eligible for financing, it has become even easier for C&I property owners to afford microgrids. 

While decarbonization will remain a driver for microgrid installations, C&I property owners stand to gain additional value. For example, those who own an office building can install EV charging stations, powered by clean energy microgrids, which become an attractive draw for employees. Even shopping center owners can create new revenue streams by selling energy generated by their microgrids back to their tenants.

Microgrids, in the end, offer C&I businesses the compound benefits of enhanced resilience, lowered energy costs, and reduced carbon footprint, making microgrids a projected $39.4 billion market opportunity within the next decade.