Amidst a Surge in Extreme Weather, Distributed Energy Takes On New Meaning for the US Grid

Advanced Solar Products turned to engineers at the world’s largest inverter manufacturer, SMA, and worked for months to adapt the power electronics so that electricity produced from the solar system could be directed into the backup lighting system, thus allowing the generator to idle at low levels when the sun was shining. It didn’t mean that the entire building was powered by solar in the days after Sandy. But the hybrid system allowed for a steep drop in fuel consumption at a time when it was nearly impossible to deliver diesel to flood-stricken areas.

"The solar did what it was supposed to do. It worked exactly as planned," said Rawlings. He imagined the possibility of doing the same for thousands of other systems throughout the state.

The Midtown solar system was an isolated case. The thousands of diesel and gasoline generators deployed in areas hit by Sandy were the true emergency power workhorses, providing important backup to homes and businesses. However, within just a few days, fuel supply shortages became a serious challenge. People lined up for hours at gas stations to find the fuel supplies completely depleted. In New York and New Jersey, half of all gas stations ran out of fuel within three days. Diesel climbed to $35 per gallon at some stations. Panic and anger grew.

Finally, in early November, the military delivered 24 million gallons of gasoline and diesel to the hardest-hit areas, bringing in trucks to help those desperate for fuel. Relief may have come, but vulnerabilities were exposed: in a prolonged outage, generators are limited by the top-down logistics of supplying fuel. Problems with fires, failed units at critical facilities, carbon monoxide poisoning and noise pollution were also issues in Sandy’s wake.

Solar is not a panacea, nor will it fully replace conventional generators anytime soon. But after Sandy, the technology was taken more seriously as a supplemental outage solution providing a clean, safe and abundant supply of energy. “I think Sandy taught us a lesson about the need for a more distributed approach to resiliency,” said Rawlings. “There’s a perception after the hurricane that we need new types of emergency power capabilities like this.”

It’s not just perception that’s changed -- it’s the technology itself. Solar, storage and power electronics are undergoing a steady transformation. Since 2008, the cost to manufacture a lithium-ion battery has fallen by half, and could potentially drop another 50 percent within the decade. Meanwhile, the average all-in price to install a solar system has fallen by 61 percent in the U.S. over the last four years, making it far more affordable for both residential and commercial customers. One recent study from the Rocky Mountain Institute estimated that solar paired with storage could be cost-effective for more than a million utility customers in East Coast markets within ten years.

The markets have also evolved alongside the technology. Since Sandy, electricity markets in California, the Mid-Atlantic and the Northeast have adopted new federal rules that value grid services provided by battery storage. While important during times of crisis, tying a solar system to batteries or a generator for emergency backup alone is cost-prohibitive for most customers. System owners must find consistent revenue streams in order to pay back the thousands of dollars in extra investment. Now that owners of fast-responding storage systems can get paid for balancing out the grid in real time, the economics of adding backup are improving. Businesses can also use storage to reduce the demand charges imposed by utilities during peak times when energy supply is limited.

These factors -- resiliency planning, improving economics and market recognition of storage -- are coming together to make solar a more viable backup technology. By 2020, commercial building owners could install 700 megawatts of distributed storage around the country, with solar partnerships a major factor in the growth. America’s largest solar installer, SolarCity, has partnered with EV manufacturer Tesla to provide solar-battery offerings in the last two years. And Solar Grid Storage, a company with offices around the East Coast, has added storage to commercial solar systems and microgrids in Maryland, New Jersey and Pennsylvania.

“Taking advantage of the tens of thousands of solar projects already installed over the last several years and accelerating support for new installations -- this time with storage -- should be a key component of plans for rebuilding,” wrote Solar Grid Storage CEO Tom Leyden in an op-ed a year after Sandy. He and others have sought to educate the public about the resiliency potential of the technology combination.

Rawlings took the experience of the Midtown school to heart. Advanced Solar Products has since started offering lithium-ion batteries with solar, and plans to make solar-storage systems a bigger part of the business going forward. In one case, one of Rawlings’ customers was able to pay for a commercial storage system and inverter through frequency regulation payments -- actually making the cost of a hybrid solar-storage system lower than solar alone.

"People are approaching this in a much more sophisticated way," he said. “It told us we could provide this service for a low cost.”

***

Daniel Soto was a digital refugee. He’d known plenty of them in Africa -- people who had to trek to far-away villages just to charge their mobile phones. But he’d never been one himself, at least not on Long Island.

When Sandy hit New York, Soto was living with his wife’s parents in the upper-middle-class hamlet of Oceanside, Long Island. He was finishing up a two-year post-doctorate fellowship at Columbia University with a focus on distributed energy access in developing countries. The fellowship brought him to Mali, where he helped work on solar-powered microgrids and other small-scale energy projects. Oceanside was a dramatically different world from the villages he’d visited in Africa where kerosene lights and candles were the norm and reliable grid-based electricity was a luxury.

But Long Island Power Authority, the utility widely considered to have been the worst prepared for Sandy, was, in its customers eyes, running a third-world grid that didn’t work. For nearly two weeks, Oceanside and neighboring communities went without power, desperately waiting for updates from LIPA that came infrequently. Soto and his neighbors wanted normalcy. And at the very least, that meant being able to use their cell phones and tablets.

Two days into the outage with no update from LIPA, word spread throughout the neighborhood that the nearby village of Rockville Centre had power. Rockville was only a couple of miles away, but the two communities seemed worlds apart. The town owned its own grid, which made electricity rates there 50 percent lower than LIPA’s. It also made turning on the electricity for the town’s 23,000 residents a faster, far less complicated process.

Soto and his neighbors took full advantage of the situation. Each day, hundreds of people from nearby towns flocked to Rockville to power their electronic devices and buy supplies. Soto rode his bike to the library, charged his laptop and cell phone, and went back home. As the days wore on and thousands of New Yorkers performed a similar daily ritual across the city, Soto realized he was witnessing the same pattern of behavior he saw in developing countries.

“It was a really interesting opportunity for me, personally and as a researcher, to see that this behavior is universal,” he said. “To see it play out miles away from the most powerful and well-known city on the planet was really humbling for me.”

Soto felt lucky to have a power source nearby. Finding a source of electricity was far more difficult for tens of thousands of other LIPA customers. On Rockaway Peninsula in Queens, there were still 27,000 people without power a full two weeks after the storm. But a small bit of relief eventually came for some in those cut-off communities: off-grid solar generators.

FEMA and the military were spending millions of dollars on fuel convoys to supply generators. However, they paid virtually no attention to the sun’s abundant fuel supply spilling into the region every day. In early November, with relief efforts in New York slowed by lack of power and fuel shortages for generators, a collection of solar advocates banded together to take advantage of that solar resource.

Chris Mejia, president of Consolidated Solar, a company that sells mobile solar units, had a lot of equipment on hand to help people access electricity via portable devices. He was eager to get them in the field -- he just needed some help on logistics. But the government didn’t seem interested in solar. After numerous attempts to reach local and federal disaster coordinators, Mejia couldn’t find anyone who wanted to help deploy his systems.

He finally connected with a local clean energy education nonprofit called Solar One, which put out a public call for help on Facebook. Some employees at SolarCity saw the post and quickly moved to contact utilities. Over the next month, the informal coalition, dubbed the Solar Sandy Project, hauled seventeen 10-kilowatt generators mounted on trailers to Long Island, Staten Island, the Rockaways and Red Hook. It was a small but meaningful effort to get energy to places where fuel convoys and the centralized grid had failed to reach. “Without it, we wouldn’t be running at all,” said Kelli Donahue, director of a local relief agency in Rockaway, in an interview. “Without the solar panel, we wouldn’t be able to have a generator” because of gas shortages, she said.

Meanwhile, a husband-and-wife team of landscape architects living in Brooklyn had the same idea. Walter Meyer and Jennifer Bolstad reached out to David Gibbs, an engineer-turned-furniture maker who had worked in Alaska for four years designing off-grid energy systems. They wanted to bring solar to the Rockaways too. Using spare solar panels and batteries that Gibbs had lying around, they installed a small charging station near the Rockaway Surf Club, which was serving as a community center near the beach. The Power Rockaways Resilience Project was born, and a dozen more systems were soon deployed.

Diane Cardwell, an energy reporter for the New York Times, was one of the many residents of Rockaway Beach flooded out by Sandy and essentially left homeless after the storm. As a journalist, her neighbors looked to her for information on relief and power restoration. Many didn’t know where else to turn.

In mid-November, a solar charging station came to Cardwell’s neighborhood. The project was a collaboration between the Solar Sandy Project and the Power Rockaways Resiliency Project, which together raised tens of thousands of dollars from corporate donors and crowdfunding. It changed the mood in the neighborhood immediately.

Cardwell was filing stories via her phone, and she was happy to have a place to charge her equipment without fighting hordes of people for an outlet. But more importantly, the solar stations gave her neighbors a better connection to the world. Using mobile devices was not just about convenience -- it was about figuring out how to start the process of putting their lives back together.

According to one industry survey, more than 75 percent of people who experienced extended outages relied primarily on cell phones to get updates from utilities. “We were desperate for that connection. I was knocking on doors telling people what to do because there were no other means of communication,” said Cardwell. “It was clear that it would have been very helpful if we'd already had solar generators.”

***

Herb Freedman liked the idea of solar. He liked the idea of a lot of different technologies. But his mission was keeping housing costs as low as possible, and Freedman wasn’t convinced that solar was the right answer.

Besides, the city his company maintained had something else keeping residents insulated from problems on the grid: a 40-megawatt combined heat and power (CHP) plant providing electricity, steam, heating and cooling to 60,000 people all in one package. And it worked flawlessly during Sandy.

Technically, the area served by the power plant wasn’t a city. It was an affordable housing development in the Bronx called Co-Op City, with more than 15,000 apartment units, 35 high-rise buildings and three shopping complexes on 330 acres of land. It was, officially, the largest residential complex ever built. If it were designated a city, it would be the tenth largest in the state of New York.

Freedman was a principal at Marion Real Estate, the company managing Co-Op City. And he took pride in the community’s energy self-sufficiency. “One dollar of fuel gets used three times. There’s a level of comfort knowing you supply your own energy needs.”

The steam and gas turbines at Co-Op City were replaced in 2011 after the original steam plant and 6-megawatt backup generator built decades ago had fallen into disrepair. The new plant generated electricity along with steam, giving the co-op an ability to island itself from Con Edison’s electric grid during emergencies. The original motivator for building the $60 million CHP plant wasn’t just resiliency during blackouts -- it was straight economics. The co-op immediately saved $15 million a year in energy costs, helping to keep housing affordable as electricity prices in New York increased.

For a year, the power plant chugged along mostly unnoticed -- cooling apartments, heating showers and electrifying appliances with virtually no one in the city knowing where the resources came from. And then came Sandy, which caused 45,000 power outages in the Bronx. During it all, Co-Op City was business as usual. “We were watching what was going on around the city, but we were fine. We had no outage,” said Freedman.

Most of the Co-Op City residents still had no idea that a local power and steam system had saved them from a possible extended power outage. But others took notice. “All of a sudden, the value of CHP really hit home,” said Jessica Lubetsky, a clean energy policy expert with the Pew Charitable Trusts.

Across Connecticut, New Jersey and New York, more than a dozen CHP plants at colleges, hospitals, data centers and corporate campuses reliably provided energy during and after Sandy. According to a report from ICF International, all twenty-four CHP systems in New York that were designed to operate independently from the grid during a power outage performed flawlessly. By comparison, during the major Northeast blackout of 2003, half of the 58 emergency generators serving hospitals failed to operate.

When LIPA struggled for two weeks to get electricity back, the 1.25-megawatt natural gas CHP system at South Oaks Hospital kept medicine refrigerated and patients comfortable. When the grid failed in Princeton, New Jersey, Princeton University’s 15-megawatt system supplied all of the campus’ energy for three days. And when cascading power outages hit Manhattan, Public Interest Network Services kept its data center and internet services humming thanks to a 65-kilowatt CHP unit.

Just three months earlier, President Obama had signed an executive order that set a national target of 40,000 megawatts of new CHP capacity and established a technical assistance program at the Department of Energy. The order was framed entirely in an efficiency context, with no mention of the resiliency benefits. Then Sandy showed how reliable cogeneration could be during extreme events. The push to develop CHP took on a whole new meaning.

“This notion of using combined heat and power for resiliency really materialized after Sandy,” said Lubetsky. “Before, ‘resiliency’ just sort of came up in passing.” Suddenly, cogeneration was a central piece of post-Sandy recovery spending.

When announced, some worried that President Obama’s 2012 executive order to double CHP deployment would fall flat without funding. But East Coast states created funding momentum after Sandy. In May 2013, following recommendations from a state commission, New York Governor Andrew Cuomo boosted spending on CHP by $40 million -- adding to the $100 million recently allocated for the technology. New Jersey quickly followed suit with another $100 million in funding for its existing CHP program. Two months later, Connecticut allocated $18 million for microgrid projects, many based on cogeneration units.

"Superstorm Sandy demonstrated the need for resilient power generation when critical facilities like hospitals lose electricity," said Gov. Cuomo in a funding announcement. "CHP technology is a clean energy, commonsense solution that keeps the lights on and systems running during emergencies.”

In recent months, Freedman has been talking with Siemens and the New York mayor’s office about turning Co-Op City into a laboratory for networking other distributed energy technologies into its microgrid. That could include solar, battery storage, or a more sophisticated software system for controlling energy across buildings. “We’re like a city. We’re a perfect laboratory for testing because of our size,” said Freedman.

***

The use of clean, distributed energy was not widespread during Superstorm Sandy. These examples were outliers at the time of the storm. But in the nearly two years since the disaster, much work has been done to turn these resources into the norm -- and tie these technologies together into a more complete resiliency framework.

Across Connecticut, Massachusetts, New Jersey and New York, more than $300 million has been spent or committed to develop distributed energy systems specifically to address events like Superstorm Sandy. Utilities, regulators and lawmakers have made a real effort to learn from the success of localized energy production during the storm.

“There is a serious commitment to begin to fund distributed power solutions for more resilient solutions. That, to me, is really a fundamental change,” said Lew Milford of the Clean Energy Group. Indeed, there has never been a coordinated multi-state effort to build distributed energy systems like the one that took shape after Sandy.

On a summer day in late July 2013, Connecticut Governor Dannel Malloy joined local officials in downtown Bridgeport to announce state funding for nine microgrid projects. It just was one of many similar announcements from state officials in the months since the storm passed. But this one was personally significant for Malloy. “This is close to my heart,” he proclaimed.

Before becoming governor, Malloy had been mayor of Stamford, Connecticut from 1995 to 2009. He took a special interest in localized energy throughout his mayoral terms, both because he believed in renewables and because he was concerned about power reliability for his city. With electricity prices in Connecticut nearly 60 percent higher than the U.S. average, it was getting harder to attract financial businesses to the city from New York. Power reliability problems made the situation worse. A heat wave in 2006 caused power lines to catch fire and left 9,000 people in Stamford without power, exposing problems with an aging system.

In 2007, Malloy ushered through an ordinance in Stamford that created an energy improvement district that allowed property owners to collectively fund and implement onsite energy systems. He was particularly interested in building a downtown microgrid. To prove the concept, Malloy worked with his economic development team and a project developer in 2009 to build a CHP microgrid for a 250,000-square-foot government building using a gas turbine and a fuel-cell unit. But the project languished. Concerns grew about the financing agreement, and when a new mayor came in a year later, the project was terminated.

Three years on, Malloy had witnessed the statewide consequences of not having resilient backup systems like microgrids. The destructive combination of Hurricane Irene and the Halloween nor’easter in 2011 caused more than 800,000 outages across the state that took 12 days to restore. Malloy knew it was time to take another stab at power reliability. In the summer of 2012, he worked with the legislature to pass an emergency preparedness act that, among many other things, established the first statewide loan program for microgrids.

When Sandy swept through Connecticut, it brought another crippling round of outages and $400 million in damages. The government swiftly set aside millions to build out distributed energy projects for critical facilities. “Today marks another step forward in how we deal with extreme weather,” said Malloy proudly as he announced the first nine projects in the summer of 2013.

In March 2014, the first microgrid at Wesleyan University in Hartford went on-line. The school invested in a 676-kilowatt CHP unit featuring a reciprocating natural gas engine that will keep nearly 90 percent of the campus running for weeks during an outage. Other microgrids around Connecticut are in development and will be finished within the year. Most will be based on natural gas; others may feature more renewable energy sources. After an initial $18 million commitment to the loan program, Malloy proposed another $15 million to build more microgrids across the state.

Since New York’s initial commitment to spend $40 million on CHP, Con Edison has stepped up with a $66 million program to support the technology. In January, New York set aside another $40 million for at least ten communities looking to develop local microgrids that can integrate clean energy and provide crucial backup power by islanding from the centralized grid. That includes a potential project on Rockaway Peninsula, where the power didn’t come back on for weeks after Sandy.

New Jersey and Massachusetts have responded in kind, together setting aside $50 million to develop microgrid projects in those states. “These states, in particular, have not wasted the opportunity to move forward,” said Pew’s Lubetsky. Adding to the funding, the Department of Energy also jumped in with an additional $7 million for innovative microgrid designs in communities around the country.

There is no doubt these programs spurred by Sandy are catalyzing the nascent market for microgrid development. But simply setting aside money for projects doesn’t solve the complex legal and technical challenges facing project owners and utilities.

The pitfalls are numerous, and have yet to be sorted out in a comprehensive way. What if wires from a local microgrid intersect into the public domain? A utility may be able to sue for infringing on franchise rights, or could opt to raise its interconnection rates. What if a project is sized too large? The project owner can be taxed as a steam corporation if using CHP. What if the host wants to island from the grid during an emergency? In some cases, the utility may argue for shutting down the microgrid for reliability or safety reasons.

Tax policy is an issue as well. Currently, the federal Investment Tax Credit for CHP is only at 10 percent. And like other clean energy technologies, CHP can’t qualify for publicly traded infrastructure funds like master limited partnerships. Those federal limitations -- combined with local conflicts with utilities -- present enormous challenges for microgrids. “While the movement is underway, there's also kind of a bigger-picture issue in that the markets aren't quite right,” said Lubetsky.

There are also limitations in the way these projects are being developed after Sandy. Building a CHP-based microgrid strictly for emergency power is much different from building a self-healing microgrid -- sometimes called a virtual power plant -- that uses advanced software, renewable energy and battery storage to react in real time. Taking the leap to the next generation of microgrid technology is still a risky proposition for many customers that are worried mostly about emergency backup, rather than becoming a smart-grid vanguard. That’s why people like Herb Freedman of Co-Op City are much more comfortable with proven, cost-effective CHP systems: “It’s got to make sense for us. We can’t just do it because it sounds like a good idea,” said Freedman.

Then there are the technical issues associated with controlling these distributed assets on the grid. Utilities without advanced monitoring and control technologies may be hesitant to support a large number of islandable microgrids as the market grows. A slew of software and power automation companies are attempting to solve these challenges, and post-Sandy activity has led to a boost in business for many.

“With all these programs starting up or in pilot stage, we are looking more and more at the concept of virtual power plants,” said ABB’s Gary Rackliffe. “It has to be one system with a multitude of applications based on a single model.”

The Defense Department has also jumped deeper into microgrids, both for in-field emergency solutions and to prove more advanced virtual power plant applications. For many years, the military has been looking at ways to reduce energy consumption at bases and in the battlefield, while also protecting itself from cybersecurity and extreme weather threats that can cause blackouts. Since Sandy, various branches of the military have accelerated microgrid development. According to GTM Research, the Army, Navy and Marine Corps are developing thirteen new projects in the U.S. -- more than a quarter of all the microgrid projects underway in the U.S.

These aren’t your traditional backup systems seen at universities and hospitals. In May 2013, the Army’s first grid-connected project was completed: an islanding system that features 120 kilowatts of solar, a 300-kilowatt battery and an advanced control system from Lockheed Martin. The Navy is also in the process of connecting three separate solar-storage microgrids together in San Diego to create the “first centrally managed cluster of multiple cybersecure military microgrids” in the U.S. that features an early-warning system for monitoring threats. “This is a very important realm [in terms of] helping to scale up situational awareness and reduce threats,” said Paul Stockton, former assistant secretary of homeland defense.

Sandy proved that networked, distributed generation could have a real impact during the most severe events. It also proved how rare those systems were compared to the ubiquity of the problems within the broader electricity system. But the storm undoubtedly created a new catalyst for investment with a lasting impact -- not just for individual technologies, but also for networks of technologies with the ability to change how the grid functions over the long term. 

Read the full GTM e-book, Resiliency: How Superstorm Sandy Changed America's Grid.