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MICROGRIDSAN ENABLER OF TOMORROW’S SUSTAINABLE & RESILIENT NEIGHBORHOODS
ramboll.se
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TABLE OF CONTENTS
58
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15
12
FOREWORD BY NIKLAS SORENSEN ..............................4
RETHINKING TOMORROW’S POWER SUPPLY OF BUILDINGS ......................................................7
TODAY’S CHALLENGE: .......................................................8
Surplus of electricity generation, bottlenecks in distribution .....................................................................................8A new emerging energy system challenges conventional thinking ...................................................................10
MICROGRIDS – PART OF THE FUTURE SMART SOCIETY ................................................................ 12
The microgrid opportunity ........................................................ 12True grid parity and tipping point ......................................... 15
THE OPPORTUNITY FOR SWEDEN: ...............................17
Microgrids applications in Sweden ........................................ 17
AGENDA FOR POLICY AND DECISION MAKERS: .......................................................... 19
Microgrid challenges today ....................................................... 19
CONCLUSION & CALL-TO-ACTION: ............................. 20
Microgrids as the future energy solution ..........................20References ........................................................................................ 22
There are five main regulatory challenges that must be solved
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Now is the opportunity to accelerate the transition towards a more sustain able, efficient and resilient society by investments in truly new infrastructure – such as microgrids
“
29 TWhPredicted Swedish surplus of electricity during 2022 given current development
(Energimyndigheten 2019).
We have seen a sharp rise in the attention around microgrids
“
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The Corona crisis has created massive challenges for Swedish society here and now. But when we lift our eyes from concentrating only at today’s most acute issues, the need to build a more sustainable, resilient and efficient society becomes evident. New infrastructures based on novel technical solutions will be required to fulfil these needs. However, change will not happen unless a combina-tion of political push, regulatory adjustments, new business models and capital supply. The good news is that these conditions may soon be fulfilled when it comes to sustain able energy provision of neighborhoods.
Already today, large part of Swedish infrastructure – such as roads, rail, water, electricity distribution, other properties and fixed assets – is antiquated and in severe need of renovation. This is often referred to as the infrastructure debt. Furthermore, the digital infrastructure does not yet live up to what it should in many parts of the country.
But the Corona crisis during 2020 has also painstakingly revealed that ‘more of the same’ and old solutions are not sufficient. Swedish society needs to apply a truly innovative thinking with new solutions to solve anything from resilient supply chains to food and energy.
Looking ahead, a holistic view on how the next generation of truly smart infrastructure shall be designed, regulated and financed is needed. Now, Sweden has the opportunity to accelerate the
transition towards a more sustainable and resilient society by making the investments in truly new infrastructure. However, old laws and regulations currently hampers new solutions and may take years to change. As speed of implementation is crucial, it must be possible to test new technologies in full scale through regulatory sandboxing, i.e., temporary exemptions from strict regulation that would otherwise halt innovation.
This is where Microgrids come in – an increasingly interesting technological solution that has the ability to significantly increase sustainability, secure resilience and decrease cost in the energy provision of local neighborhoods. And thereby also increasing the efficiency of the overall national energy system. With this white paper, Ramboll in Sweden highlights the near term opportunities – and how to make it happen.
Welcome on board to partner with us on our exciting journey!
Niklas Sorensen Managing Director, Ramboll Sweden
FOREWORD BY NIKLAS SORENSEN
Now is the opportunity to accelerate the transition towards a more sustain able, efficient and resilient society by investments in truly new infrastructure – such as microgrids
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Single properties, neighborhoods and even communities around the world can already with existing technology solutions, benefit from being autonomously supplied with locally produced energy. This at an investment that provides lower lifetime energy costs compared to the conventional electricity-grid.
The energy solutions that make all of this possible are called Microgrids. They are systems that integrate local energy sources – such as wind plants, solar PV panels and geothermal heat pumps – with energy storing capacity and intelligent monitoring and control. These systems are becoming increasingly attractive to real estate owners as they can lower operating costs, help become more sustainable and even create new revenue in selling any surplus energy produced at local levels to external users via the regional or national electricity grid.
However, the current legislation in Sweden stand in the way of these smart microgrids as we see local energy distribution monopolies, hindrance for DSO’s to store energy, hinderance to build electricity grids between different properties as well as double taxation on selling excess energy back to the grid.
Buildings currently account for about 40 percent of the yearly energy use and if we are to achieve Sweden’s ambitious climate goals, new ways to solve the energy provision is required. And it is needed fast. The legislation needs to adapt to our new reality with disruptive technology and favor the actors willing to reduce their climate impact with new innovative energy solutions such as microgrids.
RETHINKING TOMORROW’S POWER SUPPLY OF BUILDINGS
Rapidly increased capacity and decreased cost of sustainable energy sources like wind, solar and thermal has the potential to fundamentally transform the way buildings and villages are powered.
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undercapacity in transmission and distribution networks. The situation is especially alarming in Stockholm, as it hinders economic growth and the development of infrastructures like new subway systems, production facilities, and residential areas.
Despite the need to create a more robust energy system, Sweden’s major distribution companies are currently reducing their grid investments. Ellevio, one of the three largest electricity network owners in Sweden, plans to cut their investments for the period 2020–2023 by 40% compared to 2016–2019 (Ellevio 2019). At the same time, grid tariffs have been increased considerably during the past years. The price increases have predominantly been turned into bottom line profits.
We are generating a surplus of electricity ...
ELECTRICITY SURPLUS
... but at times demand at a given time is higher
than supply...
LACK OF EFFECT
... or the transmission and distribution networks cannot carry the capacity
need.
CAPACITY SHORTAGE
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Swedish wind power is expected to increase capacity from the current production of nearly 19,8 TWh to 38 TWh by 2022 (Energimyndigheten 2019). Given this development, Sweden would hit a net electricity export of 29 TWh by 2022 – continuing to break the historic record for net electricity export. (Energimyndigheten 2019).
In short, Sweden has enough electricity generation capacity, but cannot distribute it to the people and businesses that need it.
The shortage in grid capacity is now becoming alarming in several heavily populated Swedish regions like Stockholm and Malmö, according to Svenska Kraftnät. This is due to a significant
The traditional energy sector is experiencing serious challenges. Today, Sweden is generating more elec tricity than is consumed. But at the same time, there are large effect, transmission, and distribution shortages in the Swedish energy system that are becoming increasingly problematic on regional and local levels.
The Swedish electricity usage in 2019 was 139,5 terawatthours (TWh) incl. transmission losses – in line with the yearly average recorded since the early 1990s (Energimyndigheten 2020). Also in 2019, Sweden’s net exports reached an alltime high of 26,2 TWh or roughly 19% of total national usage (Energimyndig heten 2020). Furthermore, in accordance with current investment plans, for example,
SURPLUS OF ELECTRICITY GENERATION, BOTTLENECKS IN DISTRIBUTION
TODAY’S CHALLENGE:
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29 TWhPredicted Swedish surplus of electricity during 2022 given current development
(Energimyndigheten 2019).
Moving ahead, the need for electricity may also increase. A main driver for this is, for example, the shift from a fossil to electricitybased vehicle fleets –but also in the heavyindustry such as the novel process for fossilfree steel production through using hydrogen instead of coal for the direct reduction of iron ore. If all of Sweden’s cars would be transferred to electrical that would require an additional 12 TWh per year (Vattenfall 2019). But such a shift will – in an optimistic scenario – take at least 20 years (Vattenfall 2018).
Overall, Sweden must find new solutions to these challenges to secure capacity, stability, and resilience for all going forward.
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We may be facing a true paradigm shift. Renewable energy generation in combination with new software and storage technology place increasingly large pressure on the conventional way of power generation, transmission, and distribution.
As the shift continues from large scale centralized production units to an array of smaller decentralized wind and solar units, the need for an updated electricity grid increase. New local electricity systems need to become more flexible and able to work in both directions, as well as store surplus energy. At certain times during the day, the systems need to receive locally produced surplus electricity. And at other times, they need to be able to distribute complementary electricity or store it locally for later use.
In many parts of the world, smallscale power grids, often called microgrids, are now identified as a significant opportunity to obtain new levels of flexibility, sustainability, and resilience in the energy systems at a decreased cost.
In contrast to previous smart energy solutions, which were all directed towards optimizing the existing infrastructure through, for example, smart meters, we are now talking about microgrids as a new complementary infrastructure addon, and potentially as a substitute to the existing energy system in the long run.
The big question is whether microgrids could be a key solution to solving the current capacity shortage in our energy systems.
We believe so.
A NEW EMERGING ENERGY SYSTEM CHALLENGES CONVENTIONAL THINKING
We may be facing a true paradigm shift.
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As the name implies, microgrids are smaller versions of standard sized electrical grids. They can supply locally produced energy directly to a selected group of users in the grid network. One could say that microgrids function as a subsystem but with a connection point to the general grid. This connection acts as a “switch” and makes it possible to disconnect a microgrid from the public grid and temporarily operate it as a standalone electrical system, with help from renewable energy sources and batteries in the event of a power outage.
The US Department of Energy (DOE) defines microgrids as: “a group of interconnected loads and distributed energy resources (DER) within clearly defined electrical boundaries that act as a single controllable entity with respect to the grid. A microgrid can connect and disconnect from the grid to enable it to operate in both gridconnected and islandmode” (The U.S. Department of Energy 2012).
From a society and consumer perspective, the microgrid solution has several advantages. Amongst others:
FACILITY MICROGRIDSThe facility microgrid provide increased energy reliability to existing main grid connected sites like businesses, university campuses, hospitals, and military facilities. The greatest benefits are the potential for cost savings, secure and resilient energy, and increased use of renewable resources. Their impact on the national energy provision and grid as whole, however, is limited.
REMOTE MICROGRIDSRemote microgrids are most often implemented in remote locations that don’t have access to the traditional grid, such as islands. They’re able to minimize fossil fuel depen dence while maximizing re newable energy use. They serve multiple consumers and producers in locations where the main grid is not accessible.
UTILITY MICROGRIDSUtility grids can be either grid connected or offgrid and are designed to share energy usage within a community, such as multiple homes or even small municipalities. They reduce the cost of energy and provide more reliable energy from renewable sources. This category has by far the largest potential to dramatically change and even disrupt the energy landscape.
Furthermore, there are generally speaking three different kinds of microgrid systems:
THE MICROGRID OPPORTUNITYMICROGRIDS – PART OF THE FUTURE SMART SOCIETY
in society as consequence of better optimized energy
systems at a local level.
REDUCED POWER DEMAND
due to the reduced power demand and the shift towards alternative
energy sources.
REDUCED CLIMATE IMPACT
by challenging the current conventional business models for generation-
transmission-distribution.
REDUCED PRICES
$
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Within each of the three main categories of microgrids, there are numerous system setups. There is a wide array of boundary conditions that determine system capacity and capabilities, and eventually, the economic viability within a given geography, such as Sweden. Altogether, thousands of different combinations and systems setups are conceivable.
Many of these technologies and setups are now developing rapidly. One leading example is hydrogen that is becoming the most promising microgrid storage solution to take care of irregular renewable
Until recently, alternative energyplusstorage systems were neither technically robust nor economically viable. But, the dual trends of declining costs for distributed energy technologies and accelerating maturity and adoption rates of battery technologies and hydrogen storage are changing that.
Many places around the world have already reached what is called “grid parity”, where the cost of generating electricity from an alternative energy source is the same or lower over its lifetime than retail electricity prices from the grid. However, the notion of competitiveness for alternative energy sources, and especially the concept of “grid parity” (also known as socket parity), is not always welldefined.
We believe microgrid systems will be able to challenge the conventional system on large a scale, when the combination of alternative energy source plus storage reaches “true grid parity” and microgrids become an economically viable substitute. This will help to manage the irregularity of alternative
TRUE GRID PARITY AND TIPPING POINT
GRID PARITY
TRUE GRID PARITY
The cost of generating electricity from an alternative energy source is the same or lower over its lifetime than retail electricity prices from the grid.
The cost of generating electricity from an alternative energy source plus storage is the same or lower over its lifetime than retail electricity prices from the grid.
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SCHEMATIC BOUNDARY CONDITIONS FOR A MICROGRID
CONNECTIVITY OFF-GRID ON-GRID
DISTRIBUTION ELECTRIC DISTRICT ENERGY
LOCATION URBAN RURAL
ENERGY ELECTRICITY CHP HEAT
LOAD COMMERCIAL INDUSTRIAL RESIDENTIAL
MANAGEMENT FORECASTING SCHEDULING DISPATCH
SCOPE 10–25 MW-10 MW 25 MW +
STORAGE ELECTRICAL STORAGE HYDROGEN HYDRO THERMAL
GENERATION SOLAR PV WIND PANELS BIOGAS HEAT POWER
energy sources to increase grid stability and thus make it more functionally equivalent to the conventional energy grid.
In addition, a 2019 report from the energy industry research firm Wood Mackenzie shows that true grid parity might be closer than we think. According to the report, residential solarplusstorage systems are approaching true grid parity in Italy as quickly as in 2021p and in Germany by 2022p (Wood Mackenzie 2019). This means it will soon be cheaper for households to generate their own electricity locally than to buy their power from the grid.
electricity produced by e.g., solar and wind. The European Commission now claims that we have reached a paradigm shift where green hydrogen can play a big role in reaching the climate targets as it, apart from being a good fuel, can store energy for long periods of time and does not emit any CO2 and almost no air pollution when being used. Furthermore, to cope with the demand the European Commission expects that there could be investment of up to €180–470 billion to expand hydrogen production in Europe until 2050 (European Commission 2020)
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During the past few years, we have seen a sharp rise in the attention around microgrids. The reason, as previously explained, are the rapidly falling technology costs that make energy provision cheaper, greener, and more resilient than ever.
In Sweden, we have seen several research and pilot projects that aim to gain insights into innovative energy solutions and ways to propel the transition of the energy system. A few examples are:
Firstly, Eon is running a microgrid pilot in Simris in southern Sweden. The pilot aims to provide insights into areas such as “islanding”, demand response, energy storage, cross energy carrier synergies, electric vehicles, and grid automation.
Secondly, the energy startup Power2U is developing and piloting new technology in collaboration with InnoEnergy and Örebro Bostäder. The project “control and optimization of distributed energy storage” (CODES) studied the benefits of using battery technology to optimize energy usage in Örebro Bostäders properties, energy storage, and load balancing towards the grid.
Thirdly, real estate company Castellum is an active player and a leader in the solar pv and microgrid segment as they see large sustainability and efficiency gains with locally produced and stored energy. Moving ahead towards 2025, Castellum will build up to 100 photovoltaic installations on its buildings. The investment known as “100 on solar” will be one of the largest investments in solar cells in the entire Nordic region.
Fourthly, we also see private initiatives emerging in Sweden. In Agnesberg, just north of Gothenburg, HansOlof Nilsson has been completely disconnected from the conventional grid since 2015. Nilsson has built his own microgrid system of solar PV, electrolyser, compressors, hydrogen tanks, fuel cells and batteries that makes his house completely selfsufficient on electricity and heat.
MICROGRIDS APPLICATIONS IN SWEDENTHE OPPORTUNITY FOR SWEDEN:
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We have seen a sharp rise in the attention around microgrids
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A review of Swedish electricity regulations shows that the current legislation does not favor the operation of smart microgrids. Thus, in order to create a more efficient energy system, changes in the Swedish Electricity Act will be required. The current law was constructed for another era of largescale production units and oneway distribution. The legal framework does not reflect the latest developments in the energy sector, where users will increasingly choose to invest in their own sustainable energy production, local storage, or smart control. As of today, the Swedish law is counterproductive to the implementation of microgrid systems.
Accordingly, there are five main regulatory challenges that must be solved:
• Local monopolies. Swedish local energy distributor permits are granted by concession from The Swedish Energy Markets Inspectorate to one actor only: the Distribution System Operator (DSO).
• Hindrance for DSO’s to store energy. Battery storage is an extremely interesting tool to reduce the peak load, to allow for increased grid flexibility, and as a costefficient alternative to grid expansion.
• Hindrance to build electricity grids between different properties. Only the commissioned DSO is entitled to have a grid that crosses property boundaries.
• Double taxation. Transmitted power is subject for taxation both when bought from the grid (to be stored in a vehicle battery, for example) and taxed again on the way back to the grid.
• Business models. New business models that create incentives for new actors to enter into local energy markets while also safeguarding the interest of individual users and the universal service obligations towards society at large.
Undoubtedly, these questions are on the current political agenda, as policy makers at the EU and national levels are addressing these issues. But the pace of regulatory change is slow. In June 2019, the Network Concession Investigation (Nätkoncessionsutredningen, SOU 2019:30) submitted its commission report to the Swedish Government. The report partly considered the regulatory barriers related to microgrids in section 4.3 of the report where they open up for extended exemptions from the concession permit.
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MICROGRID CHALLENGES TODAYAGENDA FOR POLICY AND DECISION MAKERS:
There are five main regulatory challenges that must be solved
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We believe it is no longer a question of whether modular, decentralized energy technology will be deployed – it’s a question of how quickly it will happen.
Sweden’s production of electricity currently consists mainly of hydropower, nuclear power, wind power and cogeneration (CHP). Today, Solar pv only make up a small proportion, about 0.7% of Sweden’s electricity need (Energimyndigheten 2020). The sun, however, is a fantastic source of energy. In just 2 hours, it gives us as much energy as the whole world use in a year (Fortum n.d.).
MICROGRIDS AS THE FUTURE ENERGY SOLUTION
CONCLUSION & CALL-TO-ACTION:
option on a large scale the Swedish government need to open up to new ideas and depart from old regulations that halt innovation. As speed of implementation is crucial, it must be possible to test new technologies in full scale through regulatory sandboxing, i.e., temporary exemptions from strict regulations. Only then we can create robust and sustainable solutions for the future.
At Ramboll we partner with our clients to create sustainable societies where people and nature flourish. With our unique combination of technical excellence and socioeconomic insights, we deliver
The Swedish Energy Agency estimates that by 2040, 5–10 percent of Sweden’s total electricity use could be produced by solar pv, compared to the 0.4 percent that we currently see (Energimyndigheten 2018). Microgrid systems powered by solar pv have the ability to change the energy landscape and create a more costefficient, sustainable and resilient complement to the grid.
Regulatory sandboxingAs previously stated, legislative change is needed to speed up the transformation. In order to successfully make microgrids a viable and attractive investment
enduring structures, resource efficient solutions, and socially cohesive communities for today and tomorrow. We are ready to take on the role to pioneer the future energy supply in the liveable city.
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1. Naturvårdsverket. Bygg- och fastighetssektorns klimatpåverkan. Accessed May 13th, 2020 from https://www.naturvardsverket.se/Samarmiljon/Klimatochluft/Klimat/Tresattattberaknaklimatpaverkandeutslapp/Byggochfastighetssektornsklimatpaverkan/
2. Energimyndigheten. El-, gas- och fjärrvärmeförsörjning 2019. Accessed Dec 20th, 2020 from https://www.energimyndigheten.se/nyhetsarkiv/2020/rekordstornettoelexportnufinnsstatistikomelochfjarrvarmefor2019tillganglig/
3. Vattenfall. Kommer elen att räcka till alla elbilar? Accessed May 13th, 2020 from https://www.vattenfall.se/fokus/eldrivnatransporter/rackerelentillelbilarna/
4. Vattenfall. Så når vi en miljon elbilar 2030. Accessed May 13th, 2020 from https://www.vattenfall.se/fokus/eldrivnatransporter/sanarvienmiljonelbilar2030/
5. Energiföretagen. Elstatistik för 2019. Accessed May 13th, 2020 from https://www.energiforetagen.se/pressrum/pressmeddelanden/2019/elstatistikfor2019storstanettoexportennagonsin/
6. Ellevio. Ellevio drar ner investeringsplaner för perioden 2020–2023. Accessed May 13th, 2020 from https://www.ellevio.se/omoss/Pressrum/newsroom/2019/januari/elleviodrarnerinvesteringsplanerforperioden20202023/
7. The U.S. Department of Energy (DOE). The U.S. Department of Energy’s Microgrid Initiative. Accessed May 13th, 2020 from https://www.energy.gov/sites/prod/files/2016/06/f32/The%20US%20Department%20of%20Energy%27s%20Microgrid%20Initiative.pdf
8. European Commission. A hydrogen strategy for a climate-neutral Europe. Accessed Dec 20th, 2020 from https://ec.europa.eu/energy/sites/ener/files/hydrogen_strategy.pdf
9. Fortum. 5 fantastiska fakta om solenergi. Accessed May 13th, 2020 from https://www.fortum.se/omoss/hallbarhet/lasvart/5fantastiskafaktaomsolenergi
10. Energimyndigheten. Solceller i Sveriges energisystem. Accessed May 13th, 2020 from http://www.energimyndigheten.se/fornybart/solelportalen/lardigmeromsolceller/systemperspektivisverige/
REFERENCES
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