Microgrid Finance & Development
*A microgrid presents a challenging package to develop and finance. The primary difficulty arises from the fact that a microgrid is not just one type of asset, but rather is a combination of assets that present different technology risks, capital cost factors, and value streams. A microgrid includes generation, a distribution system, consumption, and often storage. The system is integrated and managed with advanced monitoring, control and automation systems...
The implementation of a microgrid rarely occurs as one project and a common investment. Instead, the value proposition of microgrid evolves over multiple phases. Each phase isn’t completely distinct from the others, nor must each phase be implemented in a rigid sequence. Often areas of development can overlap, and newer technologies might be considered later in the life cycle of the project.
All such investments, however, will be driven by the need to deliver value for end users.
Starting from that premise, securing affordable financing for a microgrid project depends first on clearly defining value drivers and seeking opportunities to improve the cost-benefit attributes of microgrid solutions and architecture, along project schedules that satisfy customers’ requirements. The strongest business propositions likely will depend on the cost-effective deployment of energy management systems, efficiency measures, and DR technologies to minimize capital costs and operating expenses. Efforts to reduce consumption of fuel, electricity, water, and other resources offer quicker [returns on investment], and can be compounded with simple DR programs to improve ROI.
*excerpt from Minnesota Microgrids: Pathways Toward Energy Assurance, Chapter IV: Microgrid Development Models, pp.62-69, Sept. 30, 2013.