EBay and Ellison Show Microgrids Gaining on Utilities
Originally the small-scale central power systems known as microgrids were merely a solution to mitigate blackouts, but with recent announcements that Oracle CEO Larry Ellison and eBay have adopted the technology, it’s clear that the technology is gaining momentum as homeowners use them to manage rooftop solar systems, cut electricity bills or ditch their power companies altogether.
To control solar panels or natural gas generators, the systems use software alongside remote sensors. From there the user, whether a home or business owner, or a farmer can oversee their privately produced power from generation through distribution.
Despite their more recent rise in popularity, Navigant Research expects microgrids to bloom into a $40 billion-per-year business on the global scale by 2020. In the U.S. alone, that would translate to power for as many as 4.8 million homes, Navigant says.
While eBay looks to its microgrid to run a datacenter and Ellison uses one to power the Hawaiian island he bought last year, the University of California at San Diego is busy investing millions in the technology alongside the federal government. And these aren’t the only organizations looking to the new technology as an alternative to utilities.
“We are seeing requests for proposals go up significantly, 30 to 40 percent higher than last year, said Paul Orzeske, president of the Honeywell International group that designs and builds commercial microgrids, in an interview with Bloomberg. Honeywell has already built a $71 million microgrid for an FDA research center in Maryland and is currently at work on a $213 million addition to come online in early 2014.
Although for many companies like Honeywell microgrids add a layer of protection against blackouts, they also play a role in offsetting rising energy costs. According to the Energy Information Administration, retail power prices have climbed 34 percent since 2003, with the annual U.S. electrical bill for businesses hovering around $200 billion. But to further add to that price tag, Lawrence Berkeley National Laboratory estimates that lost business from outages and power quality problems adds anywhere from $80 billion to $150 billion to that figure.
By comparison, the companies turning to self-generation and energy efficiency programs, which increasingly are being managed by microgrids, represent spending between $5 billion to $6 billion per year.