Recap: WAE Q1 2018 AEG Stakeholder Breakfast: Resiliency, Critical Infrastructure & Microgrids

-Collin Smith, AEG Fellow

Highlight Video - WAE Q1 2018

On February 22, Advanced Energy Group held its first Stakeholder Breakfast of the year in Washington, DC. The topic this time: Resiliency, Critical Infrastructure, and Microgrids. After the significant damage wrought by last year’s hurricane season, the subjects were more relevant than ever. The event’s large attendance reflected the importance of the subject matter, as the room was filled to capacity. The event also drew a number of distinguished Discussion Leaders:

Kevin Bush led the first discussion by laying out DC’s resiliency goals. These goals are not only based around addressing acute shocks like storms, flooding, and other natural disasters that commonly come to mind when we think about resiliency, but also the chronic stresses like inequality, unaffordable housing, and stressed transportation systems that can damage a city’s livability. DC plans to release their resiliency plan in October and expects it to address several different topics, including (but certainly not limited to) the development of distributed solar PV systems throughout the city.

  AEG Podcast conversation with Michael McGhee, Executive Director of the U.S. Army Office of Energy Initiatives.

AEG Podcast conversation with Michael McGhee, Executive Director of the U.S. Army Office of Energy Initiatives.

Next, Michael McGhee explained the U.S. Army’s position on resilient infrastructure. He highlighted that at the moment, most utilities are not putting the same emphasis on keeping the bulk power system “secure” and “resilient,” as they do on keeping it “safe” and “reliable,” and that this would need to change in the future to effectively guard against shocks. The U.S. Army has been working hard on this front, often partnering with utilities to use pre-existing grid assets like generation plants to provide back-up power to nearby Army bases in the event of an emergency.

Eliza Hotchkiss then shared NREL’s work on this topic. According to Hotchkiss, Superstorm Sandy was a wakeup call for many because it revealed the vulnerabilities in our current system. One of these vulnerabilities was wastewater treatment plants, which, although many had on-site generation, were still unable to operate because they lacked interconnection agreements. NREL has been conducting research on ensuring power supply to such critical facilities, as well as on other topics like resiliency in transportation, buildings and agriculture.

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Scott Schmitz from AlbanCAT Microgrid Technologies took the stage next and addressed a question that had been on several peoples’ minds: how exactly do we value resiliency? He shared the experience that Alban CAT had with many of its customers, where financial considerations were one of the primary drivers for interest in resiliency solutions like microgrids. Despite the clear benefits of resiliency, it’s difficult to put a price tag on it, and many customers still look for a straightforward multi-year payback on the equipment they install.

  AEG Podcast conversation with Ernest Jolly, Energy Chief, DC Water

AEG Podcast conversation with Ernest Jolly, Energy Chief, DC Water

Ernest Jolly from DC Water echoed this sentiment, stressing that, although DC’s water cleaning and delivery systems are some of the most important infrastructure that keep the city functioning, if the economics of a system don’t work then they won’t consider installing it. Otherwise, the taxpayers that ultimately funded the systems would bear the cost. DC Water has been taking several steps to ensure a secure supply of power, including using methane produced during its water purification processes to generate electricity and working with the Potomac Electric Power Company to develop independent power lines to critical facilities. Still, when it comes to resiliency, Ernest said that DC water has “done some but not enough.”

Michelle Isenhouer used her time to discuss the microgrid projects that Booz Allen Hamilton worked on for New York City in the wake of Sandy and emphasized that cyberattacks were one potential threat that shouldn’t be overlooked. Finally, Jaime Statter from USGBC discussed an exciting new development in resiliency that her organization was working on: the development of the PEER rating system to grade energy infrastructure on resilience in the same way that the LEED standard grades buildings on efficiency. Although the system is still in development, the idea is to create a common set of metrics that can evaluate critical infrastructure and create a community of committed professionals on resiliency that can help drive improvements.

After Jaime’s presentation, the breakfast moved into a group discussion, where the question of how to value resiliency once again moved front and center. Steve Shparber pointed out that this area still lacked long-term price signals, and that FERC and the independent system operators would be instrumental in solving the problem of placing a value on resiliency in the power sector. Shalom Flank, a New York based microgrid developer, pointed out that the telecom industry’s strategy of offering “premium plans” to customers willing to pay for more services could offer an example. From his perspectives, regulators could create tariffs that allow utilities to offer specialized services to customers who were willing to pay extra to ensure their power supply through on-site microgrids.

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Job Hennings from Grid Energy, a microgrid developer, discussed the importance of having a market mechanism to value resiliency, emphasizing that only a robust pricing system could allow the sector to move forward. Ernest Jolly pointed out that it seems as though the current formula we use to price infrastructure leaves out some components that we value, including resiliency, and the challenge is how to represent them in the pricing formula.

Kevin Bush offered the insurance industry as a sector that could help price this component, noting that insurance companies would often reduce your insurance premium if you take precautionary measures. Would insurance companies also be willing to reduce premiums for cities and infrastructure that invest in measures to improve their resiliency? Jaime Statter liked this line of thought and stated that this was already getting attention in New York City, where insurance companies helped to pay for some measures that safeguard facilities for future Sandy-like natural disasters. She also mentioned that insurance and reinsurance companies were interested in piloting these types of projects in other cities as well, leaving the floor open to the attendees as to whether they would be part of such future pilots.

Michael McGhee spoke up next to remind the crowd that investments in resiliency don’t necessarily need to be additive but could be integrated solutions as well. In cases where investments will be made in new infrastructure for other purposes, it’s possible to guide that investment to create additional value from improved resiliency – as the U.S. Army has done by co-locating utility generation assets next to Army bases so they can provide back-up power in emergencies. The group was also reminded to not focus too narrowly on electricity in the power sector; urban resilience touches on a number of different areas, and there are opportunities to combine funds from several departments – including the Department of Defense, Department of Energy, and Department of Transportation – to build truly resilient systems.

 

The second quarter Washington Advanced Energy Stakeholder Breakfast will be held on June 7, 2018 and will cover the topic of: Smart Buildings and Grid Modernization.  More details can be found here.

WAE's Q2 2017 event was featured in this recap and video highlight

 

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