Anbaric is a project development company located near Boston, MA that specializes in early stage development of large-scale electric transmission systems (especially controllable DC lines) and small, medium and large scale microgrid projects. The confluence of transmission and microgrid projects is no accident. The difficulties in permitting, development, financing and construction with regard to transmission projects has encouraged the company to develop a deep appreciation for “non-transmission alternatives” (NTAs), as well as an understanding of where transmission should or should not be developed, or where microgrids might be more effective.
Dirk van Ouwerkerk is Anbaric’s Lead Partner for Microgrids. He has more than twelve years of experience as a strategic consultant and is a mergers and acquisitions (M&A) advisor to the electric power industry in the US and Europe. Dirk is specialized in an investment category he defines as “market-based cleantech”, i.e. the segment of advanced energy business models that can benefit from new regulations and government incentives, but that doesn’t need to rely on them for growth. Dirk’s most recent focus has been on the “productization” of the microgrid: an attempt to turn world-class microgrid examples like those at Princeton, Cornell University, and the FDA into scalable solutions for a broader set of customers.
Solar Thermal Magazine talked to Mr van Ouwerkerk regarding why microgrids can best unlock the potential of distributed energy resources and help them achieve the kind of meaningful scale that’s needed for states to meet their clean energy goals.
Dirk van Ouwerkerk [Image: Anbaric]
Tell me more about Anbaric and what it does
Anbaric is a developer of energy infrastructure. Our core business originates in the transmission industry. For a long time it was only the utilities that had the right to develop infrastructure in service territories, but in the first decade after 2000, there were some opportunities for third parties to come up with some innovative solutions, and Anbaric jumped into that market and participated in partnerships that developed two transmission lines from New Jersey to New York, one to Long Island and one to Manhattan. In 2011, federal transmission regulations were changed further so that now all energy infrastructure on the grid that is transmission level needs to be subject to a competitive process by system operators to non-incumbents. We really like that business and we think that same kind of revolution is going to happen with distribution, that is, lower voltage levels in the grid. In addition to transmission, we saw a lot of opportunity with microgrids and as a result launched Anbaric Microgrids, where we look beyond the c meter application to rearrange entire grid areas and upgrade them, improve them, increase the amount of renewables that are possible, build more resilient systems, all towards a more reliable and higher quality power supply that is the foundation for economic growth. Because of our perspective on how transformative microgrids can be and our large-scale, real-world approach, we’re really a project developer of microgrids.
To what extent are microgrid developments being driven by political pressures and policymakers?
You always have to separate the hype from the real business behind it. A lot of the microgrid talk comes from policymakers and from regulators at the Federal, State, local and city levels. A lot of people hear about microgrids and wonder what they can do for them and policymakers want to drive companies into that industry. Under the public eye, there is also an undercurrent in industry where large companies in the equipment industry, the utilities themselves, big engineering firms, are all reconfiguring their teams to be able to build microgrids. This has less to do with policy and more with where they feel their business model is going to go.
What role are microgrids playing in attempts to transition grids so that they can accommodate more renewable energy?
It’s hard to overstate how big that role will be. I would almost say that building out renewables, particularly at the local level, will not be possible without microgrids. This is where Anbaric has a two-prong strategy. At the transmission level, we want to bring large-scale renewables like wind and hydro into the urban area. Currently, we have three big projects that are under development that are all wind and hydro projects, which seek to bring large amounts of clean energy into urban areas and replace big coal plants and big nuclear plants where those are being closed down. At the microgrid level, people don’t know that most of the renewables, and even most of the demand response assets in the combined heat and power and electric sectors, are creating value for the end customer but costs for the grid, which was not built to really operate in real time.
So most of the distribution grid is blind, it’s not operated in real time, it’s operated on an estimated basis of where it is right now. It’s very difficult, on the current distribution grid, to properly integrate solar, small wind, small hydro, combined heat and power, and electric vehicles, all those smaller renewable resources. That is where the microgrid comes in. In places where the microgrids are already developed, like Princeton University, which is serving 180 buildings, in San Diego at the University of California, and in four or five other places in the country, you see that renewables are no longer limited. Rather than generating costs for the grid, they’re actually providing benefits back to it.
The microgrid at Princeton University, New Jersey [Image: Princeton University]
How can the project incubation and development skills utilized in transmission development be best applied to non-transmission projects?
When the first RFPs for non-incumbent transmission came out between 2000-2010, they were really an experiment, and once it became clear this worked, the Federal Energy Regulatory Committee (FERC) issued an order called FERC 1000, which established a rule that non-incumbent transmission developers should be able to get access to every single large infrastructure project because they want to drive innovation. That same ruling also talks about non-transmission alternative, which we call NTAs. While it’s not yet implemented, it opens the door for non-transmission alternatives to bid for exactly the same projects. So now what you’re doing is looking at a certain area and saying, “Okay, there is low growth there, there are reliability problems there” or “We want more renewables in there”. The question is: what is the best application in this case? Is it a big power plant? Or is it a big transmission line? Or is it a series of embedded assets in buildings, on local sites, with some small adaptations to the transmission and distribution grid, and we call that kind of system design, at the distribution level, a microgrid.
It’s very natural for us to come with the same assessment and analysis, the same problems, and rather than saying we have only one solution that we want to push to everyone, we’ll say “we’re neutral. We’ll look at what is the best application in that case and if it is a solution that we offer, then we’ll develop it whether it’s a transmission or non-transmission alternative.
How can microgrids utilize renewable energy technologies to their best advantage, so that they are as efficient as possible?
In various ways, first of all, microgrids like diversity, so each asset has its advantages and disadvantages. Even the conventional assets. If you have diversity of assets, every single asset rarely has the same advantages and disadvantages as the other one. So if you have a pool of assets, often they build on each other’s strengths, and they even out each other’s weaknesses. This is, of course, a basic construct of portfolio theory. So, back to the Princeton University microgrid, they have a pretty large solar plant there. If you were to put that plant on to the grid without a microgrid, the grid would not know when the solar comes, would not know when the solar drops off, and can’t really count on it. But if I have a microgrid and I am controlling it and I have other assets, then I can use those other assets to integrate the solar.
So now, if my forecast is that tomorrow is a very sunny day at Princeton, you could say, I am not going to run my generator, because we’re going to have so much solar I don’t need my generator on the power side, but I will still need my heat. What I will do is, rather than run the co-generator that generates heat and power, I will generate heat at night and store it in a thermal tank. Now, what can I do during the peak of my power demand? My solar is there, and I have my hot water or my stored cold water, so I don’t need to run my generator at all. If I had not known that, if I had not forecasted it, I couldn’t balance out that solar with other assets such as demand-response. I would have polluted more and I would have used the solar much less than I could have. In general, we believe that you can turn solar into a very, very efficient and very valuable peak demand asset, especially because peak demand is often thermally driven, very often by air conditioning on a hot day. So with more precise control systems, forecasting systems and managing systems, we can actually match those peaks with the solar peaks.
It is really important to understand that if you don’t have that, if you don’t see how much you are generating each moment, if you don’t forecast, if you have no tools to balance it, it won’t work. What happens is that the grid is preparing for the worst case scenario. So what the grid will say is, we have no means of adjusting local generation, so we need to prepare for the fact that a cloud will come over the sun and we lose all of the sun, all of the solar power. Often, what it will do, is it will have generators running in backup just for that moment, because it can’t be sure of keeping the grid stable. That creates a lot of losses.
What kind of scale are we talking about with regard to microgrids? Should this be a standard way of deploying renewables?
I think there are two different types of microgrid industries. One is behind-the-meter microgrids, with one single customer and those microgrids go from hundreds of kilowatts to several megawatts, sometimes even to 10 or 15 MW. To compare that with costs, that could go from a million dollars for one building to ten, fifteen or twenty million dollars.
The other type of microgrid is what we call large microgrids, which is kind of weird because ‘large’ and ‘micro’ shouldn’t really go into the same term, but large microgrids are the ones we focus on and they include both sides of the meter, could be distribution interconnected and covering an entire area. Those projects that we develop are often in the range between 40-100 MW. To give you an example, I just came back from a two-day tour and meetings with Schneider Electric and Black & Veatch our partners, of the Rockaway Peninsular, in Queens, NY, where we are proposing to build a microgrid to service a large part of the Rockaways, which has about 120,000 people and use about 110 MW of electricity. While we’re not going to be able to provide microgrid resources for the entire 110 MW, we’re probably going to back up at least a third of that.
The Rockaway Peninsular, Queens, New York [Image: Wikipedia Commons]
Can you tell me more about your partnership with Exelon
Exelon is funding our campaign of projects in the State of New York. The State of New York is a natural breeding ground for microgrids because the REV process is a very important reimagining of the regulatory construct to promote distributed energy resource development in a state where there are a lot of problematic areas in the power grid. In some areas of the state, there’s a very high price for power and a very high awareness of the vulnerability of the grid following Superstorm Sandy. This combination of factors really attracted us to New York as a first area in which we wanted to develop five microgrids in a campaign. Exelon was already a partner with us on the transmission side for one of our big clean energy transmission projects. We are partnering initially for three years with Exelon to identify five big projects in development. That’s going very well, we’ve responded to one RFP already, on the south fork of Long Island, on the east end, and we’re responding to a second one in the Rockaways. We’re also working on a big industrial site upstate, and we’re working on two New York “Prize” projects.
What does the future look like, both for Anbaric and the microgrid sector?
We intend to show our industrial partners that microgrids are the future. Most of the major players in the power business like Exelon and Schneider Electric think distributed energy resources are extremely strategically relevant and often, executives from the CEO down are involved in them even though they are small projects. Lots of other companies that have billions and billions worth of business are looking to our development initiatives here, because they think this business so strategically relevant. We hope to be able to win a number of these RFPs and be able to demonstrate how much value we can create with those partly-owned microgrids on the grid.
What we think will happen is that there is going to be some acceleration of the institutional change required to make this a regular business. What’s currently happening is that those RFPs that are administered by the utilities ask them to administer a process that actually goes against their own interests. The microgrids that Anbaric is developing are an alternative to the core businesses of regulated utilities. To the extent we succeed, they will invest hundreds of millions less in the transmission and distribution grids that are their core businesses. That puts the utilities in an untenable position, so we would prefer and I think they would prefer that an independent institution issuing these RFPs. Then, the utilities themselves can compete for this new business without fears of conflicts of interest.
On the transmission side, the independent system operator plays that neutral role. In New York it is the New York ISO and in New England it is the ISO New England. They should be the ones administering these RFPs and, with proper regulatory supervision, be the independent arbiter for which projects are selected.
I am an experienced freelance journalist with a wide and varied portfolio to my credit including web content, magazine articles, reporting, features, interviews, reviews and blogs. My special interests include environmental issues, particularly climate change, renewable energy, transport, green building and sustainable infrastructure. I have numerous secondary interests ranging from politics and current affairs to social justice, science, technology and innovation, historical topics and lifestyle subjects such as literature, psychology, contemporary spirituality and culture.