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Reimagining Grid Solutions

Building Resiliency Through Microgrids in Puerto Rico: Barriers and Drivers. Reimagining Grid Solutions. School of International and Public Affairs | Columbia University Final Presentation May 8, 2018. The Team. Lindsay Cherry MPA, EE, 2nd yr Policy, Regulatory, Renewables.

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Reimagining Grid Solutions

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  1. Building Resiliency Through Microgrids in Puerto Rico: Barriers and Drivers Reimagining Grid Solutions School of International and Public Affairs | Columbia University Final Presentation May 8, 2018

  2. The Team Lindsay Cherry MPA, EE, 2nd yr Policy, Regulatory, Renewables Mac Farrell MPA, EE, 2nd yr Policy, Electricity Markets, Emissions Jeffrey Lepley MPA, EE, 2nd yr Solar, Waste-to- Energy, Project Finance Giovanni Pagan MPA, IFEP1st yr Puerto Rico Legislation, Consulting, Economics Astha Ummat MPA, EE, 2nd yr Energy Efficiency, Project Management, Excel Modeling Reimagining Grid Solutions – Final Presentation

  3. Project Description An analysis of regulatory, policy and financial drivers and barriers to microgrids in Puerto Rico Includes: • Analysis of a proposed microgrid at UPR Mayaguez • Case Studies of successful or innovative microgrid models Partners and background: The State Office of Public Energy Policy (OEPPE) of Puerto Rico and the National Institute of Energy and Island Sustainability (INESI) publish The State of Energy Report. The report is legally required by the 2014 Energy Reform Act to be released annually. INESI and OEPPE have invited our team to author a chapter of the report focusing on microgrids in Puerto Rico. Reimagining Grid Solutions – Final Presentation

  4. Microgrid Definition and Benefits Definition of Microgrids (Act 133-2016): “‘Microgrid’ means a group of interconnected loads and distributed energy resources within clearly defined electrical boundaries that acts as a single controllable entitywith respect to PREPA’s grid. The goal of microgrids is to reduce energy consumption based on fossil fuels through local renewable energygeneration and strategies to reduceenergy consumption. A microgrid can connect and disconnect from PREPA’s grid to enable it to operate in both grid-connected or off the grid.” Benefits of Microgrids: • Resiliency and reliability (distributed vs. centralized energy system) • Islandability • Reduced GHG emissions • Smoothing of intermittent renewables Reimagining Grid Solutions – Final Presentation

  5. Field Visit and Expert Interviews Field Research Component: Five day visit to Puerto Rico for • Stakeholder interviews • Site visit with project partner INESI at University of Puerto Rico Mayaguez • Visit to Casa Pueblo Microgrid Puerto Rico Expert Interviews: • Puerto Rico Industrial Development Corporation (PRIDCO) • Puerto Rico Chamber of Commerce • Puerto Rico Energy Commission (PREC) • Sen. Ramon Luis Nieves • Casa Pueblo Domestic Expert Interviews: • U.S. Department of Energy • Resilient Power Puerto Rico • Rocky Mountain Institute • New York Smart Grid Consortium • New York Battery & Energy Storage Technology Consortium (NY-BEST) • Sonnen • Clarkson University • Princeton University • New York University • SUNNOVA Reimagining Grid Solutions – Final Presentation

  6. FederalPolicy Federal policies and programs can both help and hurt the development of microgrid system in Puerto Rico • Investment Tax Credit (ITC) • Public Utility Regulatory Policies Act (PURPA) • DOE Office of Electricity Delivery and Energy Reliability (OE) • HUD Community Development Block Grants Disaster Recovery Program (CDBG-DR) • USDA Rural Energy for America Program (REAP) • The Stafford Act • FEMA Section 428 • Investment Tax Credit (ITC) Barriers Drivers Reimagining Grid Solutions – Final Presentation 6 6

  7. State and Local Policies (1/2) Reimagining Grid Solutions – Final Presentation

  8. State and Local Policies (2/2) Reimagining Grid Solutions – Final Presentation 8

  9. Financing Microgrid Systems (1/4) Process followed: • Investigating the most common methods of financing microgrids • Understanding applicability by mapping financial models to different market segments Reimagining Grid Solutions – Final Presentation Source: Navigant Research

  10. Financing Microgrid Systems (2/4) Costs and revenue streams associated with microgrid systems • Overnight Costs • Equipment • Labor • Design & Engineering Fees • Grid & End-User Integration • Permitting • Taxes & Warranties • Insurance • Ongoing Costs • Debt • Operation & Maintenance • Fuel Sources • End Users • Public Sources • Federal • State • Local Incentives & Grants • Energy Markets • RECs • Net Metering • Demand Response Costs Revenues Reimagining Grid Solutions – Final Presentation

  11. Financing Microgrid Systems (3/4) SUCCESS STORIES Casa Pueblo, Adjuntas, Puerto Rico • Onsite generator, solar panels and battery storage • Provided electricity to community radio station, local school and their main building during Maria • Funded privately through sales of their onsite grown and produced coffee beans and private donations • Solar panels and appliances leased out to community members through payment plan BARRIERS The University of Puerto Rico Mayaguez • Connected to a PREPA-owned minigrid - proved essential for powering campus emergency center during María • Minigrid is made up underground transmission lines, which were initially costly, but necessary for resiliency Non-Puerto Rico Aqueduct and Sewer Authority Aqueduct (Non-PRASA) aqueduct system • Private debt financing through 10 year loan at 7.95%- explored by University of Puerto Rico Mayaguez • Financing structure included permitting, design, equipment and maintenance costs associated with the project • Applicability to microgrids: Loan costs could be recovered through rate base: small fee in monthly electricity bills • Split incentive problem creates risk under variable tenant leasing • Uncertainty for private investors, local manufacturers and industry bodies Reimagining Grid Solutions – Final Presentation 11

  12. Financing Microgrid Systems (4/4) Exploring sources of financing: Existing: • Puerto Rico Industrial Development Corporation • 5 model projects • Renewable Energy + Storage • Community Development Grant • Private Banks Potential: • Development Banks • Green Climate Fund • U.S. Department of Energy Reimagining Grid Solutions – Final Presentation

  13. Questions?

  14. Puerto Rico: Proposed Microgrid Regulations by PREC • Self-supply systems – may not sell supply of energy or provide other grid services outside of their self-supply system or PREPA • Small cooperative systems (Article 4) • Large cooperative systems (Article 5) • Municipal systems (Article 6) • Owned by either one or several municipalities • Third-party systems • PREPA-owned systems • No regulations are established in the document • All other systems • Regulated like third-party systems but may be subject to exemptions under article 8 of the regulation

  15. Current Energy Landscape: High, Inefficient Costs • High electricity costs • 2x average price for electricity • Energy use per capita is ⅓ the national average • Electricity is heavily subsidized • ⅓ of PREPA’s customers receive subsidies • 78 municipalities do not pay for electricity Source: NPR, Power Problems Puerto rico’s Electric Utility Faces Crippling Debt (2015)

  16. Common Applications of Microgrids Remote • Never connect to the macrogrid • Operate in “island” mode at all times • Provides power to the local geography • Generally sourced from renewables such as hydro, solar and storage. Utility • Involves, segment of related grid. • Incorporate existing utility infrastructure • Highly reliant on utility regulation • Must comply with existing utility codes or accommodation • Costs recovered through rate base. Community/Campus • Self-governed • Community based • On-site generation with multiple loads • Integrated with utility networks • Ability to be islanded • Easily fit into current technology and regulatory structure • Most common form. Military Base • Physical and cyber security • Ability to be islanded • Increased resiliency • Integration between renewable energy, local power, energy storage, and load management. Ex. Brooklyn Microgrid and Princeton University Ex. Fort Bliss, Texas Ex. Necker Island Ex. Potsdam

  17. Case Study: Brooklyn Microgrid • Classification: • Community Grid (1.25MW Solar) • Location: • Brooklyn, New York • Owner/Developer: • LO3 Energy • Regulatory: • New York’s REV greatly encourages microgrids and community sourced energy and engagement. • Resiliency: • Grid has short power lines and storage capacity. • Financial: • Private funding sourced through LO3 Energy. • Neighbors buy excess solar powered supplied by private entities on the grid.

  18. Case Study: Princeton Microgrid • Classification: • Campus (15 MW Natural Gas CHP & 5.3MW Solar) • Location: • Princeton, New Jersey • Complementary benefits: • Chilled water production, Steam generation, Solar Renewable Energy Credits • Regulatory: • Local codes, EPA emissions and water standards, National electricity code, PURPA • Resiliency: • Interconnections with all 180 buildings, Customized dispatch system, three 7-8 MW generators instead of one 15 MW system • Financial: • 100% capital investment by Princeton University 5.3MW Solar Field Campus District Energy System

  19. Case Study: Potsdam Microgrid • Classification: • Utility: NY REV Demonstration Project • Location: • Potsdam, New York • Regulatory: • Local codes, EPA emissions and water standards, National electricity code, PURPA • Resiliency: • Underground distribution, DER and DR mechanisms, design for up to two weeks of islandable capacity • Financial: • Tiered recovery system for connected customers and surrounding community Mid-Term Presentation

  20. Phase 1 Phase 2 Phase 3 Project Scope Analysis & Recommendations Regulatory & Policy Framework Background Research • Current energy landscape • Microgrid basics • Types, resiliency, benefits • Benchmarking exercise • Princeton University • NYU • Potsdam • Brooklyn Microgrid • Expert outreach • Stakeholder mapping • Identification of federal, state and local barriers • Analysis of barriers • Technical • Regulatory • Policy • Financial • Chapter outline • Field visit • Stakeholder interviews • PREC • INESI • UPR Mayagüez • Legislators • PRIDC • Chapter draft • Chapter revisions Final Deliverable: Chapter in the Puerto Rico’s State of Energy Report Mid-Term Presentation

  21. Microgrid Feasibility at UPR-Mayaguez • 3.2 MW Microturbine CHP • 2.4 MW Solar PV • Remainder of load reduction through energy efficiency retrofits • LED Retrofits • VFD Installations Necessary Improvements for Microgrid Reimagining Grid Solutions – Final Presentation

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