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Originally published at Place Tech 

With smart buildings, electric vehicles, and increasingly digitized cities on the horizon, the question of how and where we get power has never been more critical.

Gas, coal and nuclear power plants have long supplied a vast national grid strained by peak demand – such as office hours or unexpected cold snaps – and the introduction of renewable energy, an intermittent source that has put further pressure on the stability of the supply and its pricing.

The solution could be a transition away from a centralized energy grid.

Decentralised microgrids may consist of a single commercial property with a renewable energy generator and battery, or they could be larger networks that link homes in a community or offices in a complex.

A rising priority for sustainable development coupled with the rapid growth of renewable energy are driving these smaller, localised energy markets, where electricity is generated and stored by individual buildings for use during peak demand, buffering consumers from price fluctuations and providing access to energy during outages.

Professor Joe Howe, executive director of Thornton Energy Research Institute at Thornton Science Park, explains: “Local energy markets – or microgrids – are ultimately about a more resilient supply, as well as improved sustainability of energy consumption.

“Because the energy can be contained and distributed locally, the transmission of energy tends to be more efficient.”

Energy storage makes a microgrid  

Outside Manchester’s Bright Building, a Tesla Powerpack system with four 95kWh batteries stores energy purchased from the national grid. With a battery that starts in under a second, this system designed to provide the building with a stable energy supply – and down the line, increase its sustainability by incorporating solar technology to generate some of its own energy.

“Microgrids help solve what we call the Energy Trilemma: the conflicting aspects of sustainability, affordability of energy, and the security of the supply,” commented Bev Taylor, head of energy at developer Bruntwood, which is a majority stakeholder in the Bright Building’s operator, Manchester Science Partnership, when she spoke at the PlaceTech Trend Talk in Manchester.

In the next year, this system could be generating enough energy to power the entire building, eventually making it independent from the main grid and reducing its carbon emissions, in line with Carbon Trust estimates that buildings in the UK need to cut back emissions by at least 80% by 2050 in order to meet national targets.

From a property company’s perspective, standalone operation helps assure tenants of stable electricity supply and cost, while more sustainable real estate has been found to offer a better return for investors.

Solar Panels Grass

Generating energy reduces costs

In Bristol, Two Streets of Solar is a project that aims to retrofit older houses with microgrid capabilities by installing solar systems on multiple homes connected to a central battery storage, then making the generated energy available to any household that wants to be a part of the project. Smart software distributes the energy according to demand.

As Professor Joe Howe notes: “Buildings become mini power stations, as well consumers of energy.”

Buildings that generate energy can offset their energy bill by supplementing the energy drawn from the main grid with self-generated, renewable energy. Surplus can be stored for later use, or sold back to the main grid or to another consumer on their local energy network.

Currently under development, this community microgrid could be a model for neighbourhood power networks. The energy would be managed by a community energy services company, the sole supplier of energy. Any shortfall would be made up by renewable energy supplied by the national grid.

“All buildings could certainly be built with a view to participate in local energy markets,” says Joe. “Especially for those in rural communities, microgrid connection can ensure the stability of their energy supply.”

The potential market for energy

The adoption of microgrids will depend on smart software that can match the supply of energy with varying real-time demand, based on the data from smart meters already installed in many homes and offices.

One trial in London connected a block of solar-enabled flats via a blockchain platform, Electron, that automated peer-to-peer trading of energy generated by each flat. Down the line, blockchain technology could be used for larger, multi-source energy networks that allow consumers to track the origin of their energy – then choose the options that align with their preferences, whether that is to do with sustainability, cost or location of the generator.

At the University of Cheshire’s Thornton Science Park, a combination of diesel and solar generators, universal battery storage, and a smart platform are a model for how various energy resource technologies can be used to reduce fuel costs and carbon emissions, illustrating how renewable technologies could dovetail with existing sources of energy.

“For now, renewable energy sources are far from able to meet the UK’s needs,” Joe says. “But microgrid networks based on traditional as well as renewable sources can ensure energy security for business and communities.”

Platforms such as Selectricity could point the way for a future logistics model – this virtual online marketplace connects generators of renewable energy with businesses, allowing the businesses to visualise their usage, and generators to see where their energy is being purchased.

Selectricity Phone

The future of energy?

While networks that allow energy to be traded peer-to-peer could be the key to a more stable, efficiently distributed supply, as well as new revenue streams for developers and landlords, there remain significant legal and regulatory hurdles.

Pilot projects for microgrid ownership and business models are beginning to emerge, but these should engage early with energy regulators in order to build a framework for a large-scale deployment, as well as how microgrids operated by individuals, corporations and communities work with traditional infrastructure.

“There’s certainly a willingness on the part of the government,” says Joe. “We are approaching a transition from monolithic power stations generating the nation’s energy towards multi-source energy that is much more locally based.”

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