Solar will soon be the dominant generation source for microgrids

Move over, CHP—solar is starting to gain traction in the microgrid sector.

Trane and Alstom Grid were recently awarded $5 million from the California Energy Commission (CEC) to build a wastewater treatment microgrid that will incorporate solar energy at the Laguna Wastewater Treatment Plant in Santa Rosa, Calif.

The CEC has handed out more than $20 million to microgrids that incorporate low-carbon sources of electricity for critical facilities and renewable-based microgrids at other locations. But the move toward solar for microgrids is not unique to California. Microgrids are springing up across the U.S. with various use cases. Until recently, most were fueled by fossil-fuel generation, including combined-heat-and-power systems or diesel generators.

But that is changing, according to new data from GTM Research. Of the more than 100 operational microgrids in the U.S., nearly half use natural gas combined-heat-and-power (CHP) systems. Increasingly, regulators in many states are calling for microgrids that can use a mix of generation, including renewables, which usually comes in the form of solar PV. Nearly half of future planned capacity will have solar PV integration, making it the dominant source of generation for future microgrids. 

That doesn’t mean CHP systems will fade out completely, especially in the Northeast where there is a significant potential for the technology in states like New York -- and an appetite to install more. While New York is currently the leader in installed microgrid capacity, California, with its focus on renewables, is catching up fast.

“With 39 operational and planned microgrid developments, California leads all states in terms of the highest number of microgrid projects,” said Omar Saadeh, senior analyst with GTM Research and author of North American Microgrids 2015: Advancing Beyond Local Energy Optimization. California is fourth in the nation currently with 143 megawatts of operational microgrid generation capacity. New York is first.

Most of the newly commissioned microgrids are also less than 1 megawatt, which makes it easier to rely on renewable power. Larger, more complex systems may need additional generation options.  GTM research expects U.S. microgrid capacity to grow to more than 2.8 gigawatts (generation and storage) by the end of the decade -- double the capacity installed today.