Microgrids – what are they and do they have a role to play when it comes to energy resilience in New Zealand?

These are questions worth asking because of where microgrids sit in the renewable energy generation equation. It is acknowledged that alternative renewable generation is needed to meet electricity demands that continue to grow - a recently released, Transpower-commissioned report predicts electricity demand in New Zealand will double by 2050. Added to that is the fact that microgrids being trialled in New Zealand tend to be solar powered and solar, it appears, is king. In 2017 solar became the leading form of new utility energy generation in the world. Energy sources, other than solar, can feed microgrids. For example, wind turbines, mini and micro hydro, biogas, bio mass can all be part of the microgrid energy generation picture, but the reality is that solar and batteries are utilised in the vast majority of microgrids around the world.

As the Transpower report states: “There is no silver bullet in the battle against unmitigated climate change or in decarbonising our economy. However…solar energy is certain to play an increasing role in our energy future and in our efforts to avoid a climate crisis.”

How energy is generated and delivered is changing fast world-wide and microgrids are part of that picture.

The Transpower report named Te Marui Hiko states: “electricity will increasingly become a distributed tool that consumers will generate and manage themselves at home.” Microgrids could arguably be part of that picture too.

So, what are microgrids?

Microgrids are energy distribution systems which only involve a small group of connections. They can operate independently or be connected to a larger grid. Picture, for example, solar panels on a rooftop, accompanied by battery power to store generated energy. That power can then be used by the property owner, and even sold to others nearby. Residents or businesses with microgrids are generating energy close to where it is needed and can be proud of the fact they are producing clean, renewable energy – reducing green gas emissions and lowering their carbon footprint along the way. 

Are microgrids part of New Zealand’s future?

Absolutely, microgrids are something to watch out for in New Zealand, says the head of the Sustainable Electricity Association of New Zealand (SEANZ) Brendan Winitana. He believes they will have a growing part to play in the development of New Zealand’s electricity network.

Brendan (who is both chief executive and chairman of SEANZ) says key organisations in New Zealand have invested, in recent years, in reports into solar powered energy and batteries. Both Transpower and the Climate Change Commission, for example, believe that the development of solar and batteries will be exponential.

“In New Zealand we are seeing the take up of solar panels and batteries increasing every month, so I see the development of microgrids coming off the back of that,” Brendan says.

It’s early days for New Zealand yet, but there are a number of microgrids in both residential and rural areas dotted throughout the country. Brendan is aware of one microgrid that has 40 properties in play and has been running for about 18 months. Another, in Auckland, involves 12 commercial businesses.

“Nearly all are trials to iron things out and address any challenges. This is new ground for NZ so there is a process of trials to go through,” he says.

Brendan believes microgrid development in New Zealand will grow “exponentially” as it has in other countries such as Hawaii and Germany. Australia is also adopting them to combat issues around securing energy supply.

Microgrid adoption in various parts of the world isn’t surprising, Brendan believes, as there is much that’s attractive about this energy generation concept. Microgrids offer energy independence, are a big player in the sustainability and decarbonisation picture, and they provide resilience to those connected – there’s no worry about a power outage. There are financial rewards too. While there’s the initial cost of panel purchase and set up (and in some cases the minimal cost of distributing excess power from one property to one without panels), the reward is energy that’s cheaper than buying off the main grid.

The majority of New Zealanders feeding off the national grid will be well aware, Brendan says, that transmission and lines costs are a big thing. This is significant given the long shape of our country and the fact the bulk of electricity is generated at the bottom of the South Island, yet 40 per cent of all business happens out of Auckland, and 35 per cent of the population lives north of the Bombay Hills. Consumers pay for that transmission cost. Those who are part of a microgrid are using on-site (or near-site) generation so there are no transmission or lines cost.

With microgrids come technological applications. The grids need to be managed to tell solar system where to send power, how much to send, monitor it, and charge the end user for it (if that energy is shared). All that is available now and is operating in NZ, Brendan says.

“Microgrids are here to stay and we will be seeing more of them,” he believes.

Brendan would like to see a “very clear” energy strategy wrapped around New Zealand’s renewable energy opportunities, with a driver being consumers paying the least cost for electricity. Microgrids can and do deliver that.

Meanwhile, Wellington Electricity chief executive Greg Skelton will be watching with interest to see what develops with solar units, and whether microgrids have a role to play in the future.

His company was involved in a micro grid trail that begin in 2017, ran for a few years, and involved about 30 houses in Wellington. The information was largely for Contact Energy and was a demonstration activity looking at how new technology can be integrated and how it interfaces with a retail company like Contact Energy.

“What was coming out of it for the retailer was that costs were probably higher than benefits. It is a timing thing. The associated technology is getting cheaper so there will be a time in the future where these things could become more affordable,” he says.
It’s good for consumers to have options too, Greg recognises. Other than consumers storing their own energy, one scenario that could develop for example, is an agreement for a lower line charge if some of that energy is provided back into the network.
“There are all sorts of new models that need to be explored in the future and they are starting to be discussed.”

Written by Monique Balvert-O'Connor