May 14, 2018
Indiana startup Go Electric has been focused on developing microgrids for the U.S. military and now is betting on mass producing microgrids for private companies.
The cost of designing a custom microgrid is beyond the budgets of many companies, which is why an Indiana company sees an opportunity selling a standardized, plug-and-play microgrid that could soon be installed in a single day.
Go Electric has been around since 2011, and it is perhaps best known for installing secure microgrids for the U.S. military bases. The company is now adding commercial storage and private business contracts centered around resilience. Part of the pitch: power outages cost businesses money.
“There’s some real traction recently on the private sector microgrid,” Steve Lichtin, Go Electric’s director of business development, said. “Whether that be large industrial campuses or maybe something else, there is real interest in it now. I think the market is really moving in that direction.”
Go Electric recently won a spot in a Wells Fargo startup incubatorthat focuses on developing new energy technologies and bringing them to market with funding and commercial opportunities. “From their end, Wells Fargo, especially at the critical banking centers or centralized operations, they’re looking for a resiliency solution,” Lichtin said.
Lichtin sat for an interview with Midwest Energy News to discuss how the business model works and how plug-and-play microgrids can help a broader smart grid. The interview has been lightly edited and condensed for this space.
Q: Can you tell me more about the business model?
There’s obviously the on-site generation piece, versus whatever a company would pay from the utility. Also, there’s incentives from installation of those assets – any sort of green credits a company would receive. Beyond that there’s this big line item that is valuing resiliency. Companies have a need for it whether or not they’re able to put a dollar amount on it. There are off-grid microgrids in Alaska where they’re paying over two dollars per kilowatt, so the business case is made quite easily. But in the more mainstream, the continental U.S., we’re seeing more interest in not wanting to rely on the grid all the time for business operations.
Q: What sort of companies are you targeting?
Facilities that stand to gain the most from our resiliency solution are those that require immediate operational readiness when the grid goes down — such as hospitals, data centers or defense installations — as well as businesses that risk losses from a power outage — such as grocery stores, gas stations, retail and indoor agriculture. Additionally, because Go Electric’s system helps integrate renewables and empowers them to serve as on-site resiliency assets, our microgrid is also ideal for businesses that have clean energy goals.
Q: How big of an investment is it? How long is the rate of return?
The economics depend on whether the customer buys the system or gets it for free. For a free system, the investment is $0 and the return is immediate and throughout the life of the equipment. For a purchased system, the investment varies depending on the size of the system and the equipment incentives available from the utility, and the return is in the 15-30 percent range depending on the cost of electricity in the customer’s utility area.
Q: How can the turnkey approach be a benefit to the broader smart grid?
Demand response — taking whole load off the burden of the grid — is the top line for how these things will help the broader grid. But then depending kind of where this microgrid is located on the circuit, there may be other benefits. Like let’s say there’s a bunch of utility scale solar on that circuit. Maybe you are able to also use those assets to help balance the fluctuations. A lot of that is tied up in regulation and policy. Right now, all the utility is asking you to do is use less power. Instead of trying to coordinate any sort of frequency and voltage deviation on the other side of the customer’s meter. But I do think it is kind of heading in that direction.
Q: What are the policies and regulations you see a need to change?
A lot of tariffs don’t allow backflow of power, so you are kind of limited in what you can do when you’re helping the broader grid. I think that’s a big part it. And then also who owns the microgrid who has control of it contractually. What does that mean for the owner of the microgrid, who has first right of dispatch? To kind of balance that with the local needs with the revenue streams. So that balancing act isn’t quite figured out.