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Microgrids for Fleet Electrification

As electric vehicle (EV) technology improves, the energy, operational, and up-front costs of EVs are becoming increasingly competitive with their gasoline and diesel counterparts. Driven by the financial and environmental benefits of electrified transport, many commercial fleet owners see EVs as the future of their operations.

However, the significant load growth from an electrified commercial fleet can potentially exceed the capacity of the local existing infrastructure, leading to capital-intensive upgrades on the distribution network, and long-lead times for traditional utility upgrades as shown in the table below. Without an EV charging load management strategy, fleet electrification could also move customers into a new rate class, leading to higher demand charges and on-peak volumetric bill impacts.

This is where grid edge solutions, such as microgrids, can help overcome these barriers to adoption.

Source: SEPA, 2019, Preparing for an Electric Vehicle Future: How Utilities Can Succeed

What are Microgrids?
The U.S. Department of Energy defines a microgrid as ”a group of interconnected loads and distributed energy resources within clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid.” Microgrids commonly include some form of generation, load and storage, all of which must be locally defined within an electrical boundary, and typically controlled by a microgrid controller. The basic components are illustrated below.

Within microgrids, an electric vehicle can operate as a controllable load, or in some circumstances, may function as energy storage.

Microgrids for Fleet Electrification
As someone who has worked with alternative electrification technologies for over a decade, John Glassmire, Senior Advisor of Grid Edge Solutions at Hitachi ABB Power Grids, sees EVs as a nascent technology, but one that will be a game changer in the transportation and power sectors. He believes that utilities will need to deploy grid edge solutions, such as microgrids, to maximize the full potential of transportation electrification, especially for commercial fleets.

“Electric vehicles are this amazing opportunity for utilities because it allows them to sell more electricity, but it’s also a challenge for them, because it changes how they’ve been delivering it and the way that power will flow through their lines—and you pair that up with things like the deployment of solar PV and distributed renewables that create this magic storm where you’re going to want to be considering these technologies to ensure that you have the adequate reliability and independence to achieve your energy goals.” – John Glassmire

According to John, the three primary value streams of microgrids for fleet electrification include resilience, cost savings, and carbon reduction with varying degrees of benefit depending on the stakeholder, such as the fleet, the utility, and the general public. A helpful overview of some of these benefits are included in SEPA’s most recent research on deploying and implementing grid edge solutions, ‘The Microgrid Playbook: Community Resilience for Natural Disasters’.

Despite the benefits, microgrids also pose a challenge to existing regulatory procedures. Federal regulators, such as the Federal Energy Regulatory Commission (FERC), are pursuing creative ways to enable regulations to open wholesale markets to energy storage and microgrids with FERC Order 841. This also incentivizes microgrids, as commercial customers can participate in the wholesale market to collect additional revenue by pairing battery storage with a microgrid.

Microgrid Implementation 
In order to meet the demand from fleet electrification, utilities and fleet managers are typically presented with three options:

  1. Build up the capacity of the system to handle the new load,
  2. Incorporate on-site load management strategy using software solutions and logistics (which requires fleet charging flexibility), or
  3. Add on-site energy storage and potentially microgrid control capabilities.

If the fleet has flexibility, the first and second options may be most cost-effective. However, if the fleet doesn’t have significant flexibility (e.g., due to vehicle scheduling, the volume of vehicles using the charging infrastructure), the third option may be similar in cost and have the ability to be implemented more quickly. For utilities and fleet managers with resiliency mandates, interests, or policies, they should explore options for on-site generation and microgrid capabilities as a means to ride through an outage to charge their fleet.

When compared to a traditional microgrid for a building system, microgrids for fleet electrification present new challenges; principally, microgrids for fleet electrification are not modeled on an existing load, but rather anticipated demand, which can make reliable load-based modeling more difficult. Conversely, fleets often permit charging flexibility within defined boundaries, providing a unique dispatchable resource that can be tuned to fit the needs and energy resources of the customer.

While a microgrid is not a silver bullet solution for every fleet electrification project, fleet operators should consider the technology when developing a fleet electrification plan. A microgrid may provide sufficient long-term value from a variety of different value stacks that overcome the near-term economics and technical challenges.

Lessons from Industry
Proterra, a leader in the design and manufacture of zero-emission buses, has developed extensive modeling around EV charging systems for commercial customers, incorporating elements such as vehicle efficiencies, detailed GPS-based schedules and routes, energy on board, infrastructure costs/types, and energy generation or purchase options. According to Alan Westenskow, Director of Business Development at Proterra, they consider microgrids with storage when determining the optimal solution for their customers, which are primarily North American transit agencies and other transit bus users, like airport shuttle fleets and university shuttle fleets.

Proterra’s modeling has shown that microgrids are a cost-effective solution for their customers in many, but not all cases. For many customers, microgrids can provide cost savings over their lifetime through avoiding demand charges and high time-of-use charges. Additional customer benefits include resiliency and the flexibility for creative solutions, such as an overhead charging solution integrated with a solar structure, saving vital space in a bus depot (see below).

Source: Proterra, 2020.

According to Alan, microgrids may not be as cost-competitive when the customer lacks the space for solar or battery storage, or in rare cases with very low energy rates.

Do It Right The First Time
Proterra believes in the importance of planning and modeling these projects thoroughly. For example, many companies use fleet efficiency averages such as 2.5 kWh per mile instead of modeling specific vehicle efficiencies for each individual route driven by different buses on the given terrain or weather conditions, leading to variations of +/- 0.5 kWh. This inaccuracy could then lead to over- or under-sizing systems, impacting the time needed and capital outlay for installing these infrastructure projects.

The primary takeaway according to Westenskow, is that “you need to model it and you need to model it well.” It is critical to ensure that these projects are “done right the first time,” as early failures could have adverse impacts on the pace of the EV transition.

The Future of Microgrids and Fleet Electrification
Fleet electrification and microgrids are already leading to major grid modernization efforts in their own right, but they can further complement one another to become an even bigger solution for the grid of the future.

With the rise of bi-directional charging such as Vehicle-to-Grid (V2G), and other related technologies on the horizon, transportation electrification and microgrids will continue to overlap and provide complementary benefits. For example, V2G could be a potential source of electricity in emergency situations, adding to the resilience value of microgrids. Furthermore, wholesale energy market participation can enhance the value stack for microgrids and fleet electrification. While V2G is not a prevalent option today, many projects are in development that intend to test the viability of V2G technology with microgrids, such as Snohomish PUD’s Arlington Microgrid Project in Washington State.

In the near-term, the utility, microgrid, and fleet electrification communities should work closely together and experiment with different technology and business model options. As more electric vehicles hit the roads, the demands on our existing power systems and grid infrastructure will continue to grow. Finding viable and effective solutions that minimize grid impacts are essential to the growth of the transportation electrification sector.

We encourage readers to consider joining SEPA’s Electric Vehicle Working Group and Microgrid Working Group. To learn more, contact the SEPA membership team at membership@sepapower.org

To learn more and dive into actionable next steps towards a carbon-free energy future, register for the SEPA Working Groups Virtual Meeting, taking place on September 22 – 24. The Working Group Virtual Meeting offers an opportunity to participate in short, interactive sessions exploring the work of each Working Group, and trends and challenges presented by the transition to carbon-free. The meeting is free for SEPA members and $199 for non members.