VOR123: Value of Resilience

Unleashing Community Microgrids to deliver cost-effective resilience benefits to businesses, municipalities, and communities

Why we need a standardized Value of Resilience (VOR)

Everyone understands that there is significant value to the resilience provided by indefinite renewables-driven backup power. However, no one has yet quantified the value of this unparalleled resilience.

A Value of Resilience (VOR) standard is sorely needed, and its absence represents a significant gap in the market for Community Microgrids while learning is still in the early stages.

At the Clean Coalition, we’re developing a standardized VOR metric to unleash this key market. Our goal is to make it simple to quantify VOR, starting with our VOR123 methodology, which standardizes VOR for critical, priority, and discretionary loads across all facility types.

This standardized VOR will help everyone understand that premiums are appropriate for Community Microgrids that can provide renewables-driven backup power to critical loads indefinitely, to priority loads almost constantly, and to all loads a lot of the time.

The Clean Coalition’s VOR approach will establish standardized values for resilience of three tiers of loads:

  • Tier 1 are mission-critical and life-sustaining loads, crucial to keep operational at all times, including during grid outages. Tier 1 loads usually represent about 10% of the total load.
  • Tier 2 are priority loads that should be maintained as long as doing so does not threaten the ability to maintain Tier 1 loads online. Tier 2 loads are usually about 15% of the total load.
  • Tier 3 are discretionary loads and make up the remaining load, usually about 75% of the total load. Tier 3 loads are maintained when doing so does not threaten the ability to maintain Tier 1 and 2 loads.

 

What is power system resilience?

The Clean Coalition defines resilience as the ability to keep critical loads online indefinitely in the face of extreme or damaging conditions.

This goes beyond reliability, which is measured after only 5 minutes of grid outage. Resilience is driven by renewables with energy storage and demand response, and it is focused on reducing outage duration, cost, and impact on critical services.

Critical loads are those that are life-sustaining or crucial to keep operational during a grid outage — usually about 10% of a community’s or a facility’s total electrical load.

Why we need a more resilient power system

Our centralized energy infrastructure is costly, aging, inefficient, and a highly vulnerable security risk. Extreme weather events are occurring more frequently: from January through September 2017, the U.S. experienced 16 weather- and climate-related events that cost $1B or more, for a record-breaking total of $300B.

Lack of resilience comes with high costs:

  • $119 billion: Annual cost of power outages to the U.S.
  • $20 – $55 billion: Annual cost to Americans of extreme weather and related power outages
  • $243 billion – $1 trillion: Potential cost of a cyber attack that shuts down New York and D.C. areas

Diesel generators and gas are not the answer

Diesel generators are heavy polluters, concentrated in densely populated areas — compounding their health risks. They require monthly testing for proper maintenance, and spew the worst pollution during this testing. They’re expensive to operate and maintain, with diesel fuel costs rising. Plus, there is generally only enough diesel fuel to maintain power backup for two days, and replenishing diesel during a major disaster is not always possible.

Peaker gas plants are also polluters — with higher capital costs, plus far higher operations and maintenance costs, than renewable energy.

Gas lines are just as susceptible as power lines to ground disruptions from earthquakes and other disasters — and restoration of service for gas lines after earthquakes takes 30 times longer than restoration for electricity:

Source: The City and County of San Francisco Lifelines Study

We have a better solution: Community Microgrids

What is a Community Microgrid?

A Community Microgrid is a coordinated local grid area served by one or more distribution substations and supported by high penetrations of local renewables and other distributed energy resources (DER), such as energy storage and demand response. Community Microgrids represent a new approach for designing and operating the electric grid, relying heavily on DER to achieve a more sustainable, secure, and cost-effective energy system while providing indefinite, renewables-driven backup power for prioritized loads

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Community Microgrid features

  • “Islanding” from the grid: A coordinated local grid area that can separate from the main grid and operate independently
  • Components: Solar, energy storage, demand response, and monitoring, communications, & control
  • Clean local energy: Community Microgrids facilitate optimal deployment
  • Resilient: Indefinite renewables-driven backup power for critical and prioritized loads
  • Replicable: Can be readily extended and replicated throughout
    any utility service territory.

Community Microgrid benefits

Community Microgrids provide communities an unparalleled trifecta of economic, environmental, and resilience benefits.  They bring communities four benefits not provided by today’s centralized energy system:

  1. Lower costs and increased economic investment
  2. Improved overall performance
  3. Resilience and security
  4. A replicable, scalable model

Clean Coalition Community Microgrid Initiative

Providing a standard methodology that any community can use to optimize and streamline the deployment of local renewable energy.

Our Community Microgrid projects:

The resilience value provided by Community Microgrids

  • Powers critical loads until utility services are restored: Eliminates expensive startup costs and the need to relocate vulnerable populations
  • Ensures continued critical services: Water supply, medical and elder-care facilities, grocery stores, gas stations, shelters, communications centers; avoids the cost of emergency shipments.
  • Provides power for essential recovery operations: Provides lighting for buildings, flood control, emergency shelters, food refrigeration; minimizes emergency response expenses.
  • Reduces dependence on diesel generators: Diesel is expensive and can be difficult to deliver in emergencies.
  • Keeps businesses open: Serves the community and maintains revenue streams.

The Clean Coalition Value of Resilience methodology: VOR123

Placing a monetary value on resilience

There is not yet an agreed-upon VOR for any type of loads, including critical loads at facilities that are the most vital: critical community facilities like fire stations, hospitals, emergency shelters, and critical water and communications facilities.

A VOR standard is sorely needed, and its absence represents a significant gap in the market for Community Microgrids; as Microgrid Knowledge has noted, valuing resilience “is not so simple, yet may be the primary reason an organization installs a microgrid.”

At the Clean Coalition, we’re working to make it simple to value resilience, with our Value of Resilience (VOR) methodology.

How our VOR methodology works

The Clean Coalition’s VOR methodology standardizes VOR for Tier 1, 2, and 3 loads across all facility types.

  • Tier 1 = Critical load, usually 10% of total load: Life-sustaining or crucial to keep operational during a grid outage
  • Tier 2 = Priority load (15%): Important but not absolutely crucial to keep operational during an outage
  • Tier 3 = Discretionary load (75%): Remainder of the total load

Establishing a methodology on these load tiers ensures that the methodology can be easily applied to any type of facility. What’s important is not the type or size of a facility, but rather the stratification of its load across the three tiers. Each facility can determine how it wants to stratify between Tier 1, 2, and 3 loads.

This normalization of the load tiers is key to standardizing VOR. Currently, each facility requires an elaborate forensic accounting VOR process; because of this, VOR is rarely analyzed and available for monetization. The Clean Coalition’s VOR methodology, VOR123, fixes this by providing a standardized VOR for Tier 1, 2, and 3 loads based on the average kilowatts (kW) in each tier. That means that we only need to know a facility’s annual energy usage in kilowatt-hours (kWh), divide by 8,760 hours/year, and approximate its percentages of total load that are Tier 1, 2, and 3 — and then apply the established VOR123 values.

  • Tier 1 loads are worth the same whether at a hospital, a fire station, or any other facility type.
  • Tier 1 loads are of a mission-critical, life-sustaining nature; the only difference between facility types is how much of the normal load is Tier 1.
    • Hospitals generally have high percentages of Tier 1 load, on the order of 50%.
    • Fire stations generally have a relatively low percentage of of Tier 1 load, in the 10% range — close to the norm for the majority of facilities.

A standardized VOR will allow all stakeholders to effectively consider VOR when analyzing Community Microgrid economics. This will result in Community Microgrids being widely deployed, and far greater resilience for communities.

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Initial findings

Based on the Clean Coalition’s modeling to date:

Resilience is worth $0.32 per kilowatt-hour (kWh) of critical load (preliminary estimate, to be further refined)

  • Real-world scenarios run were through the Clean Coalition Value of Resilience (VOR) model
  • The tool modeled keeping the critical (Tier 1) load online for one day on the worst-case solar day
  • If an outage spans days with greater solar resource, it may be possible to keep Tier 2 or even Tier 3 loads online

Download the VOR modeling tool

Uses for the VOR tool:

  • Simulate realistic solar+storage and Community Microgrid scenarios, to help define standard metrics for the value of resilience for critical loads
  • Analyze the cost and value of sizing a solar+storage system for resilience at any given facility

Tool inputs

  • The size of your load: How much electricity do you use per year?
  • The size of your critical load: What percentage of your electrical load is essential to keep running during an extended outage? For many facilities, this is 10%.
  • The length of outage you want to prepare for: Do you want to have energy during short outages of a few minutes, or prepare for outages lasting several days or more?
  • The cost of an outage: How much revenue or productivity do you lose per hour during an outage? If you don’t have this figure, you can use the national average of $117 per kilowatt-hour, based on data from the Department of Energy’s National Renewable Energy Lab.
  • Your energy storage system: The minimum and maximum state of charge you’d like to allow for your battery; the initial state of charge at the time of an outage; and your battery cost (including costs for demand charge reduction), capacity, and round-trip efficiency.
  • The amount of sunshine in your area: Average amount of sunshine in your area, as well as the amount of sunshine on the worst 5 solar days of the year. PVWatts (https://pvwatts.nrel.gov/) provides these figures.

Calculations based on tool inputs

  • The minimum battery capacity you need for resilience
  • The cost to monetize demand charge reduction at your site
  • Your total system cost, based on the calculated battery capacity
  • Resilience cost: The total system cost for the resilience portion of your system
  • Resilience value: The annual value of resilience provided by your system

VOR tool case study: Corporate campus

A large corporate campus in Northern California was interested in deploying a Community Microgrid to keep their critical loads online during extended outages, as well as to serve as an emergency shelter for the community.

The Clean Coalition calculated the VOR for this deployment and found a high VOR with an impressive ROI:

  • Cost of resilience = $7,040 per kW of critical load
  • Annual VOR = $2,808 per kW of critical load
  • Break-even point = 2.5 years

Cost of resilience:

Value of resilience:

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