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28 The varied factors, costs, and benefits of installing microgrids make any estimate difficult without first completing a feasibility study. Capital costs include system design, isolation and stability controls, and equipment costs, which vary depending on the design requirements, scale, and configuration of the system. Sophisticated communications, controls, and hardware systems are required to ensure stability while optimizing generation and load balance and minimizing GHG emissions (KEMA DNV 2014). Proper O&M also needs to occur to ensure the operational reliability of the equipment. The largest cost component in the development and deployment of a microgrid will be the DER systems, including the controller, generation, and storage systems. The bespoke nature of the design process brings construction and engineering costs just under the DER costs as a percentage of total cost (Griffith 2016). Table 2 shows the estimated percentages of costs for the various components of an established microgrid. Capital Costs A comprehensive understanding of the requirements for managing transitions between the microgrid and the macrogrid is important in the specification of the equipment. Relays and moni- toring systems are required to make these determinations, switches are needed to execute various transitions, and the DER equipment itself can vary significantly in cost. On sites where certain equipment and control systems have already been installed (especially DER systems), their pres- ence can drastically reduce the cost of implementing a microgrid (KEMA DNV 2014). Table 3 shows the range of costs for the balance of system equipment required to install a 5 MW microgrid. Table 3 includes only the equipment costs for the switchgear protection, communications, and controls, so it represents approximately 30% to 40% of the total costs. The table does not include the costs of the microgrid DER asset costs, site engineering and construction costs, or O&M costs. Because of the large number of factors that affect the design of microgrid systems, it is unlikely there will be a single standardized design for a microgrid. Depending on the complexity of the loads and the number and types of generation sources within the microgrid, the engineering and modeling costs to develop the required specifications can range from $10,000 to $1 million or more for a large, complex system. With more experience in completing projects, progress is being made on standardizing microgrid design and development processes as well as develop- ing contracting structures for those designs, and identifying value streams for systems (Asmus and Lawrence 2016). As engineers and contractors become more familiar with microgrid design processes, and as these processes are streamlined, these costs will be reduced. The costs of DER are improving constantly and at a staggering speed. Often when project cost estimations and budgets are established during the design phase, by the time of procurement and C H A P T E R 6 Microgrid Costs
Microgrid Costs 29 Table 2. Cost components of microgrids (Griffith 2016). Table 3. Range of costs for a typical 5 MW microgrid (NEMA 2016, adapted by Arup 2017). construction the system cost may have declined. Table 4 illustrates typical cost ranges of DER components at time of writing. O&M Costs O&M costs associated with the power generation and distribution services of a microgrid include (NYSERDA 2014): â¢ Costs of labor to operate and monitor the system, â¢ Fuel costs for reciprocating engine and turbine power generation equipment, â¢ Costs of other consumables (e.g., coolants, lubricants, fuel/oil filters), and â¢ Costs of labor and materials for scheduled and unscheduled maintenance.
30 Microgrids and Their Application for Airports and Public Transit Given that microgrid deployment is still in an early stage of development, limited information exists on these systemsâ true operating costs and associated payback periods. Additionally, the modularity and variability of configurations make calculating an overall ROI for all microgrids virtually impossible (Asmus and Lawrence 2016). For this reason, it is important to complete a feasibility study before pursuing further development of large microgrids. Depending on the environment and the customerâs needs, microgrids may not always be cost effective or suitable. Even when a microgrid is cost effective, developing and proving a business case is difficult, requiring significant up-front investment and sophisticated software tools to complete a feasibility study adequately. More information and data regarding O&M and ROI of existing microgrids will improve the accuracy of these studies while making them easier to complete. Table 4. Typical microgrid component costs (ABB 2015, adapted by Arup 2017).