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Generating Revenue from Microgrids

While a few utilities may not support microgrids because they take a portion of the load away from the utility, other utilities may welcome microgrids to avoid large investments for repairs or upgrades in their transmission system.

The microgrid is an asset. The return on investment of the microgrid and the growth in its operating income is important to its financial success and wellbeing. Much like typical real estate transactions the location of the microgrid is important primarily because of particular state utility regulations and policies of the local utilities. Microgrids generally succeed in markets where electricity prices are high, and where there are large dense power users such as educational or business campuses or districts.

Many grid operators buy services from microgrids that are grid connected. Potential revenue stream for microgrid owners include:

b Buying or selling power into wholesale markets, within the rules and requirements of some grid system operators and regional transmission operators. Owners sell energy back to the utility grid for a profit once the selling price exceeds the cost of the microgrid's generation and storage.

b Demand response, where the grid operator will pay energy users such as the microgrid to curtail energy use.

b Capacity markets that have been set up to ensure that supply will be available when it is needed most. There is an incentive for microgrids to make their capacity available to electric markets where price signals alone would not work.

b Ancillary services that a microgrid can provide to grid operators. These are driven by short term unexpected disruptions in the grid's overall capacity possibly related to a faulty transmission line or an out of service power plant, or an intermittent renewable generation capacity like wind where resources are required to address inconsistencies in generation. A microgrid may address the short-term imbalances in electricity markets by dispatching resources.

b Cost savings by avoiding peak energy costs with self-generation and storage.

b Microgrid owners may also benefit with declining costs for solar panels and energy storage.

Microgrids and distributed energy are viewed as very attractive, because of reliability, flexibility, and profitability and will grow into an important role, providing reliable power at reasonable prices in a sustainable way.

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