Microgrid Knowledge Special Report on Microgrid Financing

Finances for Microgrids

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An advanced microgrid offers both power supply and energy savings and derives value from each. And that’s just the start of the complex stream of economic benefits that can emanate from a microgrid; others include electric reliability, resiliency, energy security, emissions reductions and energy bill savings. This paper provides an overview of microgrid financing and how the microgrid controller can help your microgrid reach maximum return on investment.

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The microgrid industry is expected to see rapid growth in the coming decade. Some describe it as the next market iteration of solar, which grew eight-fold from 2010 to 2015, and is forecast to expand by another 119 percent in 2016 .

While many catalysts drive solar industry growth, analysts point to microgrid financing as a primary factor. The turning point for the solar industry came when it formulated financing models — such as solar power purchase agreements (PPA) and solar leases — that eased the strain on buyers and offered favorable returns for investors. Before that, solar had advanced slowly. (See chart on page 3).

Today, the microgrid industry is much like the solar industry in the early to middle part of the last decade; microgrid financing has piqued the interest of investors and, communities, governments, universities, businesses and others. But customers are unsure if they can afford them, and investors are unsure how to monetize them. The editors of Microgrid Knowledge have prepared this special report on microgrid financing and the role of the microgrid controller in calculating the ROI.

This guide posits that what’s missing is a ready way to establish return on investment (ROI), particularly for advanced or ‘optimized’ microgrids. It shows how an advanced microgrid controller can help establish ROI, and it offers a method for doing so.

“Every solar company can now quickly crank out a project’s value based on a few parameters, such as solar intensity, local utility rates and tax credits. In minutes they can price and produce a power purchase agreement for a customer,” says Sally Jacquemin, Siemens Microgrid Business Manager. “The microgrid industry would benefit tremendously from a similar model. Establishing an ubiquitous way to determine ROI would go a long way in helping the financing community develop a model for microgrid financing.”

In this report we describe how to quantify the value of a microgrid which make it easier to obtain microgrid financing. Read more about microgrid financing in our special report, “How Microgrids Can Achieve Maximum Return on Investment (ROI): The Role of the Advanced Microgrid Controller,”

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