The growing role of microgrids in energy policy By EPN Staff Texas has become a hot spot for microgrids, driven at least partly by concerns of power losses in bad weather, according to researchers with the Federal Reserve Bank of Dallas. More businesses, including retailers like Buc-ee’s, are adding microgrids for backup power and to avoid downtime, much as they might have used a generator in the past. In a recent post, Dallas Fed researchers called the uptake by commercial operations “notable.” Why it matters In 2023, the Texas Legislature passed broad energy legislation that, among other things, created a $1.8 billion grant program to help build more backup power systems in the state. The measure required a statewide referendum, which passed overwhelmingly. While states such California and New York have also embraced microgrids, Texas has built a commanding lead in the number of microgrid installations. A Department of Energy listing shows more than 300 microgrids in Texas, most of them powered by natural gas. Eight are powered by solar. The Dallas Fed researchers said that Houston, Corpus Christi, San Antonio, Katy and Spring are home to more than half of the state’s microgrids. “The state recorded 210 outages in 2000–23, the most in the country, often at significant expense to power providers and to customers,” the researchers said. “Weather events are revealing these vulnerabilities at a time of economic growth, much of it drawing on already strained electric power sources, including new data centers, semiconductor manufacturing facilities and oilfield electrification.” What’s a microgrid? A microgrid is just a small electric grid – something that generates power for use at its location. Often microgrids can connect and disconnect from the larger grid, operating as a backup or primary source of power and only relying on the larger grid as needed. Some solar microgrids are portable and can be brought in to restore power in the wake of damaging storms. Most microgrids are permanent. The University of Texas is home to the country’s largest non-military microgrid, according to the U.S. Green Building Council, and it powers the campus in Austin. Like most Texas microgrids, UT’s is fueled by natural gas. Yes, but… Construction costs between $2 million and $5 million per megawatt in 2018 dollars, according to the post, which cited a 2018 study from the National Renewable Energy Laboratory. Utility-scale projects are cheaper, generally costing less than $2 million per megawatt, the post states. “Constructing microgrids may provide resilience for end users, but expanding the grid for more large-scale power generation is economically more efficient,” the post states.
