Hybrid buildings, energy storage, and business opportunities in the evolving grid

Written By: Stratton Report
September 29, 2016

An interview with Katherine Ryzhaya of Advanced Microgrid Solutions

One of the most active players in the development of energy storage projects has been Advanced Microgrid Solutions, which just in September announced two ambitious projects. The first was a storage project at the Irvine Ranch Water Department, where, supported by a 10-year PPA with SCE. AMS will design, finance, install and operate 7-MW energy storage systems at IRWD facilities and reduce load at the facilities when needed to balance the grid. The second was a partnership with Opus One Solutions to develop a multi-utility microgrid project, creating a platform to provide grid operators with grid reliability services while lowering the net costs of storage through participation in wholesale and developing distribution markets. And if those weren’t enough, the firm in July announced that Macquarie Capital will provide capital for the joint development and construction of a $200 million fleet of AMS’s energy storage projects. We were lucky enough to correspond with AMS’ Chief Commercial Officer Katherine Ryzhaya, who provided us some insight into the firm’s business models and corporate vision.

Stratton Report: Can you give us a brief outline of the history of Advanced Microgrid Solutions?

Katherine Ryzhaya: AMS was founded by senior executives with backgrounds in energy regulation, power contracts, utilities and analytics. AMS recognized the need for storage-based load management structures due to circumstances governing global energy production and delivery at this point in time — aging infrastructure, need for emissions control, technological advancement and astute, active customers. By creating value to both utilities and customers that “host” grid support infrastructure, AMS has created a viable, cost-effective alternative to peaking power plants. It is through optimizing and harnessing customer load and dispatching the new shape for grid support that AMS has engaged all of the stakeholders in an industry-wide solution.

SR: Your firm has coined the term, “hybrid buildings”. Can you tell us about the value proposition for the building owner? And what is the value proposition for the utility?

KR: A hybrid building, much like a hybrid car, can switch its power consumption from grid to battery instantaneously, seamlessly and without causing disruption or discomfort to its occupants. Managed as a fleet, hybrid buildings can relieve grid congestion, offer capacity when it is needed most, or act as a “sink” for solar over-generation. Building owners that install AMS’s systems benefit from bill savings created by peak demand shaving, shifting energy consumption to least-cost periods, optimizing the full range of their on-site generation (solar, fuel cell, wind, etc.), increasing their participation in Demand Response programs and meeting their operational resilience and sustainability goals. Utilities benefit from avoided infrastructure investments and from being able to rely on frequent, predictable and dispatchable capacity and other grid services made possible by storage. Having visibility into distributed generation and storage technologies allows utilities to craft “smartgrid” solutions while engaging their customer base.

SR: It would seem that a hybrid building project would require getting a number of parties on the same page with your firm. How do you go about initiating and managing such a project?

KR: Our Hybrid Electric Buildings® fleet involves close coordination between regulators, utilities and engaged customers. AMS structures value-driven utility proposals that address utility-specific needs that may be met by distributed storage – capacity, load shifting, ramping, frequency control, voltage support, etc. We then identify the largest customers along constrained circuits and outfit them with load management technologies that may be dispatched for both customer and grid benefits.

SR: In July, your firm announced that Macquarie Capital had provided $200 million to develop and construct a fleet of energy storage projects. Can you tell us a bit about that partnership?

KR: Under the partnership, Macquarie Capital will provide project financing for AMS’s Hybrid Electric Buildings® fleet for Southern California Edison and beyond. AMS will continue to develop and operate the assets under the joint ownership structure.

SR: How large an opportunity do you see in the intersection of renewable energy, demand response, smart buildings and energy storage?

KR: AMS sees tremendous market opportunity for load management technologies, including storage, in enabling the “grid of today”. The sheer need to update our 100-year old energy production and delivery processes creates a significant opening for alternative measures. Whether grid-connected or distributed, storage is the balancing agent to integrating clean resources while maintaining the necessary resilience and flexibility needed to operate a modern grid. AMS has built a business model in multi-use storage systems that directly benefit several customer groups.

SR: There is considerable power industry discussion of moving to a more evolved grid that both encourages and is able to manage a higher level of distributed energy resources. Does your firm have a vision of how you’d like to see the distribution system of the future work? Are you active in any of the industry initiatives around this process?

KR: AMS is an active participant in all of these discussions either directly through our physical offices in San Francisco, Boston and Austin or through our involvement in industry groups. The conversations are still decentralized, with each state (or city) setting forth its own vision of the grid of the future and the products they’ll need for implementation. AMS envisions a future where distributed resources are recognized and compensated for their services to the grid. This requires customer-sited resources to be A) visible, and B) predictable and controllable by utilities and grid operators. Distributed resources have a clear place in a utility’s resource portfolio only when they are understood and managed to support the objectives of a balanced grid.