Microutility Supporters Raise Questions about California's Progress on Microgrids

March 8, 2023
Expect few neighborhood microgrids in California unless the status quo changes say supporters of Sunnova's microutility plan.

Several microgrid advocates expressed frustration this week over what they see as California’s slow pace on a 2018 law to commercialize microgrids. Their concerns emerged as they pushed for approval of Sunnova Energy’s microutility plan

“In previous filings, the Public Advocate’s Office claims that the microgrid rulemaking is moving forward diligently. Yet it’s been five years since the proceeding opened. They must be using a different definition of ‘diligent’ than the one I’m familiar with. To borrow a phrase, I do not think that word means what they think it means,” said Cameron Brooks, executive director of the advocacy and educational group, Think Microgrid, which like Microgrid Knowledge is owned by Endeavor Business Media.

The California Public Utilities Commission has been chipping away at enacting the microgrid law, known as SB 1339, through a multi-track proceeding. 

Frustrated by its slow progress on community microgrids, Sunnova offered an alternative plan for building microgrid-driven microutilities for neighborhoods. The plan has widespread support among community, clean energy and microgrid groups.

But the prospect for microutilities dimmed last month when a California administrative law judge sided with the state public advocate who wants Sunnova’s plan dismissed. Among other things, the public advocate says that Sunnova is seeking unauthorized exemptions from regulations — Sunnova argues it’s doing the opposite.

Demand high, progress slow

Demand for microgrids is high in California because of frequent power outages, but development of community or multi-customer microgrids has been hampered by an ‘over-the-fence’ rule. The rule protects utility franchise territories and makes it difficult to build microgrids that serve more than one building across property lines. Sunnova’s microutility plan is meant to remedy the problem. 

Microutility supporters expressed little hope in building neighborhood microgrids at scale in California given lack of action by the commission.

Missing multi-property tariff

A group of environmental organizations, among them The Climate Center and Clean Coalition, said they believe a multi-property tariff, necessary to support such projects, has been “completely abandoned” by the commission.

“Furthermore, there is no indication that the commission would ever address a regulatory framework for multi-customer microgrids or community microgrids specifically built for new home residential master-planned communities, as proposed by Sunnova in this application,” the group said in a filing to the commission this week. 

The Solar Energy Industries Association (SEIA) said that the commission didn’t even take up the multi-property tariff until it was almost two years into the microgrid docket. The commission then set a date of Feb. 14, 2022 for stakeholders to submit ideas for the tariff. That date then slipped to August 2022, which has “come and gone with no real indication from the commission as to when the issue will be addressed.”

The commission is “nowhere close to meeting the objective” of SB 1339 to commercialize microgrids, SEIA said. 

“The fact is that we are closing in rapidly on five years since the enactment of SB 1399 and not only has the widespread deployment of microgrids envisioned by the statute not materialized, but the commission has not taken the necessary actions which would enable it to start materializing,” SEIA wrote in comments filed before the commission. 

In its filing this week, Sunnova said that the public advocate’s opposition to microutilities “effectively recommends that the commission declare California closed to new regulated entrants that want to provide community-based microgrid solutions to consumers, reinforcing both the IOUs’ [investor-owned utilities] monopolies and the outdated barriers to deployment of microgrids.” 

For its part, the commission lists its progress on the microgrid docket since 2019 on its website. The commission has divided the proceeding into several tracks. It includes creation of a soon-to-launch utility program that provides $200 million for community microgrids.

"Shockingly little progress"

Still, Pierson Stoecklein, executive director of the advocacy organization, the Microgrid Resources Coalition (MRC), said the commission “has made shockingly little progress” towards establishing clear regulatory pathways for community microgrids.

“The suggestion that critical issues posed by Sunnova’s microutility application can or will be resolved in the parallel microgrid proceeding pending before the commission is wholly inaccurate and reflects a worrisome misapprehension of the scope of that proceeding and the diversity of microgrid projects overall. Refusal to consider Sunnova’s application fully on its merits is contrary to the best interests of Californians and represents the loss of a valuable opportunity to explore a potential model for building community resilience nationally.”

California’s investor-owned utilities oppose the microutility plan for a range of reasons. Pacific Gas & Electric argued that Sunnova’s application lacked necessary facts and supporting information. Southern California Edison said that it failed to meet the legal threshold to obtain a certificate of public convenience and necessity — which is required for an entity to act as a utility. 

Will there be a public hearing?

Sunnova wants the commission to hold a public hearing on the issue.

Denying a public hearing would send a message “that market innovators in the microgrid sector have a major policy hurdle to clear in California to serve residential customers, and those customers must remain captive to the investor-owned utilities, without any choice regarding how the energy needs of their local communities should be met,” said Sunnova in a prepared statement.

 Learn more about microgrid policy by joining us May 16-17 in Anaheim, California for Microgrid 2023: Lights On

About the Author

Elisa Wood | Editor-in-Chief

Elisa Wood is an award-winning writer and editor who specializes in the energy industry. She is chief editor and co-founder of Microgrid Knowledge and serves as co-host of the publication’s popular conference series. She also co-founded RealEnergyWriters.com, where she continues to lead a team of energy writers who produce content for energy companies and advocacy organizations.

She has been writing about energy for more than two decades and is published widely. Her work can be found in prominent energy business journals as well as mainstream publications. She has been quoted by NPR, the Wall Street Journal and other notable media outlets.

“For an especially readable voice in the industry, the most consistent interpreter across these years has been the energy journalist Elisa Wood, whose Microgrid Knowledge (and conference) has aggregated more stories better than any other feed of its time,” wrote Malcolm McCullough, in the book, Downtime on the Microgrid, published by MIT Press in 2020.

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