What? Only Utility Microgrids?

Nov. 16, 2021
Several parties are questioning why only utilities made the cut to build microgrids in a key recommendation before California regulators on how to meet the state’s capacity shortfall.

Several parties are questioning why only utilities made the cut to build microgrids in a key recommendation before California regulators on how to meet the state’s capacity shortfall.

At issue is a proposed decision by an administrative law judge scheduled to come before the California Public Utilities Commission Dec. 2. The judge last month called for accepting plans by San Diego Gas & Electric (SDG&E) for four microgrids to help meet a capacity shortfall projected for the next two summers — leaving a myriad of ideas from private developers, nonprofits and local government on the cutting room floor.

The proposed decision is the latest in a string of actions the commission has undertaken since 2019 when it began putting into effect rules and programs to comply with a state law (SB 1339) to help commercialize microgrids.

To some, the latest move missed the mark.

The Clean Coalition, a nonprofit that designs community microgrids, said the proposed decision rejected “a number of creative decisions” in favor of utility microgrids and fossil fuel strategies, referencing a plan by Pacific Gas & Electric (PG&E) to employ temporary fossil fuel generators to meet the capacity shortfall.

Shifting costs to those less able to pay

“In almost every regard, the PD [proposed decision] is underwhelming and disappointing,” said the Clean Coalition in its comments to the commission.

Bloom Energy, which specializes in fuel cells, said that the commission will miss key opportunities to leverage private funds and ease rate hikes if it favors utility projects and fossil fuel generation. Doing so will lead to inequitable cost shifting as wealthy utility customers defect to install their own supply, leaving those remaining to foot the bill for a larger share of utility operations. “Moreover, without commission structure to guide those investments, many customers will adopt diesel, imposing societal and environmental costs on themselves and on others,” said Bloom Energy in comments filed with the commission.

“As the undisputed global leader in customer-oriented technology, California’s failure to capitalize on the value of customer-side technology to enhance the reliability, resilience and sustainability of its energy system is, frankly, an embarrassment, and very difficult for California companies with a global footprint to explain to world leaders elsewhere,” Bloom added.

Fate of the LA county regional microgrid agency

Among those ideas in jeopardy is a plan by the county of Los Angeles to create a regional microgrid agency to act as a centralized resource to help local governments and public agencies implement microgrids. The agency would serve an area that encompasses roughly half of California’s population. Utilities oppose the idea, while several others involved in the proceeding support it.

The fate of the regional agency remains uncertain because the administrative law judge did not address it in the proposed decision. Instead, the judge focused on three microgrids the county wants to build, recommending that the county seek funding for them through the state’s $200 million microgrid incentive program. The county, however, said its projects are ineligible for the money because the incentive program funds only front-of-the-meter microgrids, while the county plan would create microgrids at customer sites.

Los Angeles County urged the commission to champion the agency, saying it would provide technical services and financial incentives to help develop much needed community microgrids.

“Public agency facilities are ideally suited to serve as local resiliency hubs and a growing number of public facilities, such as community cooling centers, will need to operate as increasing extreme weather events continue to occur. Microgrid resiliency strategies will be essential in serving communities,” said the county in comments before the commission. “Most public agencies, however, lack the financial and technical resources to identify and develop such projects. The Regional Public Agency Microgrid Program was explicitly designed for this purpose in response to the commission’s ruling.”

Path for community microgrids

The Clean Coalition said that the regional microgrid agency would help unblock bottlenecks to developing community microgrids.

“The greatest concern continues to be that, without active utility cooperation, deploying community microgrids is close to impossible, and, even with a utility partner, there is no guarantee that a community microgrid will be deployed (either on time or at all),” said the Clean Coalition. 

If the commission chooses only utility microgrids, it is “tightening the bottleneck rather than alleviating it,” said the Clean Coalition. “This sends the unfortunate price signal that the IOUs [investor-owned utilities], not the market, are driving the pace of technological advancement by selecting which projects and technologies will move forward.”

Solicitations by utilities

The California Energy Storage Association also challenged the proposed decision for favoring utility microgrids “while ignoring or placing greater undue or discriminatory caution” on non-utility microgrid proposals. The association recommended that the commission “rectify this oversight or shortcoming” by directing utilities to issue solicitations for a wider range of microgrid projects or by adopting a capacity payment for microgrids.

A group of organizations led by the Microgrid Resources Coalition (MRC) said that the proposed decision “makes one crisis worse and does little to alleviate the second” by endorsing use of diesel backup generators and championing a handful of utility-owned microgrids “with no demonstrated broad reliability benefits.”

“PG&E’s proposal would impose high-priced generation and pollution costs at multiple locations; SDG&E’s proposal would benefit a few at the expense of all ratepayers,” said the MRC.

The organization urged the commission to present an alternate proposal that accepts the LA County regional microgrid agency and a microgrid emergency services tariff with a capacity payment for clean, firm power.

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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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