California Looks to Bigger, More Complex Microgrids as It Faces Capacity Shortfalls

Aug. 20, 2021
California regulators made two big moves on microgrids this week, one to tackle the thorny issue of multiproperty microgrids and other to fast-track an investigation into how microgrids can help the state overcome immediate energy capacity shortfalls — a response to an emergency proclamation by California Gov. Gavin Newsom.

The California Public Utilities Commission (CPUC) made two big moves on microgrids this week, opening a proceeding to tackle the thorny issue of multiproperty microgrids, while also launching a fast-track investigation into how microgrids can help the state overcome immediate energy capacity shortfalls — a response to an emergency proclamation by California Gov. Gavin Newsom.

The proceedings are part of a larger attempt by the commission to spur commercialization of microgrids that was begun in 2019 and has already boosted microgrids on several fronts.

In the latest move, the commission issued a scoping memo on Aug. 17 outlining the fourth step in the microgrid proceeding, which will explore multiproperty microgrids as well as the capacity issue raised by Newsom.

Can microgrids help meet capacity shortfalls?

The commission memo calls for an expedited look at the role of microgrids in responding to Gov. Newsom’s July 30 emergency proclamation related to climate change. Newsom said California faces a roughly 3,500 MW shortfall during extremely hot weather this summer and a 5,000 MW shortfall next summer, partly because of a drought.

Newsom asked the CPUC, the California Independent System Operator and the California Energy Commission to speed up the installation of emissions-free energy and energy storage projects.

The commission has already been directed to expedite its approval of demand response programs and storage and clean energy projects to make sure California has enough power supply through Oct. 31 and to ensure increased clean energy capacity by Oct. 31, 2022. In the scoping memo, CPUC Commissioner Genevieve Shiroma noted that there may also be steps the commission can take in the microgrid docket to support the governor’s and the commission’s goals of boosting near-term clean energy supplies.

New microgrid programs

In the expedited phase, the commission will consider new microgrid programs or projects that could help address the capacity shortfalls, particularly during summer net peak hours, Shiroma said.

The CPUC will also look at existing microgrid and resiliency programs, such as the Make Ready Program and the Temporary Generation Program, that could help reduce load during peak and net peak hours, according to the memo.

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Shiroma said there may be changes to existing microgrid tariffs that could address capacity shortfalls. More specifically, the commission will review microgrid projects that have the capacity reservation component of their standby charges waived to see how they can help address a systemwide capacity shortfall, especially during net peak hours. The agency will also look at whether islanding microgrids can help address capacity shortfalls. When islanded, microgrids use their on-site energy to serve their hosts, taking pressure off the grid.

In doing so, the commission seeks proposals by Sept. 10 that show how microgrids can address reliability. Shiroma expects the commission to issue a proposed decision on those submissions in late October, with a CPUC final decision coming in mid-November.

Teeing up tariff for multiproperty microgrids

Meanwhile, the commission also will consider rules and procedures for developing microgrids with multiple customers across different properties, as well as a microgrid tariff for these properties, as part of a second phase in the proceeding. Rules for such microgrids are much less well-developed compared with single-customer microgrids, according to the commission’s Resiliency and Microgrids Working Group. The working group has been exploring options for the issue in a series of stakeholder meetings that started in February.

Multiproperty microgrids also are often blocked from development because they run afoul of utility franchise rules.

The Redwood Coast Airport Microgrid, now under construction, offers an example of a multicustomer microgrid that overcame these obstacles.

Stakeholders and CPUC staff will discuss protections for customers taking service under the new microgrid multiproperty tariff as well as consumer protections for ratepayers who are not participating in the microgrid, according to the scoping memo.

Some options for a multiproperty microgrid tariff were floated during Resiliency and Microgrids Working Group meetings earlier this year.

Important dates

The agency will also take up a pending investor-owned utility proposal for implementing a microgrid incentive program, which is due to be filed on Oct. 4.

The CPUC is slated to issue “guiding principles” for setting up a multiproperty microgrid tariff on Nov. 30.

Stakeholder proposals for microgrid multiproperty tariffs will be due in mid-February 2022 and a CPUC staff proposal is slated to be issued in May 2022.

California nears third year of microgrid initiative

The CPUC started its effort to support microgrid commercialization in September 2019 in response to a state law (SB 1339) that requires regulatory changes to support microgrid development.

The commission’s Track 1 decision, approved in June 2020, created short-term solutions to speed the deployment of microgrids and improve resiliency for the 2020 wildfire season.

The agency approved microgrid tariffs in its Track 2 decision in January, and in its Track 3 decision last month the CPUC suspended a key component of standby charges for eligible microgrids.

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About the Author

Ethan Howland

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