Report Calls for Change as Town Center Microgrids Run into Roadblocks

Aug. 4, 2021
TC microgrid projects are running into trouble. What’s the problem? A report written for NJ regulators offers insight and calls for change.

Town center, or TC microgrid, projects in the Northeast have foundered in the face of regulatory, statutory and technical challenges, according to a report written for the New Jersey Bureau of Public Utilities (NJBPU).

By Julia XOOXOO/Shutterstock.com

“Town center microgrids are one conceptual solution for community emergency-power resilience and reliability needs but face significant public policy-driven development hurdles,” said Marc Pfeiffer, assistant director of Rutgers’ Bloustein Local Government Research Center and the report’s main author. “These challenges are substantial but not necessarily insurmountable.”

After Superstorm Sandy in 2012 and other extreme weather events, the NJBPU and regulators in other Northeast states starting looking at microgrids as a way to bolster resilience and reliability.

In 2017, the NJBPU launched a competitive grant program to encourage such TC microgrids. Thirteen local government agencies received funding for an initial round of feasibility studies. In March, eight of the applicants were awarded a total of $4 million to fund TC microgrid design studies.

Also, with Department of Energy funding, the NJBPU hired Rutgers University’s Bloustein Local Government Research Center to lead a study on TC microgrids, which are defined as microgrids developed in downtown areas that deliver power to a non-contiguous critical facilities, often involving multiple distributed energy resources (DERs) and crossing multiple public rights of way.

Enthusiasm high, results low

When the study was approved, enthusiasm for TC microgrids was high, according to Development of Local Government Resilient Microgrids, released Aug. 3.

However, only one project meeting the definition of a TC microgrid was found to be operating in the Northeast, Pfeiffer said in the report.

“Even though there were at least 10 examples of projects that had demonstrated their technical feasibility – and some had moved on to the design phase – in the end, the vast majority were put on hold or canceled for a variety of reasons,” Pfeiffer said.

Only one of the proposed town center projects investigated by the project team has reached the procurement and financing stages, according to the report.

Over the last five years, pilot and grant programs in Connecticut, Maryland, Massachusetts and New York show that local government-driven TC microgrids cannot be readily developed under current regulatory and financing regimes, Pfeiffer said.

Excerpt from report: Development of Local Government Resilient Microgrids

Pfeiffer found that New Jersey’s effort to develop TC microgrids is “inconclusive” as projects are just entering the design phase.

“It is clear, however, that in the absence of a clear legal pathway, these projects are also limited as they are unable to reach the additional goal of increased resilience,” Pfeiffer said. “Expectations for the immediate development of TC microgrids through these incentive programs appear to have been overly optimistic.”

TC microgrid projects face multiple barriers

Pfeiffer found there were several barriers to TC microgrid development.

Utility franchise rights can prevent non-utilities from distributing power to customers or accessing needed rights of way, according to the report.

Also, Pfeiffer said in cases where there is a legal workaround to the franchise issue, the TC microgrid may find it too expensive to serve customers.

Regulators may deem microgrids serving multiple customers as a utility, leading to regulatory burdens that may make the microgrid uneconomic, according to the report.

TC microgrids are stymied by technical issues around interconnecting DERs to the grid, Pfeiffer said.

“Taken together, these factors add uncertainty and risk to the costs of developing and maintaining a TC microgrid,” Pfeiffer said. “Concurrently, these factors add uncertainty to investor cost-recovery.”

New website for TC microgrids

Meanwhile, the New Jersey Institute of Technology’s Center for Resilient Design launched a website focused on planning and developing sustainable, resilient TC microgrids.

The website includes fact sheets and webinars highlighting issues found in the TC microgrid report.

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About the Author

Ethan Howland

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