As if to underscore the point, power blackouts rolled across California late last week right after dozens of stakeholders urged state regulators to push harder to get more microgrids built.
Hundreds of thousands of Californians lost power Friday and Saturday night when electric demand exceeded supply because of extreme heat. Utilities imposed the rolling blackouts after receiving an alert from the California Independent System Operator.
By happenstance, comments were due Thursday — one day before the first blackout — in a microgrid proceeding before the public utilities commission.
The commission is seeking ways to make microgrids, which keep power flowing to customers when the grid is down, more commercially available.
Several commenters praised the state for the undertaking, perhaps the most ambitious yet in the US in support of microgrids. Still, many said California is not moving fast enough or far enough — in statements written even before the rolling blackouts.
Google says go bold on microgrids
What drew the comments is a proposal released last month by commission staff that focuses on accelerating microgrid development by reducing regulatory barriers and by creating microgrid tariffs and community pilot programs.
Google, which is eyeing microgrids for several of its large, mixed-use projects, said that the staff proposal “falls significantly short” and called on the commission to “act boldly.”
“Google believes that extensive development of microgrids will be essential in the coming years, not only to enhance the resilience of the electric system, but also to reduce its impact on the environment. Google also believes that technologies already exist, and will continue to mature, that make it feasible to build and operate microgrids on a large scale,” the Mountainview, Calif. company wrote.
An unmet need for microgrids
Demand is high for microgrid projects to serve homes, businesses, and industry in both rural and urban California, the company said. “The commercialization mandate is, in effect, a directive to catch up with an unmet need for microgrids.”
So far, the proceeding has focused heavily on last year’s wildfire related power shutoffs — and the prospect of more to come. But Google pointed out several additional reasons to add more microgrids, among them “California’s drive to full electrification, progress towards its net zero energy goals, and the pursuit of climate-positive approaches to urban renewal.”
The company called for rule revisions that would require utilities to accommodate all types of microgrid projects “truly agnostic to microgrid design, ownership, and business model.”
Google described as too restrictive the proposal’s call for 15 community pilot microgrids built by utilities. The projects would duplicate microgrids already operating in the state, Google said, so the commission should instead encourage piloting complex, less studied microgrids that face significant regulatory barriers, such as those that provide clean electricity to large multi-family housing projects.
How much should utilities do?
Others expressed concern that the commission is putting utilities in charge of microgrid projects at the expense of private industry and communities.
Schneider Electric urged the commission to foster microgrids owned by third-parties noting environmental and utility ratepayer benefits in doing so.
A decarbonization study found California would need 150-200 GW of new, clean generation by 2050 to meet its climate goals, at a cost of $6-8 billion a year for 30 years. Privately built microgrid projects could deflect part of this cost away from utility ratepayers. “With private investment, every clean microgrid installed with community or private funding is shifting cost away from ratepayers,” Schneider Electric said.
Instead of owning microgrids, utilities should focus on how microgrids can provide them with load flexibility at the circuit level below substations in two-way communication in the top 200 hours of peak demand, Schneider said. “This level of granularity is where the real benefit for all ratepayers lay in customer owned microgrids.”
Traversing the fence
Schneider Electric also pressed the commission to address regulatory barriers to microgrid projects — a sentiment echoed by several others. Among them is Public Utilities Code (PUC) 218. Known as the ‘over the fence rule,’ it requires that microgrids become utilities if they sell power to customers on more than two contiguous parcels or across a street. As such, they are subject to regulatory burdens well beyond what a small entity can manage.
As Tesla put it, “Current law would subject all but the simplest forms of microgrids to the full weight of utility regulation.” Fixing the problem requires action by state lawmakers. Without the changes, customers with multiple buildings, separated by rights of way, must install duplicative microgrid equipment, Tesla said.
Sunrun said that the over the fence rule represents “one of the most significant barriers to the development of microgrids.” The staff proposal to fix the problem offers only “incremental improvements” that benefit small microgrids or those developed by utilities, said the solar company.
The staff proposal calls for a limited exemption from the over the fence rule. The exemption would apply to 10 municipal microgrid projects across the three utility service territories.
Several stakeholders praised the commission for attempting to develop a microgrid tariff as a way to foster a market for commercial microgrids — the intent of SB 1339. But some say the staff proposal, again, fails to go far enough.
The proposal calls for utilities to develop a tariff with a single rate schedule for microgrids and outlined various options for doing so. The tariff would apply to customer-sited and customer-facing microgrids.
A group of community choice aggregators said that the tariff needs to be more “general” and cover all likely microgrid configurations. “The lack of a general microgrid tariff is the single greatest remaining barrier to achieving the commercialization of microgrids and the open and competitive microgrid marketplace required by SB 1339,” the group of nine aggregators said.
The state law (SB 1339) that launched the proceeding requires the commission take action by December 1 to commercialize microgrid projects.
The stakeholder comments filed in the proceeding are available on the CPUC website.
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