SCE Delays Pilot Microgrids after Tight Schedule Drives up Costs 

March 17, 2020
Saying a tight schedule is driving up costs, Southern California Edison (SCE) yesterday canceled plans for pilot microgrids in 2020 and instead will re-seek them for 2021 and 2022.

Saying a tight schedule is driving up costs, Southern California Edison (SCE) yesterday canceled plans for pilot microgrids in 2020 and instead will re-seek them for 2021 and 2022.

The utility spelled out its new microgrid plan in a filing with California Public Utilities Commission (R.19-09-009 ).

The postponement came in response to bids the utility received from a recent solicitation for microgrids on six circuits. The utility wants to install microgrids to keep the power flowing to customers during public safety power shutoffs (PSPS), the de-energizing of power lines to prevent sparks when wildfire conditions threaten.

The microgrid costs ranged from $15 million to over $30 million, 13-100 times the costs of the alternatives, according to the utility

The bids were high, and few, due to lack of time to install the projects within the 2020 deadline. California utilities are racing to get microgrids built this year before the wildfire season begins. SCE had hoped the projects would be up and running by September. 

Small pool invited to bid

“This short timeline limited the number of bidders SCE could consider to a small pool of ‘pre-qualified’ vendors. In turn, the vendors had only two weeks to prepare their RFP responses, which is understandably difficult given project scope and the complexity of delivering a turnkey microgrid project — including acquiring the necessary land rights — by 2020,” SCE wrote.

The proposals “were technically viable but cost prohibitive and reliant on fossil-fueled natural gas generation,” the utility told the CPUC.

Microgrid developers also were hamstrung by a tight timeline that prohibited them from pursuing the normal interconnect queuing process. This meant the microgrids would not be able to participate in power markets, forfeiting potential revenue.

“The vendors needed to price their bids to recover microgrid costs without taking advantage of any market revenues,” SCE said.

Finding sites with existing DERs to drive down costs

The utility is now exploring a new microgrid solicitation for 2021-2022 with emphasis on sites that already have distributed energy resources. This can significantly drive down the cost of a microgrid since the generators and energy storage are usually the pricest assets in the microgrid. The microgrid controller — the brain of the system that allows the generators to island from the grid — is typically multiple times less expensive.

But it’s likely the sites will need some additional distributed generation, so the utility also seeks locations with land to accommodate the assets.

SCE expects the extended schedule to give the microgrid developers time to undertake the interconnection process for access to wholesale distribution tariffs. This would open the opportunity for the microgrids to earn revenue by participating in wholesale markets and qualifying for resource adequacy payments.

More time, more bids

“With a less aggressive schedule than the 2020 RFP, SCE can solicit proposals from a larger pool of vendors and in turn, the vendors will have more time to develop their bids and can form partnerships, should they so desire, to deliver the full scope of a new multi-customer microgrid,” SCE said.

Instead of installing pilot microgrids for 2020, the utility says it will consider portable diesel generators and other alternatives that can be quickly installed for this year.

California has become an epicenter of microgrid activity following power shutoffs last year during wildfire seasons that left customers stranded without power throughout large swaths of the state. Private businesses, communities, institutions and utilities have been pursuing microgrids, most notably Pacific Gas & Electric, which has a solicitation underway for 20 microgrids, totalling more than 500 MW.

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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, 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.

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