Microgrid Industry Sees Promise – Mostly – in California’s 100% Zero-Carbon Electricity Mandate

Sept. 11, 2018
Clean energy continued its victory lap in California yesterday when Gov. Jerry Brown inked legislation that would require 100 percent carbon-free electricity by 2045, a move largely praised by microgrid industry leaders — with some cautions.

Clean energy continued its victory lap in California yesterday when Gov. Jerry Brown inked legislation that would require 100 percent zero-carbon electricity by 2045, a move largely praised by microgrid industry leaders — with some cautions.

The bill (SB 100) was one of several clean energy initiatives passed by California lawmakers in recent weeks as they finished up the 2018 session. Some bills still await Gov. Brown’s signature, including SB 1339 that requires utility changes to support microgrids.

But it was SB 100 — the 100 percent zero-carbon electricity target — that most rocked the energy industry.

The legislation emerged out of efforts by a small but determined movement that has been pushing 100 percent clean energy worldwide since the early part of the century. Supported by the Renewables 100 Policy Institute, a non-profit formed in 2007, the movement seemed quixotic at first, attracting some islands, a few cities, Hawaii and small countries like Denmark, Scotland and Ireland.

But with California, the fifth largest economy signing on, the quest no longer looks so moonstruck. Where California goes, the energy industry tends to follow.

“Historically, bold moves by states have reshaped the marketplace over time. There is no question that the energy industry is watching every move that California is making, as these policy decisions and desired outcomes are disruptive to the status quo and require reshaping traditional business models,” said Will Agate, former president and founder, NetZero Microgrid Solutions and now Ameresco’s vice president – microgrid services.

The new law requires that California derive 50 percent of its electricity from renewables by 2025 and 60 percent by 2030. For the final 2045 goal, California chose its wording carefully. It dropped the term renewables and instead adopted 100 percent zero-carbon electricity, a broad descriptor that recognizes technology may change, and it may not just be renewables that are carbon free in 27 years.

Learn how microgrids serve California’s zero-carbon electricity law at Microgrid 2019: Shaping the New Electric Grid, May 14-16 in San Diego.

Boon for microgrids

For microgrids, the goal creates several positives.

Grid-connected microgrids are increasingly viewed as way to help balance the sudden on-again, off-gain nature of solar and wind. So the more solar and wind on the grid, the more need for microgrids.

In addition, microgrids themselves often contain on-site renewables. Utilities may choose to build such microgrids for reliability and apply the project toward meeting their clean energy goals.

At the same time, the new law evokes worry because it removes natural gas as a resource. And some caution that the mandate disrupts the playing field and could create the inverse of what it’s designed to do.

Law is pro prosumer

Don Wingate, Schneider Electric

Don Wingate, Schneider Electric’s vice president of sales, utility solutions, sees the new law as largely a win for the microgrid market.

“These initiatives are going to raise costs. Microgrid technology can offer more cost-effective solutions,” he said.

Businesses, for example, will be increasingly likely to install microgrids to reduce demand charges.

The 100 percent target also will disrupt the utility model and strengthen the rise of cost-conscious prosumers, he said. Microgrid-to-microgrid exchanges are likely to emerge, possibly using blockchain technology.

“If a microgrid is generating renewable clean energy, it will likely have more than one buyer for its excess capacity. It could sell to the grid or it could sell to its neighbor,” Wingate said.

The new mandate also may encourage installaton of more solar plus storage microgrids to fuel EVs, he said. When EV owners plug into the grid, they are charging up with mostly fossil-fuel generation — although they may not realize it. As of 2016, about half of the utility generation in California came from natural gas, according to the US Energy Information Administration. The zero-carbon electricity mandate is likely to heighten awareness about the level of fossil fuels still used by the grid.

Like others interviewed by Microgrid Knowledge, Wingate is concerned about the state’s decision to leave behind natural gas and the consistent supply of electricity it brings to the grid, especially given California’s vulnerability to power outages from wildfires and earthquakes. Natural gas also is a common fuel used in combined heat and power (CHP), a technology often incorporated into sophisticated microgrids.

However, Wingate also noted that alternatives to natural gas are in the works. For example, Schneider Electric is developing a project at a military base in San Diego that fuels a microgrid with landfill gas.

New fuel sources for microgrids

So CHP is not necessarily out of the picture in an all-green California; it just may be fueled differently.

Will Agate, Ameresco

Ameresco’s Agate pointed out that SB 1440 — another bill passed by California’s lawmakers in August — could pave the way for a state renewable natural gas procurement program. Still awaiting Gov. Brown’s signature, the bill would authorize the California Public Utilities Commission, in consultation with the Air Resources Board, to consider a biomethane (aka renewable natural gas or RNG) procurement program.

“The availability of RNG and state support of RNG procurement, would support continued use of cogeneration (aka CHP) systems in combination with other renewable energy resources,” Agate said.

Agate foresees ripple effects as California moves toward 100 percent zero-carbon electricity, including microgrids designed to interact “with a wider distribution system filled with other microgrids.”

“The reliability and resiliency of a collection of microgrids…will become the new norm of the bulk power system” — Agate

“The reliability and resiliency of a collection of microgrids, with storage and other renewable-based energy supply, will become the new norm of the bulk power system. This complex grid, where there used to be only hundreds of generators providing supply, will someday consist of tens of thousands of assets controlled by distributed energy management systems, autonomously serving localized energy needs and interacting with other grid services previously served by central station supply,” Agate said.

He added: “What remains uncertain is how soon, and to what extent, a greatly expanded distributed energy system of microgrids becomes the basis of a new bulk power system.”

But what about behind-the-meter projects?

John Westerman, Dynamic Energy Networks

SB 100 applies to utilities and electric retail suppliers but exempts customer on-site microgrids and distributed energy that does not export to the grid.

However, other rules do push ‘behind-the-meter’ projects toward green energy, noted John Westerman, vice president — technical solutions at Dynamic Energy Networks,

“With the current regulations by the California Air Resources Board, the use of fossil fuel generation as a resource within a microgrid has already eliminated small engine and gas turbine generators (i.e. less than 5 MW) from microgrid designs,” he said

He noted that microgrid developers are already developing projects with a heavy focus on renewables and energy storage supplemented with load management, intelligent control systems and the grid.

“Perhaps the highest impact of this approach is designing for operation during a grid outage,” Westerman said. “Given the intermittent characteristics of today’s renewable energy solutions, cost-effective island mode operations will likely only support critical load circuits (driven by the night-time load characteristics and space available for the energy storage). This is in contrast to the case where there is a base load fossil fuel generator that can operate continuously, thereby supporting more of the energy requirements of the entire microgrid electrical and thermal loads.”

Westerman sees SB 100 driving new technologies and models for EV transportation, electric heating systems in buildings, energy storage, vehicle-to-grid technologies, energy sharing, and transactive energy models for microgrids and DERs facilitated by blockchain.

“Innovation will be required for both technical and financial partnerships…” — Westerman

“Innovation will be required for both technical and financial partnerships among many stakeholders, including the utilities, to achieve the aggressive renewable energy goals,” Westerman said.

Something to worry about?

David Chiesa, S&C Electric

Already fertile ground for microgrids, California promises to up its game with SB 100 and other legislation passed in 2018. But there may be some problems along the way. In fact, SB 100 could cause a migration toward fossil fuels by private, behind-the-meter systems, said David Chiesa, senior director of global business development at S&C Electric.

Unable to use fossil fuel generation to ensure system inertia, utilities will find it more difficult – and more costly — to design a reliable system, he said.

“Rates will go up. What happens when rates go up? That will be more opportunity for grid defection,” he said.

While this would create more microgrids, they may not be renewable microgrids. Commercial and industrial facilities do not have to meet the 100 percent renewable dictate – they just need to meet state and federal emissions requirements, he said. So the utility grid will be 100 percent renewable but privately owned grids are likely to use more fossil fuels to save money.

“You get the inverse effect of what you want to have,” he said.

No illusions

So while the goal is set — and it largely favors microgrids — many details have yet to be worked out. Even Gov. Brown admits that achievimg 100 percent zero-carbon electricity won’t be easy.

“This bill, and others I will sign this week, help us go in that direction. But have no illusions, California and the rest of the world have miles to go before we achieve zero-carbon emissions,” he said when he signed the new law Monday.

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About the Author

Elisa Wood | Editor-in-Chief

Elisa Wood is the editor and founder of EnergyChangemakers.com. She is co-founder and former editor of Microgrid Knowledge.

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