California Offers New Proposal to Break Down Barriers to Microgrids

July 27, 2020
Staff at the California Public Utilities Commission last week proposed a new microgrid pilot program, a special tariff for microgrids, and other measures to overcome barriers to microgrid development.

Staff at the California Public Utilities Commission released a proposal last week that calls for a new microgrid pilot program, a special tariff for microgrids, and other measures to overcome barriers to microgrid development.

The proposal comes in the second phase of a commission proceeding to help commercialize microgrids. The first phase culminated in June when the commission ordered a number of short-term modifications required of utilities, including steps to expedite applications and approvals.

For the second phase, staff took on more complex issues affecting microgrids, and proposed five changes for the commission to consider:

1) Direct utilities to allow construction of microgrids at special facilities

2) Allow microgrids to serve critical customers at adjacent parcels

3) Require utilities to create a microgrid tariff

4) Direct utilities to develop a community microgrid pilot program

5) Direct utilities to study low cost reliable electrical isolation technologies

$15 million for each microgrid

The pilot program would focus on 15 community microgrids built within the service territories of Pacific Gas & Electric, San Diego Gas & Electric and Southern California Edison.

Ratepayers from the three utilities would fund the microgrids, which would be designed to serve vulnerable populations, particularly low-income areas likely to face power outages. The proposal caps funding for each community microgrid at $15 million.

Critics of ratepayer funded microgrids say they create disparity because all utility customers pay, but only a limited number benefit. The proposal attempts to avoid this problem by charging only those ratepayers within the county where the community microgrid will be built.

Staff rejected the idea of seeking competitive bids for the pilot projects and instead put the utilities in charge, arguing that the utilities can “rapidly implement the program whereas a competitive solicitation for a third-party administrator will increase the program lead time.”

Each microgrid would be able to island critical functions for at least 96 hours, and would need to be built by Jan. 31, 2022.

Microgrid development without the hassle

Staff also took on other controversial issues, among them legal restrictions that stop microgrid owners from serving buildings on adjacent property. They proposed that municipalities be exempt from the prohibition, but limited the exemption to 10 microgrids across the three utility service territories. Staff reasoned that the 10 microgrids will create opportunity for the state to study the exemption and make modifications if necessary.

In calling for a microgrid tariff, the proposal noted that microgrids in California face barriers caused by rate complexity. “For example, there are net energy metering options for systems that involve solar generation alone, solar and storage together, fuel cells alone, or in combination with those technologies,” the proposal said.

Staff also said that some microgrids also face financial barriers, such as high upfront capital investment and payment to utilities for departing load and standby charges.

The proposal called for utilities to develop a single rate schedule for microgrids and outlined various options for doing so.

Mark the date: August 14

To be move forward, the staff proposal requires approval from the commission, which seeks stakeholder input by August 14. The full proposal is available on the commission website: Rulemaking 19-09-009.

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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.

“For an especially readable voice in the industry, the most consistent interpreter across these years has been the energy journalist Elisa Wood, whose Microgrid Knowledge (and conference) has aggregated more stories better than any other feed of its time,” wrote Malcolm McCullough, in the book, Downtime on the Microgrid, published by MIT Press in 2020.

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