Microgrid Industry to California: Help Us Help You

Nov. 7, 2019
We can move faster installing microgrids, but you need to make some changes. That’s the overarching message from microgrid companies to California regulators as the state faces utility power shutoffs for years to come.

We can move faster installing microgrids, but you need to make some changes. That’s the overarching message from microgrid companies to California regulators as the state faces utility power shutoffs for years to come.

The recommendations are pouring into the California Public Utilities Commission as it attempts to translate into regulation a law (SB 1339) that calls for the state to facilitate the commercialization of microgrids (19-09-009).

When the law was passed last year, its backers saw microgrids as good risk planning. Now the risk is real with massive power shutoffs in recent weeks by utilities attempting to avert wildfires. The state’s largest utility, Pacific Gas & Electric, has warned that such outages could be the norm for a decade. 

Millions of Californians have lost power, inducing anger, chaos and economic loss. For those who rely on medical devices that run on electricity, the outages mean danger. 

“As planned power shutdowns interrupt daily life and business for hundreds of thousands of ratepayers — and pocketbooks, health, and even life for the most vulnerable — it is imperative that California accelerate action on implementing microgrids,” said the California Hydrogen Business Council in comments filed with the commission. 

Microgrid companies see surge in inquiries

Not surprisingly, microgrid companies report a surge in requests for installations from California businesses, communities and institutions seeking a way to ensure that they have power when the utility shuts down its service.

“Since the first widespread PSPS [public service power shutoffs] event in June, demand for distributed energy resources has spiked and has begun to surpass supply,” Scale Microgrid told the commission. “It is inevitable that California’s grid will become more distributed with or without the help of the state.”

But the speed and equity of the microgrid ramp up depends on the state stepping up and rethinking its microgrid strategies for the short and long-term, Scale Microgrid added. 

Others told the commission that overly restrictive permitting rules and interconnection requirements stymie microgrid installations.

Further, the issue looms that microgrids are not fully compensated for the electric reliability they provide to the grid and society. The state is beginning to explore a microgrid tariff that could help overcome the problem and incentivize more microgrid companies to work in the state.

Schneider Electric, a large microgrid player, advised that the commission segment the tariff part of the proceeding from more complicated issues and put it on a fast track.

“The track should be completed by March 2020 — before the next fire season commences,” Schneider said in written comments to the commission.

Clear rules about third party ownership of microgrids also would speed their development, especially for commercial and industrial customers, Schneider said. The company called for regulators to give attention to energy as a service (EaaS) contracts that spare customers from paying upfront capital costs for microgrids.

Newer microgrids can now be installed at 30% less cost and within nine months, 65% faster than the industry standard, “but only if known rules of deployment are in place,” Schneider said.

Other issues can be tackled under slower timelines, such as DC standards, community-level microgrids, interaction with the wholesale market and nanogrids, Schneider said.

No need for more pilot programs

By Elnur/Shutterstock.com

Vote Solar, a solar advocacy group, pushed to fast track microgrids that provide critical municipal services such as water supply, wastewater pumping and treatment, telecommunications and first-responder facilities.

Microgrids for community shelters also should be on a fast track , the organization said. “The recent mass evacuations in northern California underscore the need for and make it clear that these centers are just as critical as first responders, water pumping, etc.” 

A second, less urgent track should look at issues such as utility ownership of microgrids, according to Vote Solar

The Microgrid Resources Coalition (MRC) cautioned California regulators against getting bogged down in pilot studies. 

“Private developers and technology providers on the whole have more than the requisite experience and are ready to perform,” wrote the advocacy group.

Get ready for new grid paradigm

Bloom Energy, too, underscored the urgency of putting effective rules and policy and place quickly. The fuel cell company also advised that the commission start rethinking the grid’s role as it becomes clear how vulnerable the grid is to wildfires, extreme heat, floods, cybersecurity and other threats.

“Notably, microgrids create a new paradigm. They are the primary power source to serve the customer’s load and can be designed to be 99.99999% reliable. As such in some scenarios, the microgrid customer will no longer rely on the utility to provide power — either primary or standby.”

Given this new reality, state regulators should reconsider standby and non-bypassable charges, Bloom said.

Port of Long Beach. Photo by Sergey Novikov/Shutterstock

Causes of delay

Entities that are developing microgrids for their own use also joined the conversation. The Port of Long Beach, which accounts for nearly one-fifth of containers moving through US ports, said its work developing a microgrid “has confirmed the need for regulatory changes.”

Despite “vigorous efforts” by the port, Southern California Edison and state officials, it has taken more than a year for the microgrid to secure an agreement with the utility and obtain commission approval.

“Lack of clear regulatory standards for microgrids” delayed the project, among them issues related to interconnection rules and a requirement to trace the source (utility or microgrid) of electrons stored in batteries in sales transactions.

In a joint filing, cities (including San Diego and San Jose), community choice aggregators and authorities urged California regulators to move on the microgrid tariff before the next fire season. The group called for the commission to prioritizes two types of microgrids: those that are customer-sited (behind the meter) and community microgrids that include a load-serving entity engaged in retail sales

Several of the parties to the joint filing have microgrids underway, among them Lancaster Choice Energy, Monterey Bay Community, Peninsula Clean Energy, East Bay Community Energy and Redwood Coast Energy Authority.

Time frame for California regulators

State regulators set a schedule to complete the new microgrid rules by December 2020, but the city/aggregator group said, “Simply put, events have overtaken SB 1339’s proposed time frame.”

Editor’s note: California’s Administrative Law Judge Rizzo has scheduled a prehearing meeting on this proceeding for December 17, 2019, at 9:30 am PST, in the Commission’s Courtroom, State Office Building, 505 Van Ness Avenue, San Francisco, California.

More coverage is coming on the California microgrid proceeding, including articles on the utility position, equity issues and the microgrid tariff. Track them by subscribing to the free Microgrid Knowledge newsletter.

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 RealEnergyWriters.com, 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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