If Regulators Had a Magic Wand, How Would They Encourage Microgrid Development?

May 15, 2019
If you had a magic wand and could create one policy that would help rollout more microgrids, what would that be? Panelists respond at Microgrid 2019 in San Diego on Tuesday.

If you had a magic wand and could create one policy or rule that would help rollout more microgrids, what would that be? That’s the question with which panelists grappled at the Microgrid 2019 conference in San Diego on Tuesday — with answers ranging from pricing carbon to valuing resiliency.

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The underlying premise is that microgrids are serving a public benefit because they are performing a number of functions — everything from keeping the lights on during catastrophic events to creating new markets for clean energy to expanding economic development opportunities. Given those benefits, it should thus be the goal of policymakers and regulators alike to motivate development. But how?

“We should create a carbon value tax,” says Joseph Sullivan, vice president policy and development for Concord Engineering Group. “The goal is to reduce carbon emissions. We do not actively have a metric by which we reduce carbon.”

“The market will then decide which technology will succeed,” he continued. “It could be microgrids “But market-based solutions are strictly economic. They take the long view.”

Sullivan spoke on a Microgrid 2019 panel, “Choosing What to Champion: Which Energy Policies, Rules and Programs Open the Way for More Microgrids?”

To flesh out this idea, by pricing carbon, it would encourage power companies and clean technology providers to pursue those options that would result in fewer greenhouse gas emissions. Microgrids are well positioned to succeed because they can work in unison with onsite renewable generation and battery storage.

Putting a value on clean energy production has been a hard task not just at the federal level but also at the state level. Some states, of course, have done so with regard to green energies and nuclear power. But the role of the regulator has been to provide safe and reliable electricity at the lowest possible price. And given the pressures today of reducing carbon dioxide emissions, they are now tasked with thinking about resilience and renewable energies. When then is the balance between regulation and markets?

“We would have to be aggressive with regard to market signals,” says Galen Nelson, senior director for innovation and industry support at the Massachusetts Clean Energy Center. “We will need aggressive mandates that ramp up over time to solve climate change … valuing resilience is the kicker.”

But regulators have had a hard time valuing resilience, or the ability to snap back from a loss of power. Regulators must figure out where to draw a line between the public benefit and the private interest.

Commercial path

Clearly, if a microgrid can keep the lights on and businesses up-and-running, that is a positive value. And if it helps avoid broad economic losses, the benefits start to compound themselves. But it extends beyond economic value and into societal interests: For example, a loss of power can wipe out communications systems and drinking water facilities.

Northern California, of course, just suffered wildfires that knocked out power in PG&E’s territory. It’s up to California’s regulators to sort out the precise cause of the wildfires and the extent to which PG&E’s oversight had a role. The overall mosaic, though, is complex and involves scare resources combined with market rules and changing weather patterns. 

“We need new solutions,” says Mike Gravely, team leader for energy technology at the California Energy Commission. “We must look at the value that a microgrid provides, which is not readily quantified: think reductions in greenhouse gases and improvements in response times.

“Developers must show us a commercial path,” he continues. “Our focus has been on commercializing microgrids. One of the challenges of microgrids is that they are all different And the biggest single factor has been wildfires. Microgrids have to be able to operate for 14 days,” he adds, not just for a few hours after a brief outage. It is about remaining operational during catastrophic events.

From the utility perspective, microgrids can reduce peak demand, smooth out voltage to avoid lapses in power and reduce the overall wear and tear on the central grid, thus minimizing capital outlays that are passed through to ratepayers.

For others, though, it is about bringing electric service to remote areas, which can then facilitate economic developing and create jobs. Still others see microgrids as the mechanism by which to create a clean tech economy while at the same time, provide more reliability.

“We are looking for ways to incentivize microgrids,” says Peter Klauer, senior advisor for smart grid technology at the California ISO. “Microgrids can provide value either behind the meter or in front of the meter. They balance the grid and bid into the market. We don’t pick technology winners. We need resources to help us balance the grid.”

Microgrids are taking on increased significance in a society that is valuing clean energy and electricity reliability — especially in the aftermath of wildfires and hurricanes. But if the role of microgrids is to grow, regulators are going to need better data to help them make critical decisions. That means knowing the benefits a microgrid bring and then being able to quantify that value.

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About the Author

Ken Silverstein

Since the late 1990s, I've covered energy, beginning with the rise and fall of Enron -- first as a magazine writer before becoming a columnist. For more than seven years, I've been a columnist for Forbes while also expanding my coverage to include key environmental issues and emerging technologies such as microgrids. I've also done some global reporting of those same issues that touch the African and Asian regions. My work has appeared in, and by cited by, dozens of publications and broadcasts.

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