Many revolutions in the U.S. electric power industry begin within states, where policymakers drive change to lower electric rates or green energy supply. This is proving true again as the ‘microgridding’ of the U.S. power grid begins.
In the last three weeks alone, California, New Jersey and Washington state have issued grants or put forward plans to fund more microgrids. Massachusetts and Connecticut have already allotted funds and are planning to release more. And New York is microgridding ambitiously with its $40 million NY Prize.
None of these programs are meant to act as long term subsidies; instead they are carefully injected incentives designed to jumpstart a fledgling industry, one that state officials believe offers a public good.
Microgrids ensure electricity service when the central grid fails. They also can reduce energy costs and assist in greening our energy supply. Several states see the microgrid industry—and related energy storage and solar—as job builders. So they are trying to persuade these industries to set up shop within their borders.
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Microgridding on little money
However, even with these recent announcements, public funding for microgrids remains miniscule. In fact, decentralized energy (of which the microgrid is one technology) continues to receive far less climate change funding worldwide than does centralized energy or utility-scale projects. A recent report by the International Institute for Environment and Development found that only three percent of climate funding worldwide goes to decentralized energy—even though decentralization is widely seen as the next big phase for the electric power industry.
Private investors will step in to finance microgrids as they become more educated about how to acheive a return on equity for a microgrid project. Read more here.
