A new California order that aims to take advantage of the flexibility of distributed energy resources (DER) and microgrids – while lowering interconnection costs – is a step in the right direction.
But it stops short of unlocking all the benefits of DERs, microgrid industry members said.
On March 21, California regulators approved the Limited Generation Profile (LGP) option, which allows DERs to interconnect to the grid and follow specific schedules that reflect grid constraints, according to the Interstate Renewable Energy Council (IREC). The schedules limit how much energy DER and microgrid operators can send to the grid at different times based on grid constraints. The goal is for the LGPs to help add more renewables to the grid, minimize DER projects’ impacts on the grid and avoid expensive infrastructure upgrades that can sink projects.
California’s hosting capacity maps paved the way for LGP ruling
The creation of the LGPs was possible in part because California requires utilities to publish detailed, time-based maps about distribution grid conditions.
These maps, called hosting capacity maps, allow developers to see where hosting capacity is limited and where it might make the most sense to propose developments, said the Institute for Local Self-Reliance in a recently released state scorecard. While some utilities offer the maps, they often don’t reflect current conditions. Most states “flunked” the hosting capacity map section of the scorecard, while California, Colorado, Washington, D.C., Hawaii and Illinois got good grades.
Avoiding costly infrastructure upgrades
The idea behind the maps is this: If DER and microgrid developers create projects in areas where hosting capacity is more available, their projects are less likely to spark expensive infrastructure upgrades.
To date, no state’s interconnection process has considered hosting capacity in deciding whether grid upgrades are needed, according to IREC.
“Now, by taking into account the grid conditions at their proposed project site, and designing an export schedule based on those conditions, project developers have a means to avoid potentially costly grid upgrades,” said IREC. This will allow the grid to take on more renewable energy at lower costs. And more renewable energy yields more flexibility.
The advantages of resource flexibility
Energy flexibility is a software-driven ability associated with advanced DERs such as microgrids. When the electric grid needs relief, flexible resources can come to the rescue. They turn on and off in response to price signals or the sudden cessation of wind or solar, situations that can cause too much demand to chase too little power supply on the grid. In that way, they act as a booster to renewable energy growth as the U.S. strives to make renewables the dominant energy resource.
But microgrid industry members said the California measure doesn’t take big enough steps toward unlocking the benefits of DERs, especially in the context of anti-DER and microgrid policies in the state.
“In the face of everything else California is doing in terms of slashing net energy metering payments and blocking microgrids in other contexts, this is a small victory in a battlefield littered with DER carcasses,” said Cameron Brooks, executive director of Think Microgrid, a membership coalition that represents the microgrid industry in policy discussions.
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Benjamin Shell, senior product manager at Scale Microgrids, said the company applauds the California Public Utilities Commission (CPUC) for creating the LGPs. “California desperately needs more flexible capacity that can be delivered to load without waiting for lengthy interconnection studies and even lengthier grid upgrades,” he said. Scale Microgrids wants to start working with utilities to implement this policy as soon as possible.
Only three LGP schedules offered
But the LGP measure would be much improved if DER developers could tailor a microgrid site's generation profile to tariff structures and site load characteristics, said Shell.
Most non-grandfathered active tariffs offered by California's investor-owned utilities identify 4 p.m. to 9 p.m. as the most expensive time of day to use electricity. But prices vary significantly during different seasons, and the LGP schedules should reflect that, he said.
Under the order, utilities will offer only three LGP schedule types to developers, and the one that incorporates both seasons and time blocks doesn’t completely match with utility tariffs, he said. The order provides for a 5 p.m. to 9 p.m. time block and four seasonal blocks that align with calendar year quarters such as January through March. These blocks don’t align with utility tariff definitions of summer (June through September) and winter (November through February).
“In terms of site load, if a site's load has peaks and valleys that are not well aligned with the available schedule blocks then, say, you could be requesting an export level for a particular block that will only be realistically used for part of that block instead of being able to align blocks with actual expected start and end times for higher or lower export levels,” he explained.
The need for additional schedules
For example, if a facility’s load in June and July is 500 kW between 3 p.m. and 6 p.m., and then only 200 kW from 6 p.m. to 9 p.m., there is no existing schedule type that allows the facility to export more during the 200 kW load hours and less during the 500 kW load hours, especially during a different season when loads are different – say November through February. During that season, the load might only average 200 kW from 3 p.m. to 9 p.m. Many facilities use more electricity in the summer because of air conditioning loads, Shell said.
Bill Powers, campaign chair for Power San Diego, the group proposing a not-for-profit public utility in San Diego, said the public utility could benefit from the LGP ruling, but the ruling doesn’t go far enough.
Power San Diego would use local solar power paired with battery storage, plus smart energy efficiency and demand response programs to provide 100% local clean energy in 10 years. This approach would reduce the cost of electricity to San Diego residents and provide income streams by aggregating and dispatching customer batteries during times of peak demand.
“For our proposed power supply plan to work most effectively, the flow of power from local batteries and battery storage must modulate in real time to maximize use of the existing distribution while minimizing the amount of distribution grid upgrades. The ruling is a step in that direction,” Powers said.
Need schedules that allow developers to reap income
However, he’s concerned that the scheduling options approved by the CPUC may not allow developers to design projects that reap income. A better alternative would allow customers to pick their own schedules, he said.
Erin Weber Kiel, senior manager of government affairs, California at Sunnova Energy, said the new rules are helpful for storage and community microgrids – but don’t go far enough.
“They certainly don't address the key barriers to deploying our model,” she said.
California order doesn’t solve California’s microgrid battles
Sunnova developed a community microgrid model for interconnecting new planned communities. The company wants to act as a utility that owns and operates community microgrids. California regulators rejected Sunnova's proposal, but the company has said it is still pushing for “a more competitive energy market that prioritizes the needs of the people over the interests of monopolistic utilities.”
Sunnova wants the California Legislature to pass AB 3107, “which would open the door to meaningful commercialization of microgrids, by appropriately regulating microgrid service providers,” Weber Kiel said.
Numerous organizations are frustrated that the CPUC, after a six-year effort, hasn’t created a tariff that would commercialize microgrids. That’s just one facet of what Brooks described as an unfriendly environment toward DERs in California.
California’s new LGP option doesn’t pave the way for renewables to get their full value, said Brooks. “But it’s a step forward from a very bad baseline,” he said.
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