Confused about How to Develop a Microgrid?

April 21, 2014
Want to develop a microgrid? Don’t know where to start or what rules to follow? A new California white paper outlines how regulators should help. For one, regulators should avoid pigeon-holing microgrids. They are more than a set of technologies capable of keeping the lights , says “Microgrids: A Regulatory Perspective.”

If you’d like to develop a microgrid for your business, campus or community, but don’t know where to start, you’re not alone.

In the US, the race is on to build these mini-grids that can keep the power flowing when the larger grid goes down. But it’s a race without a pathway or clear rules in many states. Regulators appear to be chasing the market more than guiding it.

Often a green energy leader, California recognized this problem and outlined solutions in a recent white paper issued by the California Public Utilities Commission Policy & Planning Division.

“The question is not does the industry encourage or discourage this development – this development is happening whether the utility, or regulator, encourages it,” says Microgrids: A Regulatory Perspective, issued April 14.

Microgrids are coming. So what framework can regulators create to guide those who want to develop a microgrid? And how can regulators get the most out of the technology for their state?

As is often the case in electricity regulation, the first step is defining the product. And, of course, we’ll probably end up with a unique definition for microgrid in almost every state.

Learn more about microgrids by joining the discussion now going on in the Microgrid Knowledge LinkedIn Group.

The CPUC staff paper defines two kinds of microgrids: 1) A basic microgrid with one customer, possibly with multiple meters and a dedicated distribution system; 2) An advanced microgrid with multiple customers and multiple resources that can island or connect to the grid, and may have a dedicated distribution network or use the existing one.

California Public Utilities Commission Policy & Planning Division

We should avoid pigeon-holing what microgrids can do, the paper says. They are not just “a set of technologies capable of keeping the lights on specific locations. Rather, microgrids can provide far more benefits, not only to the customers of the microgrid, but to the grid as a whole.” For example, microgrids can help states achieve energy efficiency and environmental goals and provide services to improve the functioning of the larger grid.

Next steps

So what needs to be done to guide those who want to develop a microgrid?

The paper outlines several steps for California.

First, microgrids are likely to disrupt the conventional utility model, says the paper. The bottom line is that independent microgrids will take customers away from utilities. So regulators and policymakers should consider a new role for the utility.  For example, the utility might act as a ‘distribution system operator,’ akin to the independent system operators that run the US transmission networks. In essence, the utility would oversee the distribution grid, including any connected microgrids, to ensure that the lights remain on for all.

Second, the paper suggests that the regulators develop standards for microgrids to ensure that they interconnect and interact safely with the macrogrid.

Third, “Location matters!’ the paper says. Map the distribution grid to determine where to site microgrids and perhaps set up a locational pricing system to encourage siting in those areas.

Many states and the federal government are now focusing on microgrids. California regulators should get involved in national efforts, the paper says. This will help them better understand microgrid challenges as California develops its own policies.

And last, all revolutions create discomfort; the microgrid revolution will be no different. As the paper puts it, “This will not be easy, as widespread and successful implementations of microgrids will upset the century-long view of the electricity grid. We should not shy away from this opportunity, but should embrace it thoroughly.”

Keep up on news about energy efficiency and the emerging microgrid market by signing up for Energy Efficiency Markets free newsletter.

About the Author

Elisa Wood | Editor-in-Chief

Elisa Wood is the editor and founder of She is co-founder and former editor of Microgrid Knowledge.

Exploring the Potential of Community Microgrids Through Three Innovative Case Studies

April 8, 2024
Community microgrids represent a burgeoning solution to meet the energy needs of localized areas and regions. These microgrids are clusters of interconnected energy resources,...


Microgrid Controllers: Rapid Relief for Today’s Dynamic Grid

This white paper explores six ways in which microgrid controllers can solve common challenges that the modern grid faces, including improving resiliency.