Certain states lead on microgrids when it comes to sorting out policies and regulation. Here we look at what California, Connecticut and Maryland are doing to move the microgrid market forward. This article series is based on EnergyEfficiencyMarkets.com’s report: Think Microgrid, available here.
In the U.S., electricity is governed mostly at the state level. Hence, there is a patchwork of markets, generally formed around local resources or economic needs. Often states encourage microgrid development because they have tech industries that require highly reliable power. These states also tend to favor clean power and energy innovation.
California already is home to several microgrids, but it is is expecting a new, larger wave of installations. The California Public Utilities Commission Policy & Planning Division offered some direction for their development in a recent paper, Microgrids: A Regulatory Perspective.
“Microgrids are coming; how utilities and regulators respond will go a long way to determining how innovation and services will impact the electric grid,” said the April 2014 paper.
The state should avoid pigeon-holing microgrids and instead consider their full range of benefits, the paper says. They are more than a set of technologies capable of keeping on the lights. Instead, the microgrid is a fundamental building block for a smart electric grid, a kind of “cell in a matrix” of interconnected distributed energy resources and customer loads, controlled through the interaction between the microgrid and the utility, the paper said.
Microgrids are likely to disrupt the conventional utility model, according to the paper’s authors Christopher Villarreal, David Erickson and Marzia Zafar. 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.
The paper also discusses problems with interconnection and net metering that California microgrids face. They illustrate the difficulties created by microgrids when they are not defined in regulation, but must fit into a slot created for other distributed resources. The report says:
Distribution interconnection rules that have been established by the Commission only recognize three types of generation interconnection: net metering, self‐generation (nonexport), and wholesale distribution access tariff (WDAT). Net metering is on the customer side of the meter and involves a bill credit for exported energy. It is not visible to the California ISO, and is connected at distribution‐level voltage. There is a limit of 1 megawatt (MW) of nameplate capacity. Self‐generation interconnect is effectively wheeled to the customer via the distribution grid, but is not intended for net production. Wholesale distribution access interconnect is visible to the CAISO and is interconnected on the utility side at distribution level voltage. There is a limit of 3 MW at the 12 kV PCC and 5 MW at the 60 kV PCC.
It is important to note that none of these interconnection techniques support a general advanced microgrid as defined above, but all require the approval of the utility.
A number of other regulatory problems also need to be addressed to foster microgrids in the state, according to the paper.
For example, should the interconnection tariff consider the ability of a microgrid to switch back and forth from consumer to producer of electricity in short bursts of time?
Most California utilities do not support islanding – will this dampen microgrid development in the state?
And what does it mean to microgrids that California requires net metered resources to power down in the event of an outage or grid failure? This negates another one of a microgrid’s most important benefits – the ability to serve during a grid crisis.
The paper suggests a number of steps regulators should take. They include development of standards for microgrids to ensure that they interconnect and interact safely with the central grid. The authors also advise that California map the distribution grid to determine where to site microgrids and perhaps set up a locational pricing system to encourage siting in those areas.
“Microgrids offer locational marginal resiliency, or stable nodes of resiliency and reliability, that decrease the end users cost, and in some cases the utility’s cost.” – Philip Barton, Microgrid and Reliability Program Director at Schneider Electric
Connecticut began exploring the microgrid concept after suffering extended power outages from severe weather, even before the October 2012 SuperStorm Sandy. The state has been supporting development of microgrids both through incentives and policy changes.
To date Connecticut has issued two solicitations for microgrids.
The first solicitation resulted in nine projects announced in July 2013. The state granted the projects $18 million in total. The projects included microgrids that use micro gas turbines , natural gas reciprocating engines, solar PV, CHP, diesel, fuel cells (a manufacturing industry being cultivated in Connecticut) and some battery storage. The hosts are critical facilities, such as police stations, hospitals, cell towers, fire departments, shelters, as well as a naval submarine base, college campuses and schools.
Connecticut issued its second microgrid solicitation March 3, 2014. It offers $15 million in funding, and seeks projects that promote geographic diversity. The RFP also seeks a variety of project sizes, scale, and technical configurations. Bid winners must support critical facilities when the grid fails. Bids are due Aug. 6, 2014 and winners will be announced by Oct. 1, 2014. The state also plans a third microgrid solicitation.
The state established the incentives as part of a storm emergency preparedness bill (Public Act 12-148) that became law in June 2012.
In addition to offering financial incentives, Connecticut has fostered microgrid development through changes in utility franchise rules. Public Act No. 13-298, passed in July 2013, make it possible to site microgrids that cross public streets without franchise infringement.
“Utility franchise rights in Connecticut are now essentially erased for municipal microgrids. So if you have a microgrid in Connecticut that is serving what is considered a municipal critical facility, you can string wires wherever you want, and the utility is not allowed to sue you – although that could still be challenged in court,” said Genevieve Sherman, senior manager at the Clean Energy Finance and Investment Authority at the Northeast Sustainable Energy Association BuildingEnergy 14 conference in Boston.
Maryland created a task force to study microgrids. See our story on the task force’s recent report here.
The effort is being led by Abigail Hopper, an energy advisor to Governor Martin O’Malley. The Resiliency Through the Microgrids Task Force is looking at statutory, regulatory, financial, and technical barriers to microgrids. The effort builds on recommendations from a September 2012 task force report
“Marylanders expect and deserve an electric grid they can count on, especially during unpredictable severe weather events. Developing microgrids is critical to a sustainable future,” said O’Malley, announcing the effort.
The Maryland Energy Administration is providing staffing for the task force. The effort includes identifying areas of high electric demand where pilot projects may be built.
In a presentation to the task force, Baltimore Gas & Electric that there do not seem to be insurmountable barriers to microgrids in Maryland, although legislative or policy changes might be helpful to foster development.
Utilities Pepco and Delmarva Power described themselves as “microgrid friendly” and said that Maryland law allows both utilities and their customers to build and own microgrids.
Other Maryland microgrid presentations are available here:
Come back next when we will look at how Massachusetts, New Jersey and New York states lead on microgrids. Or immediately download the full report, free of charge: Think Microgrid: A Discussion Guide for Policymakers, Regulators and End Users, courtesy of the report’s underwriters: the International District Energy Association, Schneider Electric and Microgrid Knowledge.