Microgrid Acceleration
Some thoughts on how to best deploy microgrids
I recently watched a webinar on how to unlock the potential of microgrids (thanks to reader and friend S.K. for the tip).
A portion of the webinar (hosted by a group called the Clean Coalition) was devoted to overcoming barriers to microgrid deployment in California, where regulation continues to favor large-scale transmission projects over decentralized energy resilience.
With an innovative tech climate, green-energy subsidies galore, and a population that is at least nominally interested in clean energy, California should be on the vanguard of microgrid deployment. However, as we so often discuss at this blog, economic and regulatory conditions in the state favor centralized infrastructure over local energy solutions.
Regulatory Bias Toward Large-Scale Projects
One significant problem in California is that investor-owned utilities earn a guaranteed rate of return (approximately 12% on transmission projects compared to 8% for distribution), which makes centralized infrastructure investments like transmission lines and substations more attractive than locally controlled microgrids.
While the CPUC has enacted the Microgrid Incentive Program and the Community Microgrid Enablement Tariff (CMET), these initiatives have failed to produce meaningful or widespread deployment. And the latter program, as we’ve discussed previously, opted for a utility-designed community microgrid over plans submitted by various non-utility stakeholders. (Note that the CPUC rejected a plan from PearlX, who proposed a framework where microgrids could operate full-time, not simply during outages, and could use their own distribution infrastructure, sans interconnection to the utilities’ distribution system. Proposals submitted by the Clean Coalition, Sunnova, the Green Power Institute, the Microgrid Resources Coalition, and the Applied Medical Resources Corporation were also rejected in favor of a plan submitted by PG&E, Southern California Edison, and San Diego Gas & Electric.)
Case Studies Highlighting Microgrid Urgency
The Clean Coalition webinar highlighted the Goleta Load Pocket (GLP), which is a 70-mile stretch of coastline from Santa Barbara to Carpinteria whose 300,000 residents are served by a single transmission line in an area vulnerable to wildfires, earthquakes, and landslides.
The Clean Coalition has developed a GLP Community Microgrid blueprint, where it proposes 200 megawatts of solar and 400 MWh of storage to ensure full transmission failure protection. However, utility cooperation remains a roadblock, with PG&E resistant to community microgrid efforts.
Similarly, in Southern California, the East Los Angeles Community Microgrid aims to integrate solar, storage, and electrified transit, but minus financial mechanisms that reward energy security, potential investors struggle to justify the costs of such projects.
Ann Arbor’s Microgrid Model
A webinar representative from Ann Arbor, Michigan shared insights on an alternative approach. Ann Arbor’s Sustainable Energy Utility model bypasses utility control by establishing a community-owned energy provider that is focused on solar, storage, and microgrid expansion. These circumstances are made possible by Michigan’s Foote Act,1 which indirectly created conditions that are conducive to parallel (or competing) utility infrastructures. While California lacks an explicit legal framework for such an undertaking, its cities could look to Ann Arbor for ideas.
Recommendations for Unlocking California’s Microgrid Potential
To accelerate microgrid deployment, the webinar proposed several key reforms:
Reform Utility Incentives: Adjust return-on-equity structures to favor distributed energy investments over transmission projects.
Mandate Utility Participation: Require utilities to streamline interconnection processes and enable microgrids for the provision of grid services.
Place a Value on Resilience: Establish financial mechanisms, such as the Resilient Energy Subscription (see description below), to compensate microgrids for providing local energy security.
Simplify Interconnection: Consolidate interconnection studies to reduce project timelines from years to months.
Explore Municipal Energy Alternatives: Encourage cities and counties to develop community-controlled microgrid utilities.
The Resilient Energy Subscription Model
Under the Clean Coalition’s RES model, customers could opt to pay a monthly fee per kWh in exchange for guaranteed delivery of locally-generated renewable energy during grid outages. This approach would allow microgrid operators to recover costs tied to infrastructure, operations, and return on investment, thereby creating a a viable funding model for community energy resilience.
One last microgrid item, separate from the webinar — White Sands Missile Range has launched a $10.9 million hybrid microgrid to ensure uninterrupted potable water service to its main post. The system provides backup power to four groundwater wells and comprises a 700-kilowatt solar photovoltaic array, a 500-kW natural gas generator, and a 500-kW lithium-ion battery energy storage system. The microgrid enables WSMR to operate independently of civilian water and energy services for up to two weeks.
The Foote Act (Act 264 of 1905), was a Michigan law that granted certain rights to electric utility companies for the construction and maintenance of infrastructure on public streets and highways. While the act itself didn't explicitly provide for municipality-created parallel utilities, it set the stage for scenarios where multiple utilities, including municipal and privately owned, might coexist.