A Second, More Targeted Strategy to Boost California Microgrids

In a state often afflicted by natural disasters such as wildfires, the need for resilience provided by microgrids is especially critical. But microgrid development has been no easy task in California, where interconnection delays, complex rate structures, and bureaucratic challenges are common hurdles.  

These challenges and the sheer opportunity size for hybrid renewable power systems in the Golden State make this latest regulation stance even more significant. In an effort to pave the way for future deployments, in June the California Public Utilities Commissions (CPUC) made several requirements for utilities to address challenges.

In the second phase of these proceedings—a proposal released last week—the commission has made several more targeted recommendations, for policy changes to facilitate new project development, a special tariff for microgrids, and for the development of a new community microgrid pilot program. 

In its June action, the CPUC ordered utilities to streamline project applications and approvals and develop easily replicable, pre-approved templates for microgrid interconnection. The new set of requirements delves deeper into the issues faced by microgrid projects. These new measures, aimed at ensuring that new systems can be deployed quickly, efficiently, and economically, outline three primary changes for the commission to consider. Stakeholders are invited to provide input by August 14.

If the measures are approved by the CPUC:

1) Utilities would be required to allow the construction of microgrids at special facilities and allow microgrids to serve critical customers at adjacent parcels.

Current legal restrictions prevent microgrid owners from serving buildings on adjacent property. The new set of recommendations proposes that municipalities be exempt from these restrictions but limited this exemption to 10 microgrids across the three utility service territories as a study for the state to test the policy and adjust it if necessary.

2)  Utilities would have to create a microgrid tariff.

In addition to financial barriers such as high upfront capital investment and payment to utilities for departing load and standby charges, rate complexity is often a barrier for microgrid projects in California. Therefore, the second phase of the CPUC’s proposal calls for utilities to develop a single rate schedule for microgrids and provides options for doing so.

3)  Utilities would be obligated to develop a community microgrid pilot program.

The pilot program involves 15 community microgrids deployed within the service territories of Pacific Gas & Electric, San Diego Gas & Electric, and Southern California Edison, that would serve as a test bed for community microgrids and their supportive technologies. These systems would be ratepayer-funded with costs capped at $15 million.

California utilities undoubtedly have their work cut out for them in the coming months. Yet it also seems likely that these new requirements could not only establish a clearer path forward for future microgrid projects and those currently sidelined by the pandemic but may also provide increased opportunities for developers of hybrid systems throughout the Golden State.  

Discover more about regulatory frameworks and their impact on microgrid project development at the 8th Annual HOMER International Microgrid Conference, October 12-16, 2020. In this presentation — Microgrids Policy Progress in the StatesTom Stanton of NRRI will review, catalog, and categorize state policy actions, ranging from state policies where microgrids will be allowed to those opening pathways to public purpose microgrids, and those where individuals can switch to island mode during service disruptions of wide-area grids.

Attendance is free and sessions are 100% online from October 12-16. For more information or to register, visit the HOMER International Microgrid Conference website.