The Old Must Yield to Clean Microgrids, Advocates Say

27 Oct 2020

California is striving to attain a clean, reliable, and affordable grid, but getting there requires huge changes—from institutional to technological. Part and parcel of this transition is the age-old battle between the established and the newbies, with the former fighting to hold onto turf and the newcomers struggling to get some viable sod in an evolving landscape.

A prime example is the struggle at the California Public Utilities Commission to advance non-utility owned clean microgrids.

“We must rethink the 100-year-old electricity regulatory structure that is failing California,” Ellie Cohen, the Climate Center chief executive officer, said. She and others point to the growing number of public power shutoffs, the devastating wildfires across the state and critical need for resiliency. “The CPUC should revise its regulations so thousands of small-scale distributed energy resources can participate in and be compensated for providing clean local energy services when needed, while also creating new local jobs,” she wrote in a recent Sacramento Bee editorial.  

Earlier this month, CPUC President Marybel Batjer told lawmakers that fixes will soon be in place to avert future blackouts, including more clean microgrids. She told the Assembly Utilities & Energy Committee during a hearing on the cause of the mid-August outages that a decision by Commissioner Genevieve Shiroma promoting commercialization of these technologies will be out by the end of this year.

Microgrid proponents, including the lawmaker whose bill requires the CPUC proceeding, warn that Shiroma is failing to tackle the most critical issue: ground rules for rates and interactions between utilities and the owners of microgrids. The latter includes hospitals, grocery stores, data centers and homeowners. 

“It has been two years, two wildfire seasons, multiple [public safety power shutoffs], a series of rolling blackouts and Flex Alerts and yet, there still appears to be no urgency at the PUC to create a customer-facing microgrid tariff,” Sen. Henry Stern complained in an Oct. 26 letter to Commissioner Shiroma. The CPUC is required to implement his SB 1339 seeking to commercialize clean and low polluting microgrids, largely by making them less costly. These systems range from solar-battery projects to natural gas-powered fuel cells, which create energy via a chemical process.

The CPUC’s Track 2 proceeding is supposed to focus on building a market for simple customer microgrids and be completed this December. Simple systems have one owner, or more than one if they are located next to each other.

These small microgrids do not use utility lines to self-supply.

Institutional challenges

The Commission’s microgrid proceeding isn’t just old vs. new, it’s also complex and bumps up against institutional barriers. It crosses into other CPUC matters, including Net Energy Metering and the Renewable Market Adjusting Tariffs. Agency silos inhibit the Commission’s ability to see the big picture, according to several clean energy and microgrid proponents.

The three investor-owned utilities say that a call for a tariff is neither reasonable nor feasible. In an Oct. 5 joint filing, they state that resolving “this complex and controversial set of issues in less than two months is patently unrealistic.”

A key concern of CPUC staff is that microgrid owners may not pay their fair share of system costs, shifting them to others. Staff also insist that rules already exist for microgrids under Net Energy Metering. Not included in compensating tariffs are ones for fossil fueled microgrid technologies, CPUC spokesperson Terrie Prosper said.

The existing tariffs “are not currently working for anyone,” countered Erin Grizzard, Bloom Energy senior director of policy and government affairs. Bloom is a major microgrid developer.

Grizzard and others, including the Climate Center, Green Power Institute and Vote Solar, warn that the Net Energy Metering tariffs do not cover some of the backup systems that provide grid resilience. This coalition also says the utilities improperly disqualify certain systems.

The governing statute under 1339 applies only to microgrids certified by the California Air Resources Board that produce low or no emissions.

The microgrid coalition complains that the CPUC is focused on advancing systems that belong to utilities, and not anyone else. To date, the Commission has approved the installation of more than 400 MW of polluting diesel generators this fire season at Pacific Gas & Electric substations, undermining state efforts to clean up the grid. Many more diesel generators are cranked up across the state during power shutoffs.

The value of resiliency

Tam Hunt, consulting attorney for the Green Power Institute, said no party in the proceeding backs cost shifting. He said the focus needs to be on the “value of resiliency.” That is, keeping power flowing during shutoffs and paying clean microgrids for sending excess power to the grid and reducing load during heavy demand to make them more affordable.

Independent microgrids that can supply power for many hours under smoke-filled skies “can be deployed between now and the 2021 fire season if a simple microgrid tariff is in place by January,” the Green Power Institute said in an Oct. 23 filing to the CPUC. The systems can also avoid the use of temporary diesel units.

“We want a standardized set of rules everyone knows how to play by,” Bloom’s Grizzard said.

Clean microgrid advocates want swift interconnections to the utility system and payment for taking load off the grid when supply and demand are out of balance, including ancillary services. They also want departing load charges removed.

Clean energy advocates’ overall mission is to move beyond the antiquated, centralized fossil-fueled power system, to a clean, distributed energy system, involving not just the private utilities but also local governments and individual customers. Clean microgrids “will play a key role in achieving our state’s goals for decarbonization, resilience and environmental and social justice,” the coalition stated in an Oct. 1 filing.

The coalition urging creation of a tariff in the ongoing Track 2 proceeding also includes the Microgrid Resources Coalition, CEDMC, Clean Coalition, 350 Bay Area, Lorenzo Kristov, California Alliance for Community Energy, and Indivisible California Green Team.

Elizabeth McCarthy

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