California Approves Microgrid Tariffs as Grassroots Groups Push for More Local Control of Energy

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In a decision likely to be eyed closely by other states, California regulators yesterday approved microgrid tariffs and rules to hasten the deployment and commercialization of the technology.

microgrid tariffs

By anemad/Shutterstock.com

Approval of the tariffs, as well as accompanying microgrid incentives, followed a year-long effort by the California Public Utilities Commission (CPUC) to enact a state law (SB 1339) that requires regulatory changes to support microgrid development.

California is one of the forerunners in the creation of microgrid tariffs — an approach meant to create a revenue stream for microgrids. Its work is expected to be used as a springboard for other states looking to do the same. 

The commission’s deep dive into microgrids over the last year drew a wide range of participants and nearly 700 filings (Rulemaking 19-09-009). The proceeding took place within the backdrop of power outages related to wildfires and grid issues.

Genevieve Shiroma, the CPUC commissioner who headed the effort, described the final decision as a balancing act “to reduce barriers for the commercialization of microgrids while keeping an eye to ratepayer equity and supporting vulnerable and low-income communities.”

Advocates push for greater local control

But before the vote was taken, the commission’s approach was criticized by several speakers from environmental and community-based organizations, among them the Reclaim Our Power campaign and the youth-led Sunrise Movement, which said the decision favored utility control over local control of microgrids.

“Californians desperately need more choices to protect themselves from power outages and outrageously high electricity bills. Microgrid power by local solar and storage are a key solution, but the solution only works if we empower communities to establish microgrids in a way that they see fit and do not allow the utilities to use their monopoly power to undercut community-based microgrids,” said Lee Miller of the Solar Rights Alliance.

Californians for Energy Choice’s Eric Brooks said the decision fails to consider that the “bread and butter” for utilities is construction of transmission lines and other large capital projects, “which makes it ridiculous, quite frankly, to put them in charge of microgrids.”

Microgrids, he said, “are designed to take communities away from those long-range transmission lines to make them safer and more resilient from power shut offs and to promote local community-based clean energy adoption.”

“…the solution only works if we empower communities to establish microgrids in a way that they see fit” — Lee Miller

Known as the Track 2 decision, yesterday’s ruling had been circulated by the commission weeks earlier in draft form. During that time, the draft also drew criticism from some independent microgrid developers, including Google, as skewed against third-party development of microgrids in favor of utility projects. Microgrid developers are particularly concerned about California’s “over-the-fence” rules, which prohibit them from building microgrids that serve commercial buildings on adjacent properties — something utilities can do.

The decision loosens the restriction but in a limited fashion. It allows local government microgrids to service critical customers on adjacent parcels.

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Serves the vulnerable

Others praised the decision, particularly its focus on ensuring that low-income and disadvantaged communities reap the benefits of microgrids. 

“Vote Solar appreciates the public utility commission’s leadership on supporting microgrid development in disadvantaged communities with a $200 million incentive program. There is still much work ahead to implement this groundbreaking initiative,” said Ed Smeloff, senior director, grid integration at Vote Solar.

The $200 million microgrid incentive program will be jointly developed by the state’s three investor-owned utilities, Southern California Edison, Pacific Gas & Electric and San Diego Gas & Electric. The money will fund clean energy microgrids for vulnerable communities that face grid outages. It also will be used to test new technologies or regulatory approaches. 

Lightning pace

Marybel Batjer, CPUC president, said that the commission worked at a “lightning pace.” It produced two major decisions on microgrids over the last 12 months. 

“Often it takes us 18 months (per decision). This has been nothing short of a whole lot of work done very quickly,” Batjer said.

 The Track 1 decision, approved on June 11, 2020, created a suite of short-term solutions to accelerate deployment of microgrids and improve resiliency for the 2020 wildfire season.

Now having completed the second track, the commission moves into Track 3, which includes creating a Resiliency and Microgrids Working Group to take up additional approaches to speed microgrid development. Among other things, the third track will look at adjustments to the microgrid tariffs to reflect the value certain technologies provide, regardless of what fuel sources they use. Batjer noted fuel cells as an example.

Key actions on microgrid tariffs

The decision orders that the state’s three investor-owned utilities take the following actions:

  • Southern California Edison must revise its Rule 2 to permit installing added or special facilities microgrids.
  • All three utilities must:
    • Revise their rules to allow local government microgrids to service critical customers on adjacent parcels.
    • Create a renewable microgrid tariff that prevents cost shifting for their territories.
    • Jointly develop a statewide Microgrid Incentive Program with a $200 million budget to fund clean energy microgrids to support the critical needs of vulnerable communities impacted by grid outages and test new technologies or regulatory approaches to inform future action.
    • Develop pathways for the evaluation and approval of low-cost, reliable electrical isolation methods to evaluate safety and reliability.
    • Consult with local air quality agencies to ensure temporary generation complies with applicable air regulations with a goal to achieve a 90% reduction in criteria pollutants.

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About Elisa Wood

Elisa Wood is the chief editor of MicrogridKnowledge.com. She has been writing about energy for more than two decades for top industry publications. Her work also has been picked up by CNN, the New York Times, Reuters, the Wall Street Journal Online and the Washington Post.

Comments

  1. George J Kamburoff says:

    As a former utility engineer and still an eco-freak, My household and two electric cars are primarily powered by the PV system on the roof. We are grid-connected for benefits to both.
    If I can generate and store my own power cheaper than the power company can deliver it, what is the power company?

    • Perhaps a new concept in a nation where electricity is becoming more expensive with every “lost revenues” or “stranded asset” rate case before the PUC. You don’t (have) to (have) 3 to 5 days stored energy, all one needs is enough solar PV generation to charge a battery for after hours electricity and save some to create one’s own critical circuits isolated power for the home to get through PSPS events and blackouts. When the grid becomes a secondary back up power source, then you become grid agnostic.

  2. “In a decision likely to be eyed closely by other states, California regulators yesterday approved microgrid tariffs and rules to hasten the deployment and commercialization of the technology.”

    When one says ‘tariff’ I think of Germany and their tariff program that pushed the installation of solar PV on homes, businesses, farms to get what was at least one time up to 40 cents a kWh for electricity pushed back onto the grid. California already has three major IOU electric utilities with tiered electricity rate programs, TOU rate spiking and “demand charges” that drive up the cost of a monthly electric bill. On (average) it is costing California rate payers from $0.20 to $0.25/kWh after the effect of all of these rate programs are tallied up and added to the bill. A micro-grid tariff just adds another layer of electricity cost increases that will push ratepayers away from the utility and into self consumption of one’s own solar PV generated power each day.

  3. madan Sachdeva says:

    The power utilities vs communities (solar) voting on microgrid right to self regulate by the Regulator Authority will always have a tilt in favour of Utility due to in adequate representation and strength of communities and prosumers have to pay more for their own contributed units to the grid (utilities) due to investment made in assets / networks and operation charges. I hope the utilities when evolving tariff on renewable energy based on incremental charges caused on utility assets relating to distribution network and not the total transmission network underlying generating system / generators. The creation of microgrid by communities is to hasten restoration of power supply to community and not a source of earning by utility. Apparently owning of solar for acting as prosumer /community microgrid for exchange of power to utility is not helping to get reduced tariff.

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