With policy changes, community resilience programs could make the most of microgrids

The California Energy Commission (CEC) has created a $170 million Community Energy Resilience investment program that will fund microgrids and other distributed energy resources (DERs) — which is good news — but some say policy changes are needed to make the most of the program.

“One of the perennial challenges has been a lack of structures in place to allow DERs to be compensated,” said Kurt Johnson, community energy resilience director at The Climate Center.

One of The Climate Center’s goals is to make use of the many existing DERs in California, including rooftop solar, electric vehicles (EVs) and storage, said Johnson. But price signals and incentives are needed to capitalize on these resources.

That’s also how stakeholders view New Jersey’s Town Center Microgrids community resilience program, under which state agencies and local governments may apply for some of the $2 million available in funding for microgrids to provide resilience, especially in areas hard hit by Superstorm Sandy. That program has been stymied by regulatory, statutory and technical challenges, according to a report written for the New Jersey Board of Public Utilities.

“There [are] no comprehensive metrics or signals,” said Richard Mroz, managing director of regulatory consulting firm Resolute Strategies, and a former commissioner for the New Jersey Board of Public Utilities. Valuing resilience is very subjective, he added.

While there may be no metrics or price signals in place, stakeholders are hoping that such measures will be implemented to boost the effectiveness of community resilience programs.

In California, the Community Energy Resilience program aims to invest in projects that increase energy resilience and reliability, reduce the likelihood and consequences of outages, help decarbonize the grid, improve energy justice and create good paying jobs.

A top priority is to focus on communities that experience air pollution and power outages, said Johnson.

The California program will be funded through US Department of Energy grants from the federal Infrastructure Investment and Jobs Act. Funding is expected to be available in 2023.

Using what we already have

Johnson sees many opportunities for using existing DERs to create resilience. Many of these DERs were funded or subsidized through state programs, including California’s Self-Generation Incentive Program (SGIP), which helps fund storage projects.

“We’ve spent a lot subsidizing clean DER,” said Johnson. In addition to the SGIP, this includes California tax credits for EVs. Of the 2 million solar roofs in the US, half are in California, he noted. The clean DER that have been funded by policy initiatives could be brought online as reliability assets, he said.

And public agencies own EVs that could be used as storage assets in microgrids, he added.

All of these resources could be utilized to island from the grid and keep power flowing locally when the grid is down. They could also support the broader grid during times of grid stress.

Diablo Canyon money for microgrids?

Meanwhile, a number of funding and microgrid programs that could impact the success of the new resilience program are now up in the air in California. For example, Gov. Gavin Newsom has proposed providing a forgivable loan of $1.4 billion to the nuclear Diablo Canyon Power Plant’s owner, Pacific Gas & Electric, to address permitting, licensing and cost issues. The California Assembly would need to pass the legislation.

But a new counterproposal from the California Assembly, called the Clean, Diverse, Safe and Reliable Energy Proposal, calls for the $1.4 billion to be used for DERs, said Johnson.

In a letter to Newsom responding to the new counterproposal, The Climate Center called for the California Public Utilities Commission (CPUC) to create new demand flexibility incentives that would allow customer-sited clean DERs to be compensated for daily load shifting services to reduce peak load. This could be accomplished through the CPUC’s new Demand Flexibility Proceeding (R. 22-07-005) or through legislation, the letter said.

Demand flexibility can make use of the DERs that already exist, often on the customer side of the meter. They include microgrids, energy storage, building load, on-site generation, refrigeration, EVs and other customer-side resources that can be ramped up or down based on grid needs.

But it’s not always easy to take advantage of demand flexibility. The grid’s rules and payment structures were conceived before the idea took root.

DERs as grid assets

The Climate Center also called for the state to enact policies requiring the use of clean DERs as grid assets. And it called for establishing a new $200 million grant program that would incentivize and support local governments to accelerate siting, increase staff and expand other local resources. This grant money could be used for the community resilience program The Climate Center said in its letter. The program could be expanded to include energy planning and funding for local governments.

Another goal of The Climate Center, expressed in the letter to Newsom, is to establish grants that would allow for more stakeholders from frontline communities to engage with state agencies. Frontline communities suffer the most from air pollution and power outages, and these communities need to participate in the agencies’ processes, said the center.

“By providing direct payments to communities and community-based organizations to participate in these regulatory proceedings, the state can ensure that these critical voices can truly inform and impact,” said the letter.

NJ community microgrids face hurdles

Meanwhile, in 2016 the state of New Jersey granted feasibility study funding for 17 Town Center Microgrid locations, most of which were affected by Superstorm Sandy, said Mroz during the Microgrid 2022: Microgrids as Climate Heroes conference in Philadelphia, Pennsylvania.

But a number of challenges plague such projects, including technical feasibility, property ownership, crossing rights of way, generation ownership and how the owners interact with electric distribution companies. And tariffs need to be revised to compensate microgrids, he said.

Capturing community energy resilience

In spite of such challenges, proponents of community resilience microgrids are determined to make progress in both California and New Jersey. In fact, Johnson said he was “ecstatic” that the CEC created the community resilience program.

“If you look at projections for load growth with electrification, loads will increase,” he said. “We will need every clean kWh we can get. The way to do that is community level planning and identifying our existing assets.”

And an important step would be implementing policies that put those clean kilowatt-hours to work for the states and communities.

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