Google Spells Out What California Must do to Unlock the “Tremendous Potential” of Microgrids

To unlock “the tremendous potential of microgrids,” California regulators need to make two key changes to microgrid rules proposed earlier this month, according to technology giant Google.

One of the provisions would allow microgrids to serve multiple commercial buildings without being categorized as ‘utilities,’ a designation that imposes a level of regulation that is crippling for small entities like microgrids. 

The second would change who devises microgrid tariffs. While the proposed decision calls for utilities to undertake the task, Google says it should instead be done by a stakeholder group led by staff of the California Public Utilities Commission.

Google recommended the changes in written comments to the commission following the release December 7 of a proposed decision by Administrative Law Judge Colin Rizzo in Track 2 of the complex state proceeding (19-09-009) to help commercialize microgrids. 

The company has become involved in the proceeding because it plans to build multiple microgrids in California, a state besieged by wild-fire related power outages.

“Google is poised to make very substantial investments, using its own funds, to design, build and operate large, fully functional microgrids — i.e., microgrids that operate on a 24/7 basis, and not merely in emergency ‘island’ mode during grid outages — in campus-type settings at various locations in California,” the company wrote. “This investment in microgrids is part of Google’s ambitious commitment to sustainability.”

The company noted that it will design, construct and operate its microgrids without requiring any funding by utility ratepayers.

Google plans microgrid in San Jose

Google already has a microgrid project in the works for an 81-acre high density mixed-use development to accommodate its expanding workforce in San Jose. As proposed in plans before the city, the microgrid would include 7.8 MW of solar and 10 MW of batteries and no more than 47 emergency diesel generators. Controls connecting multiple buildings would allow sharing of power across a distribution network. 

It’s commonly believed that project’s like Google’s run afoul of regulations if the buildings sell energy to more than two contiguous parcels or across a street. In what’s known as the over-the-fence rule, the microgrid then becomes subject to utility regulation.

However, Google disputes this interpretation of the rule, arguing that that it fails to recognize a longstanding principle of California law that a private enterprise can supply electricity to nearby third-parties as a contractual matter.

Google cited a California Supreme Court ruling nearly 100 years ago, Story v. Richardson. The court found in favor of a building owner who argued that the building could not be taxed as a utility for supplying electricity to tenants and others that occupied property in the vicinity.

Correct interpretation of this law is crucial, according to Google, because the commission has been tasked by state lawmakers (SB 1339) to find ways to help commercialize microgrids. 

Microgrid rules too narrow

“Simply stated, to encourage investment in microgrids by third-party enterprises like Google, it is not required, nor even appropriate, to regulate as a ‘public utility’ the third-party owner-operator of a microgrid,” Google wrote.

Google also criticized the proposed decision for narrowly focusing on municipal microgrids and those designed for critical facilities in an attempt to ensure benefits to public, and not private, interests.

“This statement fundamentally misconstrues that private investment in microgrids, particularly at the scale Google proposes, will improve the electrical grid, address microgrid technical challenges, support California’s policies to integrate a high concentration of distributed energy resources, and play a role in implementing other important policy goals,” the company said in its written comments.

The Legislature directed the commission to address tissues which substantially impact all Californians, not just municipal electric customers. Any tariff, therefore, should encompass microgrids built for commercial and industrial purposes, Google said.

At the same time, Google commended Rizzo for approaching the complex issues surrounding microgrids in a “conscientious manner” and “admirably” documenting “the divergent views of an exceptionally large number of parties who have participated in this proceeding.”

The administrative law judge’s proposed decision awaits consideration by the full commission.

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