Funding Opportunities Abound for California Microgrid Developers – if They Can Find the Confusing Route to the Money

In California, money is flowing to resilience programs, and it includes money for microgrid developers, but it’s not easy to find the funding programs or apply to them.

“There is a huge amount of money available,” said Kurt Johnson, community energy resilience director for the Climate Center. “There are enormous opportunities for the microgrid community to benefit.”

CEC’s $1 billion resilience pot

For example, the California Energy Commission (CEC) has about $1 billion in resilience funding appropriated by the state legislature under AB 205, some of which is eligible for microgrids.

The challenges: There is no website or web page that lays out the funding opportunities and their deadlines. 

What’s more, the application deadlines for the various funding programs aren’t in sync, which means that developers applying for funding may not be able to take advantage of two or more programs at once. In a perfect world, there would be more thought that goes into aligning the application windows, said Jeremy Donnell, senior manager, microgrid strategy and implementation for Pacific Gas and Electric (PG&E). PG&E is working on creating a web page that will list funding opportunities, he said.

The CEC, California Public Utilities Commission (CPUC), utilities and the federal government all provide funding for resilience and clean energy and some of the programs specifically call for microgrid proposals.

The largest bucket of money is the $1 billion provided by the state legislature under AB 205. It’s being administered by the CEC, said Johnson. It includes $700 million over five years for Distributed Electricity Backup Assets (DEBA).

This program provides incentives for the construction of cleaner and more efficient distributed energy assets that serve as emergency supply or load reduction for the state’s electrical grid during emergencies. Projects that may be eligible for incentives include capacity additions to existing power generators, as well as new zero- or low-emission technologies, including, but not limited to, fuel cells or energy storage, at existing or new facilities. Those who receive funding are required to serve as an on-call emergency resource during extreme events.

In addition, the $1 billion includes $295 million for demand-side grid support. The program offers incentives to electric customers that provide load reduction and backup generation that can support the grid during extreme events.

Another big pot of money that will help microgrid developers is the microgrid incentive program, an outgrowth of SB 1339, under which $200 million was appropriated to help fund community, local and tribal microgrids. While the idea gained approval in concept in January 2021, the CPUC is still working on application requirements, scoring and other grant program details. Johnson said that the CPUC is engaging in “foot-dragging,” slowing progress on the program, which is focused on multi-parcel microgrids.

Also of interest to the microgrid industry is the Self-Generation Incentive Program (SGIP), which supplies incentives to support existing, new and emerging distributed energy resources. Under the program, rebates are provided for qualifying distributed energy systems installed on the customer's side of the utility meter.  

Funded by the general fund, the SGIP program has been allocated $900 million for solar and storage, said Johnson. In January, in his budget proposal, Governor Gavin Newsom said he wanted to lower that amount but the legislature has the final word on the budget, which will be completed by July 1, said Johnson.

The California Office of Planning and Research offers planning grants that can be used to plan microgrids, said Johnson. For local, regional and tribal government planning, $25 million has been allocated. And for regional resilience planning and implementation grants, $250 million is available. In addition, the office plans to invest $100 million in extreme heat and urban heat island mitigation efforts.

California’s Strategic Growth Council’s grants include $125 million in funding for community resilience centers, resilience hubs that could withstand power outages.

“People in environmental justice communities are keen on this,” and they offer a good opportunity for the microgrid community, said Johnson. 

In addition, under AB 179, the Budget Act of 2022, $30 million was approved for use by the CPUC for grants to community-based organizations that need assistance taking part in CPUC decision making that is aimed at equity initiatives – providing clean energy access opportunities to tribes, for example.

Federal money for California microgrids

Federal funding is available for a number of initiatives. The California Office of Emergency Services is administering the state’s share of the $2.3 billion available nationally via the Federal Emergency Management Agency (FEMA) for building resilient infrastructure and communities. The money starts out as FEMA money, then becomes state money via the state Office of Emergency Services, said Johnson.

Federal funding is also available through the Inflation Reduction Act and Infrastructure and Jobs Act. That includes $16 million from the Local Energy Action Program (LEAP), which helps low-income communities transition to clean energy.

And $10.5 billion in these federal funds is available nationally for the Resilience and Innovation Partnerships Program. The program aims to boost grid flexibility and improve the resilience of the power system in the context of extreme weather and climate change.  

Utility funding

Utilities are also offering funding for resilience projects. For example, PG&E has a total budget of $82.2 million through the Community Microgrid Enablement Program (CMEP), said PG&E’s Donnell. The program provides cost offsets for certain distribution system upgrades and technical support for creating resilience for critical facilities during extreme weather or public safety power shutoffs (PSPS).

The first round of funding ran out in 2022, and PG&E has requested from the CPUC additional funding for microgrid islanding studies and changes needed to PG&E infrastructure to enable islanding, he said. The company has asked for $5.5 million a year for 2023-2026.

PG&E also has requested about $60 million for previously authorized CMEP capital funding to be rolled over through 2026. This money goes toward utility infrastructure that’s necessary to enable microgrids, including controllers and system hardening to make the microgrids safe.

For California microgrid developers, all the resilience funding is both positive and negative. On the plus side, the funds are available. But on the negative side, it’s hard for communities – especially small and disadvantaged communities – to identify the programs and then apply to them.

Advantages of working with microgrid developers

Donnell advises communities to work with developers. Projects proposed by communities working with developers are more likely to move more quickly and reach the finish line faster, he said.

Johnson added that the microgrid industry needs to follow these grant opportunities carefully and lend a helping hand to under-resourced communities.

“In order for California to meet its goals, it needs to have industry participants following this and providing project applications. This money won’t help unless the industry is following it. It’s important to understand the programs and get ready,” Johnson said.

Interested in learning about more microgrids? Join us May 16-17 in Anaheim, California for Microgrid Knowledge 2023: Lights On!