Utilities Propose Resiliency Adders that Could Benefit California Microgrids

As California braces for a hot summer and another wildfire season, the state’s two largest utilities have put forward proposals aimed at mitigating those risks, including “resiliency adders,” incentives that could encourage the development of microgrids.

Both Pacific Gas and Electric and Southern California Edison (SCE) have petitioned the California Public Utilities Commission to include “resiliency adders” in the Self Generation Incentive Program (SGIP), which has become the state’s main program for providing incentives for the deployment of energy storage systems (Rulemaking 12-11-005).

California utilities are facing the fact that wildfire season could lead to widespread service disruptions, if the utilities see the need to trigger Public Safety Power Shutoff (PSPS), forced outages to avoid the possibility of energized wires sparking wildfires.

Already, in early June, PG&E took pre-emptive action and cut off power to about 22,700 customers in its territory.

Also in June, SCE warned that high winds were raising the threat in the High Desert area of shutoffs to reduce the risk of high voltage lines sparking a fire.

Faced with the potential of widespread forced outages this summer, both PG&E and SCE have petitioned the commission to make changes to the SGIP program. This comes under the shadow of PG&E’s bankruptcy filing in January, prompted by liabilities related to its role in past wildfires.

Achieving shelter-in-place during outages

PG&E is proposing a $0.15 per watt-hour resiliency adder, a 43% increase to the existing $0.35/Wh incentive, but limited to customers in areas most vulnerable to the shut-offs.

In addition, the utility wants to increase the SGIP incentives for generation sources such as fuel cells fueled by biofuels, which were pushed out of the SGIP program when the rules were changed to require generation to be fueled 100% by renewables.

PG&E notes that backup batteries could allow customers to shelter in place during shut-offs for many hours, possibly days, if batteries were able to be charged by solar panels for instance. The utility added, however, that residential storage would not be as cost-effective as fossil-fueled options. On a “per dollar basis, fossil-fueled options have the potential to generate more electricity for a greater length of time, albeit with different environmental consequences,” according to PG&E’s filing.

And finally, PG&E recommends that adopting the same approach for generation that can island from the grid would be “reasonable.” That adder should be based on the capacity of the prime mover and in the $0.20 to $0.30 per watt range, the utility said.

Two resiliency adders for SCE

SCE is proposing two resiliency adder programs. One would add $0.15 to $0.25 per watt-hour to existing incentives and would be applicable for critical services and public facilities that serve customers during the shutoffs.

The other would be for customers in areas at high risk of being affected by wildfires and would add $0.10 to $0.15/Wh to existing incentives.

The two proposed resiliency adders are not meant to be combined.

Until SCE can determine the interest in such projects, the utility suggests capping the incentive budget at $3 million for the ordinary customers and $5 million for critical services customers.

SCE also recommends that the SGIP rules be modified to include resiliency projects able to discharge for up to eight hours that would be paid a flat $/Wh rate across the full eight hours. Projects able to discharge for longer than eight hours would be allowed under the program but would receive a tiered incentive, under SCE’s recommendation.

Perfect storm for driving microgrids

The shutoffs create “the perfect storm for driving microgrid deployments,” said Craig Lewis, executive director of the Clean Coalition in California.

The resiliency adder could represent an extra 20% value stream for microgrid developers. But for that to be true, developers would have to be able to use what Lewis described as battery “dead zones.”

The dead zones stem from provisions by manufacturers that void their batteries if they are operated in the upper or lower ends of a battery’s state of charge. That creates dead zones roughly in the upper and lower 20% of a battery’s state of charge. Operating within those parameters limits the ability of an operator to respond to some outage events. Developers can get around the restriction by oversizing the battery, but that would obviate the benefit of a 20% incentive.

If regulations were written to acknowledge the importance of operating at the upper and lower ends of a battery’s state of charge, it could give battery operators leeway on warranty provisions. And that could allow developers to reap the full benefit of the incentives, Lewis said. “That is why it is important to get this right.”

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