Sunnova wants to build and run community microgrids as a utility

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Residential solar company Sunnova Energy took the bold and unusual step yesterday of seeking regulatory approval in California to act as a utility that owns and operates community microgrids.

community microgrids

By palidachan/

Microgrid developers have typically avoided being designated as utilities — in some cases fought against it — because few have the resources to take on the level of regulation applied to utilities.

However, Sunnova is tapping into a unique “microutility” designation conceived by California regulators. Microutilities would serve fewer than 2,000 customers under lightened regulation.

The proposal arrives as the state’s grid labors under extreme heat. The California Independent System Operator this week called for conservation to avert the kind of blackout the state saw in August 2020.

The grid warning comes on top of the more frequent public safety power shutoffs that Californians are experiencing as utilities try to prevent power lines from sparking wildfires.

For new neighborhoods

The Texas-based company wants to install the microgrids in partnership with real estate developers who are building new neighborhoods in California. 

In a typical 500-home community, each home would act as a nanogrid, with separately metered on-site solar PV and battery energy storage, oversized so that excess energy could flow to the community or the grid. The neighborhood also would have community solar, energy storage, emergency generation and microgrid controls and software and could function as a virtual power plant.

During a grid outage, the microgrid would island from the grid and the community would rely on its on-site power. The design allows the microgrid to operate independently for a minimum of 300 hours.

About 82% of the community’s power would come from the microgrid with the remainder coming from the grid. The microgrid would cost about $16,000 to $20,000 per home, Sunnova said in the Sept. 1 filing before the California Public Utilities Commission.

Sunnova would operate the microgrids and employ software and predictive analytics to manage the assets and energy imports and exports. Households will also be equipped with platforms so that they can monitor and adjust their energy use.

The renewable energy microgrids will offer the state a range of benefits, among them increased electric reliability, advancement toward utility sustainability goals, jobs and grid services, according to the filing.

By building community microgrids California also can avoid expensive grid upgrades, Sunnova said, citing a $40 billion price estimate to underground utility distribution lines.

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Microutilities would charge regulated rates

To move forward under the plan Sunnova needs to win a certificate of public convenience and necessity from the CPUC. Winning approval would give each microutility the ability to charge regulated rates, as utilities do, for its services. Sunnova envisions setting customized rates for each microgrid, given that energy supply will vary among communities.

Residential and neighborhood microgrids remain rare, but they are beginning to crop up elsewhere in the country. Emera Technologies is developing a similar neighborhood microgrid in Tampa, Florida, but under a different business model. Rather than creating its own microutility, Emera is partnering with a Florida utility on the project.

True energy democratization

Sunnova, traditionally a solar and storage company, unveiled its entry into the microgrid market at Microgrid 2022 in May. 

Speaking on a panel, “Microgrids for Homes and Neighborhoods,” Davis Peden, vice president of IT and microgrids at Sunnova Energy, urged the microgrid community to get behind rules that will allow neighborhoods to microgrid, share energy and realize sustainability goals. 

“To realize the benefits of true energy democratization, guidelines need to be put in place. My ask of all of you in this room and everybody at the conference is to participate. We need guidelines that will support rolling out microgrids at scale in the residential space,” he said. 

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About Elisa Wood

Elisa Wood is the chief editor of She has been writing about energy for more than three 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.


  1. Chris Greacen says:

    The New York Times just published about this project too:

    It will be interesting to see how the regulatory environment on these evolves. On the one hand, large regulated utilities are forced to serve unprofitable customers and mini grid companies like this can pick off the more profitable customers. But on the other hand, with declining PV and battery prices, this is a technology that can help with the transition to more renewable energy and potentially help make the grid and electricity service broadly more resilient.

  2. Eric T Ackerman says:

    Will the incumbent be compensated for distribution facilities Sunnova would use?

    Will Sunnova be fully responsible for service quality?

    How will rates be set?

    Hi Elisa. Good to see you and in the thick of things. – Eric A.

    • Elisa Wood says:

      Hi Eric! Nice to “see” you. Good questions. I’m guessing they will be raised in the regulatory proceeding before the CPUC over the next year or so.

  3. Elsa,
    AAEC of Lawrence Kansas has the same basic business model in mind, the difference is our approach would use our multifuel and multi-process capable furnace scaled up as required as the primary source of energy. One advantage is not nearly as much land would be needed and another is our approach would use municipal wastes and available biomass and construction and demolition debris as feedstock fuels. See for a visual. More info is available on request directed to

  4. Hello,

    What is the maxiumum capacity to supply power of microgrid utility?
    This is a purely renewable energy?
    What is estimated power cost per khr of renewable energy?