In Unique Deal, California Utility Places Monetary Value on Microgrid Use to Help Avert Crises

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In a move that recognizes the value of clean microgrid power to avert grid emergencies, California utility San Diego Gas & Electric (SDG&E) and the Marine Corps Air Station Miramar inked a deal under which Miramar would provide generation from its microgrid during September and October 2021 to help avert emergencies.


Provided by Mick Wasco, MCAS Miramar

The deal, negotiated over the summer, was intended to be used between Sept. 1, 2021, and Oct. 31, 2021, but has not yet been utilized because of mild weather conditions.

“It would have been nice to have this in place in May or June,” said Mick Wasco, energy manager for the San Diego air station, where Schneider Electric and Black & Veatch developed an advanced microgrid. “It’s sit and wait until next summer,” he added, noting that no agreement is yet in place for summer 2022.

The arrangement was made possible because of a rule, General Order 96-B, Rule 9.2.3 under the California Public Utility Commission’s (CPUC) Rules of Practice and Procedure, that allows utilities to sign specific, customized tariffs with governmental entities (including the military). These custom tariffs don’t require full review by the CPUC for approval, said Christopher Chow, public information officer for the commission.

The agreement between Miramar and SDG&E, called the Summer Generation Availability Incentive (Advice Letter 3838-E), said that Miramar could provide SDG&E 6 MW up to five times a month between 4 p.m. and 9 p.m. weekdays between Sept. 1, 2021, and Oct. 31, 2021.

The total incentive to Miramar would not exceed $110,000 a month, which would represent payments for 6 MW five times a month, according to the advice letter.

Significant breakthrough

Because all customers would benefit from the generation from Miramar’s microgrid, SDG&E proposed that all customers pay for the incentive payment, the advice letter said.

Jeff Morris, senior director,  state government relations for Schneider Electric, said the agreement is a “significant breakthrough” because the utility is acknowledging the value of a microgrid.

This isn’t the only effort to use behind-the-meter resources to help the California grid.

The CPUC is now considering a number of proposals that could reduce electric demand in the summer evening hours, said Chow. The regulators are expected to release a decision on the proposals soon.

“This includes multiple suggestions to pay customers, including customers with behind-the-meter generation that could be part of a microgrid, for their load reductions or send economic signals to shift load away from evening hours,” he said. Among those customers are military bases.

“The military bases are the largest electric customers of SDG&E and have generally been very cooperative with the state and SDG&E to help support electric reliability,” Chow said. “We anticipate that similarly customized arrangements between California utilities and government customers (including other military bases) will be executed going forward.”

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The Miramar program was the brainchild of Miramar’s Wasco, who argued that using available clean microgrid power before the utility experienced a grid emergency would be more helpful than calling for generation — including carbon-intensive diesel generators —  when an emergency occurs. It would also allow microgrid operators to be paid for their power, said Wasco.

During summer 2020, when SDG&E implemented rolling blackouts because of high electricity demand from a heat wave, the air station supported the utility with microgrid power but wasn’t paid for it.

Other similar moves

Miramar wasn’t the only entity that lent power without compensation during the grid emergency that summer. On Aug. 14, 2020 — when there were two hours of rolling blackouts in response to the hottest temperatures on record worldwide — OhmConnect provided nearly 200 MWh of flexible load, paying its customers for allowing the company to control their appliances, microgrids and devices. But OhmConnect didn’t make money by supplying that badly needed resource.

After that crisis, the CPUC created two programs to address system stress spurred by heat waves. The Electric Load Reliability Program (ELRP) provides up to $1,000 per MWh for on-site generation. And the California State Emergency Program (CSEP) provides $2,000 per MWh to encourage customers to provide on-site generation during times of system stress.

“Those two programs are for when the grid is in a state of emergency. It’s great to do that, but diesel generators got to participate,” said Wasco.

It makes more sense to bring on clean burning generators first — before a crisis evolves, he argued. The Miramar facility, which is based on 50% renewable energy plus clean burning diesel, is a Tier 4 facility, said Wasco.

Because of the Miramar microgrid’s unique operational characteristics, the air station had challenges participating in the ELRP and the CSEP. One challenge: The air station didn’t always have staff available between 4 p.m. and 9 p.m. — the utility’s peak demand hours — to operate the microgrid on an emergency basis, said Wasco.

“Miramar expressed challenges they foresaw in participating in the ELRP or CSEP, but they do have on-site generation that can be used for electric grid support. That is why we worked with Miramar to create this very specific agreement,” said Helen Gao, senior communications manager at SDG&E.

Future for program?

Mick Wasco, utilities and energy manager at Marine Corps Air Station Miramar

Wasco hopes that this program will be available next summer.

“Because the issue is so political, it was a pilot, but I hope the utility does it on a bigger scale,” he said.

Gao said that offering the agreement — or some variation of it — will depend on grid needs during the summer 2022.

The utility has no plans at this time to offer similar agreements to operators of microgrids that aren’t owned by the US government, she said.

“The agreement was borne out of a unique set of circumstances. Therefore, it is not appropriate to broadly replicate this,” Gao said.

For Wasco, a broader application of the agreement for Miramar would be welcome.

“There was a lot of bureaucracy to jump through to make this happen. I’m deflated because we haven’t used it. This could happen at all times but to my knowledge, this is only for summer,” Wasco said.

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  1. “The total incentive to Miramar would not exceed $110,000 a month, which would represent payments for 6 MW five times a month, according to the advice letter.”

    It’s hard to ‘handicap’ the direct specifications of large scale energy storage like TESLAs MegaPacks. But with a reported cost of about $1.3 million each for 800kW/3MWh of energy storage and a cost reduction if you buy 10 or more of these units would cost around $652K per MegaPack. That would be good for 8MW/30MWh of energy storage for $6.52 million. The ultimate question to ask is this actually enough capacity to keep Miramar going for right around 4 hours? One is looking at about a 10 year payoff of this system straight across. IF this system is connected to a large solar PV array, one might be able to extend the solar PV powered day and pay this system off in less than 10 years. I’m not sure dealing with the electric utility for contracted power is not becoming over priced opposed to one’s own micro-grid on site.