Aug 17, 2020 | Scale Microgrid Solutions

Response to Track 2 of California’s Microgrid Proceeding

This month, I’ve been busy digging into Track 2 of the California Public Utilities Commission’s (CPUC) 19-09009 proceeding. A proceeding created to enforce the directive of SB 1339 (passed in 2018) for the Commission to create and enact rules and regulations that enable the commercialization of microgrids in the State of California.

While Track 1 had focused on short-term solutions for resilience in order to deploy solutions before the 2020 fire season, it only improved access and costs for small solar + storage systems.

Now we are on Track 2 and the first round of stakeholder comments on the Staff Proposal flooded my inbox on August 14th. The Staff Proposal offered five main proposals for the ALJ and parties to consider. Below are my comments on each of those items.

Proposal 1. Direct utilities to revise rule 2 to explicitly allow IOUs to install microgrids as Special Facilities
The Commission should use its broad authority to help move utilities to a new business model in which they support customers and communities without competing with them. Utility ownership and operation of behind-the-meter microgrids not only creates unfounded cost shifts between customers but will create confusion and barriers to microgrid development that will ultimately hurt the commercialization that this proceeding was directed to enable.

In addition to not adopting this proposal, the Commission should outright prohibit utility operation and ownership of behind-the-meter microgrids.

Proposal 2. Direct Utilities to Revise Rule 18/19 to Allow Microgrids to Serve Critical Customers on Adjacent Parcels
Rules 18 and 19 are additional restrictions that SCE, PG&E, and SDG&E have placed on Rule 218 that prevent the supply of electricity from a customer to adjacent parcels whether they are or are not owned by that same customer.

While in the Concept Paper, staff recommended removing any additional barriers beyond the scope of 218 and actually petitioning the legislature to exempt microgrids from the provision altogether, what is proposed in the Staff Proposal are small and ineffective adjustments. Such as allowing microgrids to supply adjacent parcels only during macrogrid power outages and only if the microgrid services a municipal facility.

Microgrids designed to power multiple facilities are economically optimal when they are serving those facilities during as many hours of a year as possible. And if we are allowing it for some projects, as it is already allowed with CHP, we certainly have processes in place to allow it for others.

The simplest and most effective solution that is within the Commissions jurisdiction is exempting microgrids from Rules 18/19.

Proposal 3. Direct Utilities to Develop a Microgrid Rate Schedule
It is acknowledged both in comments from various stakeholders and in the Staff Proposal that a tariff is needed to create fair rules and a secure environment for microgrid developers to operate within. That is the explicit directive of the legislature within SB 1339.

While the Staff Proposal left the door open for the full creation of a Tariff through a working group and acknowledged that antiquated SBCs and DLCs are barriers for microgrid developers in the state, the staff proposal does not make any meaningful attempt to remove the identified barriers to microgrid deployment. Not only does staff elect not to exempt microgrids from these punitive charges, but the tariff proposal is simply a mashing together of existing Rule 21 tariffs instead of starting with a clean slate and creating a new tariff for microgrids. This does not fulfill the specific direction of SB1339 to create a separate microgrid tariff.

California is burning and shut offs are on the horizon. The solution being consistently requested by those who are the boots on the ground working to empower and fortify communities during this time (the developers and their respective industry groups) are asking for a specific and separate microgrid tariff. Which, when designed appropriately, would properly assign costs to avoid cost-shifting, fairly compensate microgrids for the services they provide the grid, and provide developers with the clarity they need to reduce overall microgrid development costs for their customers.

Microgrid tariffs are the key to unlocking microgrid development. Instead of hiding behind tired cost-shifting excuses or kicking the decision to a working group, the Commission can and should design and deploy a new, distinct microgrid-specific tariff within Track 2 of this Proceeding.

Proposal 4. Direct utilities to develop a community microgrid pilot program
We don’t need pilot studies. The microgrid industry knows how to build and operate microgrids safely, economically, and optimally. According to Wood Mackenzie’s latest report, 546 microgrids were installed in the United States in 2019.

We ourselves, along with industry colleagues have run safe, resilient microgrids for over a quarter of a century. The California Energy Commission invested in microgrid research through it’s EPIC Program, the successful results of which are what birthed SB 1339.

Why would we pay the utilities extra to learn what developers already know while delaying commercialization of microgrids?

No pilots.

Proposal 5. Direct utilities to study low cost reliable electrical isolation technologies
Similar to my comments above, there are already organizations out there that are experts on low cost reliable microgrid technologies. Islandable microgrids were validated by the CEC through its decade-long microgrid grant program. These technologies can provide grid services to the utility, sophisticated energy management for facilities, and meaningful long duration resilience for communities and critical facilities. Microgrids are not a new technology. Should rate payers have to pay for this unnecessary utility education?

No pilots.

Track 2 has failed to recognize that microgrids are the solution and not an additional problem for California’s grid woes. There are market-ready, safe, and economically viable microgrid solutions available to customers today whose deployment can be rapidly expanded with the correct application of regulation. Resources that can independently provide access to clean, reliable power – especially in the event of dangerous and costly multi-day public safety power shutoff events – are more important than ever to protecting Californians. It is important that as rules are propagated the Commission is engaging and listening to those who are the boots on the ground working to protect California constituents: the developer and industry groups that represent them.

I personally am excited to get to work building a more resilient, cost-effective, and sustainable electric grid of the future, but in order to serve more customers more cost-effectively, we need a microgrid tariff.