The California Public Utilities Commission has issued a Track 1 decision of its nation-leading Microgrid rulemaking proceeding on June 11, 2020. In it, the CPUC looked at ways it could accelerate microgrid deployment before the 2020 wildfire season, with a focus on local governments, Tribal governments, and assisting communities of vulnerable persons (for example, seniors and persons with disabilities). The CPUC will take up the broader Track 2 of the Microgrid rulemaking starting in mid-July 2020 which will more broadly focus in general microgrid policies.
The Microgrid rulemaking was jumpstarted by Senate Bill 1339 (Stern 2018), which required the CPUC to facilitate the commercialization of microgrids for distribution customers of large electric corporations. These actions are to include developing standards, protocols, guidelines, methods, rates, and tariffs that serve to support and reduce barriers to microgrids, while not shifting costs between ratepayers.
Why are microgrids important? Microgrids are small back up electrical generation systems that can "island off" from the larger electric grid during a temporary power outage or longer-term blackouts, and continue to serve its customers with electricity. They can operate on the main grid or unconnected. Microgrids can also help the overall grid, serving a role in balancing power demands and smoothing the intermittencies of solar and wind generation when the sun goes down or the wind dies down.
In the US, microgrids are generally built using renewable resources (such as solar and storage), although they can be run on other energy sources such as diesel or natural gas. Yet microgrids have been existed since the earliest electric systems set up by Thomas Edison. Only lately have they come back into fashion. Why? The need for reliable electricity by entities such as universities (that may have millions of dollars in research ongoing in labs that require electricity), hospitals (to keep patients alive who relying on equipment powered by electricity), public safety entities (like fire, police and emergency response that require electricity for 24/7 operations), and community or senior centers where vulnerable residents may be housed. Microgrids also serve many of the California's state energy goals which include climate change, grid modernization, integration of renewable energy, clean energy and deployment of electric vehicles.
The Track 1 decision issued on June 17th, and was authored by Assigned Commissioner Genevieve Shiroma. The focus on Track 1 was short-term solutions to accelerate interconnection of resilency projects in advance of the 2020 wildfire season. The large investor owned utilities (IOUs) were ordered to: (1) develop/implement standardized, preapproved system designs for interconnection of microgrids that deliver energy services during power outages; (2) make faster, simple and more transparent how the utility inspects and approves a microgrid project; and (3) to prioritize interconnection of microgrids for key locations, facilities and customers. In addition, net-energy metering tariffs were modernized to allow storage devices to charge from the grid prior to a Public Safety Power Shutoff. Also, storage sizing limits of net-energy metering tariffs were removed. Finally, the CPUC promoted collaborative engagement between IOUs and local governments and Tribal governments as the latter develop resiliency projects. More utility staff is required to be dedicated to such projects, as well as a new access restricted data portal for local and Tribal governments to review essential utility data for microgrid resiliency projects.
"Commercializing microgrids, utilizing other resilency technologies, and related utility activities is likely to mitigate the negative impacts of [Public Safety Power Shutoff] outage events and wildfires." CPUC Finding of Fact 5
Track 2 kicks off in mid-July 2929 with an anticipated Staff Report that will provide issues involving more general Microgrid policy setting. In this Track 2, more significant regulatory barriers will be tackled.
- First, there largest barrier for microgrids is a current Public Utility Code provision Section 218(b) known as the "over the fence" rule, that does not let any entity other than a utility sell electricity generated at one property to more than two neighboring properties or to any non-adjacent property. In the past, this protected utilities from competition, given its monopoly status. It also may have protected consumers from unfair practices by non regulated entities. Clearly, for microgrids owned by anyone other than the utility to flourish, this over the fence rule must be repealed.
- Second, California Electric Rule 2 allows each utility to levy a "cost of ownership" charge or other charge on customers designed to recover the expenses of new grid infrastructure to support their service. Generally, this is applied on a case-by-case basis. This cost of ownership charge may be so highfor a microgrid project that it renders a microgrid project uneconomic. A way to ensure the cost of ownership levied is fair to microgrids will be needed.
- Third, outdated utility tariffs have to be updated to provide a tariff or electric rate that values power sharing among multiple customer accounts or meters, and that values the benefits to the grid when a microgrid "islands" when the main grid goes out. And to value the benefit to the grid if it borrows energy from the microgrid storage when renewable energy is not available.
All eyes are on the CPUC as this important Microgrid rulemaking gets underway on the larger policy issues. With continuing concern about brownouts and long term outages, state regulators want to better understand the benefits of Microgrids and how to provide the proper incentives to encourage them.
