Microgrid Developments in California and Hawaii

September 14, 2021

Claire Halbrook

General

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Microgrid policy discussions are picking up in legislatures and PUCs across the West. Particular emphasis is being placed on addressing resiliency and reliability issues in light of increasing climate change-driven natural disasters and capacity shortfalls. Developments in states like California and Hawaii, the only two states with microgrid tariffs, offer an opportunity for other jurisdictions to assess which processes and policies warrant replication and which are in need of reconsideration.

California

California is now entering Phase 4 of its Microgrid Proceeding (Rulemaking 19-09-009). This will include key policy decisions around the value of resiliency, the often-raised and rarely-resolved heart of the microgrid debate. Raising the stakes further, the CPUC is expediting portions of this proceeding due to Governor Newsom’s recent emergency proclamation in response to the accelerating impacts of climate change, with the intention of developing new clean energy projects by the summers of 2022 and 2023.

Previous Phases of California’s microgrid proceeding sought to address a multitude of issues, including:

  • Accelerating interconnection

    • IOUs must prioritize resiliency projects

    • IOUs must develop and implement standardized, pre-approved system designs

  • Waving of standby charges

  • Supporting local communities with resiliency planning

    • IOUs are required to develop a “resiliency project guide” and to dedicate staff to manage the intake of local and tribal government resiliency projects

  • Requiring the IOUs to create a Microgrid Incentive Program to support the critical needs of vulnerable communities impacted by grid outages and test new technologies or regulatory approaches

  • The deployment of temporary generation to keep customers energized during Public Safety Power Shutoff (PSPS) events in 2020 and 2021

  • Reducing emissions from microgrids, particularly reducing the use of diesel technologies for emergency back-up. The CPUC pursued this through an “alternatives to diesel” workshop, setting emissions performance standards for generation used to mitigate PSPS events, approval of PG&E’s DR pilot for substation microgrids in 2021, and a recent directive to PG&E to pursue a clean pilot at one or more substations for PSPS mitigation.

PG&E also launched two new microgrid programs in 2021:

  • The Community Microgrid Enablement Program (CMEP) provides technical and financial support to community microgrid projects with the greatest resilience needs.

  • The Remote Grid Program replaces traditional wires to small loads at the edges of the distribution system in high wildfire threat areas with standalone energy systems. The first project in Briceburg came online in June.

Hawaii

In May, the Hawaii PUC issued Decision and Order No. 37786 (Docket No 2018-0163), approving a Microgrid Services Tariff. This proceeding initially prioritized removing the regulatory barriers preventing microgrids from serving customers during outages or other emergency events. The Commission chose to eliminate the existing program installed capacity limit and microgrid operator fees paid to the utility while also choosing not to institute a standby charge. Several issues related to non-emergency use of microgrids and compensation for services remain unresolved and will be addressed in a second phase of the proceeding. Staff expects to launch Phase 2 in the coming weeks.

In addition, the Hawaiian Electric Companies are developing a microgrid map on Oahu as part of the U.S. Department of Energy’s inaugural Energy Transitions Initiative Partnership Project (DOE’s ETIPP). This map is intended to identify optimal areas for microgrid development based on technical and practical criteria while also allowing project developers to select potential microgrid participants.

Additional States

Additional states are providing funding for early-stage microgrid projects. Washington recently announced $3.9 million in grants to a number of grid modernization projects, including nine microgrids. Oregon’s goal of 100% clean energy by 2040 includes mention of community-based microgrids with a funding set-aside. Larger public policy discussions will likely arise in these jurisdictions as well.

Emerging Questions

While states like California and Hawaii have been focused on microgrid policy for several years now, the primary emphasis has been on small, isolated use-cases and have largely entailed utility-owned projects. Major outstanding policy questions remain:

  • What are the costs and benefits of microgrids? How should these be valued and compared?

  • Which communities get a microgrid? How were those communities chosen?

  • Who pays for the microgrid and how?

  • Who owns the microgrid?

  • How do independent project developers determine where to build?

  • Do microgrids really support decarbonization?

  • What is the impact of increased microgrids on labor?

  • Can microgrids help defer distribution system upgrades?

Gridworks seeks partnerships to resolve these questions. We feel they are ripe to be taken up and resolved through stakeholder engagement. If you agree, be in touch. We look forward to working with you.

Post by Claire Halbrook