California is several years into a push to help commercialize microgrids in the state. Now, officials are taking stock of the performance of the first generation of microgrids supported under the effort.

These demonstration microgrids are delivering a reported utility bill savings of 20 percent to 60 percent, primarily in avoided demand charges, and some have successfully islanded during power outages.

State regulators believe microgrids, or localized grids that can operate apart from or in concert with the traditional power grid, offer solutions to some of the challenges facing grid operators, including integrating distributed energy resources.

The California Energy Commission (CEC), which has led the early work by state agencies to advance microgrids, has disbursed a total of $84.5 million to build 20 new microgrids scattered across the territories of the state’s three investor-owned utilities. Grant funding for the projects has come from the Electric Program Investment Charge (EPIC), a ratepayer-funded energy innovation research program.

The CEC recently convened a workshop on lessons learned from the seven microgrids funded under the EPIC program in 2015.

The projects include: a microgrid at the Blue Lake Rancheria, a tribal community in Humboldt County; a microgrid owned and operated by San Diego Gas and Electric Company (SDG&E) in Borrego Springs, which includes a 26-megawatt, ground-mounted solar PV array; microgrids installed at three City of Fremont fire stations; a microgrid installed at Kaiser Permanente’s Richmond Medical Center; a direct-current microgrid installed at a Honda distribution center; a microgrid on the Las Positas College campus; and a microgrid installed at the City of Santa Rosa’s Laguna Wastewater Treatment Plant.

The seven projects were awarded a total of $26.5 million, with project grants ranging from $3 million to $5 million each.

"Clear value"

“Across the board, we demonstrated that microgrids have a clear value, and in certain cases, can be very beneficial,” Mike Gravely, team lead in the California Energy Commission’s energy R&D division, told Greentech Media in an interview.

David Erne, a supervisor in the CEC’s energy R&D division, said the projects funded by the commission in 2015 focused on two use cases: microgrids ensuring low-carbon power delivery at critical facilities and supporting a high penetration of renewables.

“For the critical facilities,” he said, “it was clear that the resilience aspect of those microgrids really resonated with the end customers, and they saw the value.”

The Blue Lake Rancheria microgrid has already been tested by unplanned grid outages. Erne recalled that when a nearby fire caused the surrounding grid to go down, “They were able to island successfully and seamlessly during that outage.”

“It’s still a costly endeavor to implement one of these,” he added. “But we’re already seeing entities that are...[acknowledging] the value and understanding the business case for building them.”

Erne said several of the operators of the EPIC-funded microgrids, including Gridscape Solutions, the owner and developer of the Fremont fire station microgrids, are building and refining their business models to take on more clients.

Mike Gravely observed that one of the signs of the success of the 2015 class of microgrids was the fact that by the time the CEC accepted proposals for a second round of EPIC-funded microgrids in 2017, and awarded grants beginning the next year, “the number of proposals, and the quality of proposals, came way up.”

In the first round, only seven proposals passed the CEC’s funding screening process and all seven were awarded grants. Just a few years later, round two generated 60 proposals.

“The interest is high. The technical expertise has grown. Those are positive signs in the area of microgrids being perceived as a viable solution,” said Gravely.

Gravely emphasized the importance of the ratepayers’ seed money.

“Without the Energy Commission’s insertion of funds, most if not all of these microgrids would never have happened,” he said. “They used those funds to pay the upfront capital costs.”

Going forward, six of the seven EPIC-funded 2015 microgrids will continue operating. According to Gravely, the DC microgrid installed at the Honda warehouse facility was shut down in March of this year — not because of any performance failure but owing to a decision by Bosch, the project developer, to take its business in another direction.

Project interconnection and standardization challenges

Even though project developers have made substantial progress in microgrid design and construction since 2015, barriers remain. In a presentation at the CEC workshop, Gravely summarized many of the challenges, which were based on feedback from interviews Navigant Consulting conducted with the microgrid customers and developers.

Some of the lessons learned included: permitting and interconnection still take far too long; component costs continue to decline but will need to fall further for many customers to achieve their required returns, absent grant funding; and microgrids often require long-term third-party service agreements to support O&M.

“All of them took longer than they thought they were going to need to take for interconnection with the utility,” Gravely said. “Interconnection is still one of the most time-consuming challenges.”

Erne added that the microgrid developers all learned by doing. Operators, he said, got better at designing microgrid controllers and tailoring the controllers to the project.

But, he added, “the challenge that we still have is the design for each microgrid. It’s not quite a plug-and-play process, which is what you really need for a robust market.”

Erne predicted that in the coming years, more developers will create templates suitable for project size and the end customer.

The path to commercialization

Around the same time the CEC was preparing the solicitation for the second batch of EPIC-funded microgrids, the commission was also drafting a microgrid policy road map. The draft road map was prepared without state policy guidance.

But that changed with passage of legislation in 2018 (SB 1339), which directed the California Public Utilities Commission to develop a standardized interconnection process, as well as appropriate rates and tariffs, for microgrids by December 1, 2020.

According to Mike Gravely, the CPUC has requested additional staff to begin implementing SB 1339, with the first public workshops expected by the end of this year. He added that the CEC’s draft microgrid roadmap, which was put on hold after passage of SB 1339, will likely be updated and released as part of the CPUC’s new public microgrids proceeding.