Santa Barbara’s public school system is finalizing a solar microgrid project that could set a model for investment in clean backup power.

Purveyors of carbon-free backup power have struggled for years to convince customers to pay for resilience. But a novel design will save the Santa Barbara Unified School District considerable amounts of money while creating resilience for critical infrastructure in the face of California’s many and varied calamities. All of this requires no upfront purchase by the schools and shields them from financial risk if the system does not perform.

"We can bring solar-driven resilience to critical community facilities, and frankly, to any facilities," said distributed energy advocate Craig Lewis, executive director of the Clean Coalition, which helped design the project. "We can do that while providing bill savings to the sites if the projects are large enough."

The project is especially relevant for California, which enacted supportive policies for solar and battery storage, and where earthquakes, wildfires and mudslides regularly threaten the normal functioning of the electricity system. But the architects of the deal believe the concept could easily translate to other states with pronounced resiliency needs.

How does it work?

Santa Barbara may be known for righteous shore breaks and fresh, creamy sea urchin, but the coastal city has had its brushes with calamity.

The Thomas fire burned for weeks in the mountains above town in December 2017 and into 2018, followed by heavy rains that triggered a deadly debris flow. The schools served as safe havens during that time because their power supply happened to remain intact. “It clicked,” said SBUSD Board President Laura Capps: For the schools to reliably play that role, their electricity access couldn’t be left up to the elements. 

The Santa Barbara Unified School District held a request for proposals earlier this year to build a series of solar installations and solar-battery microgrids. The installations would allow key facilities to continue operating through an outage so that schools can keep feeding the students who depend on breakfast and lunch, as well as maintaining communications.

Global energy giant Engie won the contract through its public-sector energy solutions division. Engie has been building public-sector microgrids for years and counts 57.9 megawatt-hours of customer-sited battery storage installed around the country. The company is finalizing its designs for final approval by the SBUSD board later this year. 

Engie plans to install solar at 14 locations; it will also install battery-power microgrids at three high schools, one junior high school, and the district office and facilities maintenance warehouse. During normal times, the solar should cover the schools’ energy needs. The batteries will cycle to avoid time-based rates and demand charges. Those savings make the project attractive for a school district.

Solar will generate power across the school district's portfolio, while the larger facilities will serve as resilient microgrids. (Graphic courtesy of Engie)

"There's more money for the classroom, the more money we save outside the classroom," Capps explained.

If the power goes out, the batteries guarantee operations indefinitely for a specific set of critical operations; if extra energy is available, they will keep other parts of the buildings online too.

“Everything is sized for the worst solar day,” Lewis said. “Even on that day, there’s going to be enough solar and storage to provide the resilience requirement.”

The school district will pay Engie via a power-purchase agreement for 28 years — the long-term certainty helps bring down the cost. Engie will install and own the equipment while guaranteeing performance from the solar generators and bill savings from the batteries.

Why it’s revolutionary

The RFP process, designed and run by Clean Coalition and clean-energy engineering firm Sage Energy Consulting, developed a sophisticated method for valuing resilience. It breaks down all the various school building loads into a clear hierarchy and determines which loads need full-time support, which ones should be backed up most of the time and which ones are nice to have if there's energy to spare.

But perhaps the most striking aspect of the deal is that it pencils out financially even without factoring that in, simply on the basis of cash saved from utility bills.

“Over the lifetime of the project, the school district will definitely be saving money compared to a business-as-usual, 'stick with the utility' approach,” said Dana Coe, who helped craft the design as a senior project manager at Sage.

That statement requires a little parsing. Coe said “over the lifetime of the project” because the school district opted for a flat-rate power-purchase agreement. The result is the first few years will see a modest increase in energy price compared to today, but the schools will be insulated from utility rate hikes in the future. Even conservative estimates show it will save money as the years go on.

Had the school opted for just solar, it could have saved additional money, but this setup lacks a defense against outages. The microgrid additions boost the cost of the project, but the savings more than pay for the backup functionality.

“They’re getting a luxury vehicle for an economy vehicle price,” Coe said.

That's a marked break from the past when the "luxury vehicle" of clean backup power only came at luxury prices.

But does it scale?

California’s high utility rates, time-based rate structure for solar customers and local incentives make it an attractive state to try something like this. But similar conditions exist elsewhere.

“It can certainly expand beyond the borders” of California, said Russell Schmit, Sage’s chief operating officer. He said it could work in Hawaii and parts of the Northeast that value resilience, like Long Island or coastal Maine.

Courtney Jenkins, vice president and head of Engie's public sector organization, agreed that similar projects could fit well in Hawaii and the East Coast.

"They’re building this national model for how we look at microgrids as a form of proactive resilience," she said of the Santa Barbara schools. "I anticipate we’ll see more in this vein."

Jenkins noted, though, that long-term partnerships like this 28-year power-purchase agreement work better for government and nonprofit customers. Commercial customers are typically not interested in locking down such a lengthy commitment.

Another crucial ingredient is a customer that is willing to look beyond the easy savings from standalone solar.

"Anyone can throw together a savings analysis for a solar system these days," said Engie project manager Sophie Fallon. Justifying the additional expense of the microgrid can be challenging, and parsing critical and noncritical loads is complicated. But doing so opens up values a customer can't get from solar on its own.

Scale matters, too: In Santa Barbara, 14 buildings will produce solar generation, thereby increasing savings for the portfolio. It did not, however, make sense to put batteries on all of them at today's prices. That’s just a snapshot of the market: if battery costs drop, or new market mechanisms compensate distributed energy for its services to the grid, the addressable market will expand, Clean Coalition's Lewis noted.

Clean Coalition is looking to export this model to the surrounding region, known in grid-planning terms as the Goleta Load Pocket. The steep Santa Ynez mountains isolate the coastal plain from the rest of the grid; ensuring reliability from the outside, in the face of earthquakes or wildfires, requires expensive infrastructure investments. But Clean Coalition has calculated that building 200 megawatts of solar capacity and 400 megawatt-hours of storage in the area would allow it to keep functioning even if a disaster cuts off the broader grid.  

If the school district's approach catches on, it could inspire copycats in the neighborhood, as well as across the continent.