by Jeff St. John
February 21, 2020

Back in September 2018, California passed a law, Senate Bill 1339, giving the California Public Utilities Commission until December 2020 to create “standards, protocols, guidelines, methods, rates, and tariffs that serve to support and reduce barriers to microgrid deployment” – or, more specifically, a “customer-supported microgrid.” 

A year and a half later, a spate of wildfire-prevention blackouts has scrambled the conversation. Communities need local resilience, fast, and that has led to a more utility-driven, fossil reliant approach. Consequently, the CPUC now is embroiled in a debate over how it’s interpreting the microgrid law’s mandate, and whether fire season preparations have taken it off course. 

In December, more than a year after SB 1339 was passed, the CPUC decided that it would prioritize Track 1 of its microgrid proceeding on short-term efforts that could get microgrids or other “resiliency strategies” deployed by the summer of 2020, if not before then. It also decided to postpone fulfilling the rest of the law’s mandates, including new regulations and tariffs for customer-owned microgrids, until Tracks 2 and 3. 

The Track 1 high-priority items include streamlining existing interconnection rules and tariffs to allow resiliency projects to be deployed more quickly, as well as helping local governments access utility infrastructure and data to develop projects. But it also includes a request for the state’s three investor-owned utilities to propose plans for “immediate implementation of resiliency strategies” — including their own microgrids. 

While SB 1339 doesn’t prohibit utility-owned microgrids, it isn’t focused on enabling them either, but rather on giving utility customers the tools and tariffs to build and run their own. And while it doesn’t prohibit all fossil-fueled generators as part of a proposed microgrid, it does specify that the microgrid tariffs developed under the law should not pay customers for using them, unless they comply with strict state air quality and safety codes. 

PG&E’s fossil-fueled microgrids draw criticism

That’s why so many stakeholders in the microgrid proceeding are upset with Pacific Gas & Electric’s microgrid plan.

PG&E filed for bankruptcy early last year under the weight of tens of billions of dollars of damages from wildfires caused by its grid. It also executed massive fire-prevention blackouts last fall that left hundreds of thousands of customers without power for hours or days at a time and has borne the brunt of public outrage over the dangers and costs these blackouts impose on vulnerable customers. 

To reduce the scale and scope of those outages, PG&E’s microgrid plan asks the CPUC to approve $317 million for up to 10 of its distribution substations to be backed up by on-site generators. But it also conceded that to make this summer’s deadline, it would almost certainly have to rely on diesel or natural-gas-fired generators instead of cleaner alternatives, such as batteries charged with solar power. 

This plan follows an earlier PG&E request to prepare up to 40 “temporary microgrids,” or communities connected to a section of grid that can be isolated from the main system. But once again, PG&E plans to power those temporary microgrids with diesel generators that can be moved from site to site. 

California’s other investor-owned utilities, Southern California Edison and San Diego Gas & Electric, also provided the CPUC with proposals, largely built around accelerating some of their ongoing microgrid work, centered on solar and batteries. But neither of them suggested deploying fossil-fuel-fired generators as part of their wildfire and power outage mitigation efforts — perhaps because both have been able to limit their fire-prevention blackouts so far to tens of thousands, not hundreds of thousands, of customers.

PG&E’s fossil-fuel microgrid plans have drawn criticism from multiple parties in the microgrid proceeding — and not just because they could embed more polluting and carbon-emitting resources in a state dedicated to reducing them.  

Sonoma Clean Power and Marin Clean Energy, the community-choice aggregators serving customers in PG&E territory targeted for many of the projects, worry that they’ll push aside cleaner alternatives that could assist the grid when it’s up and running, not just when it’s down. Ratepayer advocate The Utility Reform Network, the Sierra Club and Vote Solar complained that PG&E is attempting to force through a big increase in investments it can recover from ratepayers under the guise of protecting them from blackouts. 

But perhaps the most overlooked flaw in PG&E’s plan, critics say, is that it’s almost certainly not going to be able to be carried out to completion in time for this summer’s fire season.

“The [investor-owned utilities, or IOUs] can’t connect a 1-megawatt school solar system in six months. It’s pretty unrealistic that they’re going to [be able to] develop a 60-megawatt microgrid in downtown San Rafael in four months,” said Allie Detrio, chief strategist for consultancy Reimagine Power, which is representing the Microgrid Resources Council, a group of microgrid companies and microgrid-enabled universities. 

In the meantime, PG&E’s mobile generator plans, while simple to implement, lack any of the other characteristics of a microgrid as defined by SB 1339, she noted.

Detrio, who helped craft the language of SB 1339, supports the CPUC’s goal of moving quickly to help people this summer. “But the way you do that is to implement the law as written, and not by saying, ‘OK, IOUs, we’re going to greenlight a bunch of microgrid projects that can’t even realistically be built by June 2020.”

How to move quickly and avoid utility dominance 

So far, the Track 1 discussion has been “very heavily weighted toward utility-centric proposals, which wasn’t the intent of SB 1339,” Detrio said. The Microgrid Resources Council, which includes big distributed energy systems vendors like Engie, Eaton, Bloom Energy, NRG and Scale Microgrid Solutions, is asking the CPUC to move more quickly on activities that can help nonutility customers create microgrids.

“Implementing strategies for resiliency can be done by June,” she said. “We can enable customers to build more microgrids, improve the interconnection process for microgrids, and address what technologies can provide the resiliency that the commission is looking for.” 

Vote Solar, which has also protested PG&E’s plan for fossil-fired microgrids, wants the CPUC to narrow its Track 1 focus even more. Because complex, multibuilding microgrids are so complex and challenging to implement quickly, the solar advocacy group has asked the CPUC to limits its Track 1 proposals to “single-user microgrids,” buildings or facilities with only one interconnection to the grid at large. 

Most critical facilities like hospitals, fire stations and water treatment plants fit this description, giving the CPUC plenty of targets for its goal to get microgrids up and running by this summer. “That’s a viable, doable goal, and we should focus on what we can actually do before the fire season starts,” Ed Smeloff, Vote Solar’s director of grid integration, said. 

What’s more, single-user microgrids are much simpler to implement than the alternative of a “multiuser” or “community” microgrid of the kind that PG&E is proposing, he said.

In fact, current regulations more or less bar utilities and their customers from sharing equal access to and control over utility grid infrastructure — a set of problems that SB 1339 was written to address, Detrio noted. 

The community microgrids that do exist in California have been built as pilot projects with state grant funding. Some, such as the Blue Lake Rancheria microgrid in Humboldt County, have proven their value in supporting vulnerable populations during the fire-prevention blackouts in fall 2019. 

Vote Solar doesn’t oppose SDG&E and Southern California Edison’s plans to build microgrids to protect their customers from blackouts, Smeloff noted. But it doesn’t want those plans to become a precedent for how SB 1339 will prioritize microgrid spending in future years, either — and certainly not before the CPUC takes up the complicated question of creating customer options for owning their own microgrids in its Track 2 or Track 3 efforts. 

“We want to plant the seeds of long-term commercialization, not set up a situation where the utilities dominate the market,” he said.