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SB 1339: Supporting Standards that Advance the Microgrid Industry

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If signed by Governor Brown and properly implemented by regulators, SB 1339, California’s microgrid bill, will provide a much-needed venue for creating standards that advance the microgrid industry, with promising implications for onsite renewables-driven energy resilience and value streams for behind-the-meter microgrid owners. However, if regulators catch the spirit of boldness and innovation that appears to be guiding California’s legislature these days, they can also include key reforms that will extend the promise of microgrids to wider communities who also deserve to benefit from the advancement of clean energy technologies.

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The Community Microgrid is a modern approach for designing and operating the electric grid, stacked with local renewables and staged for community resilience. Instead of serving a single customer behind its meter, a Community Microgrid can tie multiple customers together and even extend to encompass entire distribution substation grid areas to leverage existing grid infrastructure and maximize value to communities and ratepayers. By prioritizing critical loads, Community Microgrids can harness a broad array of local renewables, energy storage, and other distributed energy resources (DER) to provide indefinite renewables-driven energy resilience to a community’s critical loads, like those at fire stations, hospitals, water pumping facilities, communication networks, and emergency shelters, during disasters of any duration.

Traditional single-customer microgrid (above) vs multi-customer Community Microgrid (below.)

(Image source Oncor Electric Delivery Company)

Iterations of the Community Microgrid approach have been studied and piloted at the highest levels by utilities and other load-serving entities (LSEs). The hardware and software technology required to deploy and coordinate DER across a substation grid area exists and continues to improve rapidly with advancements in solar, inverters, batteries, electric vehicles (EVs) and EV charging infrastructure, and monitoring, communications, and control solutions. Still missing, however, are policy and market mechanisms that allow and incentivize the siting of these community-scale systems by compensating for the value they provide—in terms of grid optimization under normal circumstances and energy resilience to entire communities during broader grid outages.

Some important policy advancements that will help unleash the power of clean local energy and Community Microgrids include:

  • Consistent compensation to distributed energy for avoiding the use of the transmission grid, versus central generation, which uses and drives the need for ever more transmission grid infrastructure (see the Transmission Access Charges Campaign for details)
  • Other mechanisms for compensating DER that provide non-wires alternatives to new transmission grid infrastructure
  • Feed-in Tariff 2.0, with Market-Responsive Pricing and compensation adders to incentivize policy goals, which will streamline the deployment of wholesale distributed generation (WDG)
  • Standardized interconnection tariffs for in-front-of-the-meter energy assets that streamline processes for utilities and developers alike, provide cost certainty for developers, and yield the best value for ratepayers
  • Compensation for dispatchable renewables that are available whenever they provide the best value instead of just when the sun is shining or the wind is blowing
  • Business model alternatives for the future of the investor-owned utilities (IOUs) as Distribution System Operators (DSOs) that can coordinate the many distribution-connected assets in a manner that optimizes the overall electricity system

This last point is worth expanding upon. Currently, DER can provide valuable services to the electricity system through a variety of existing markets, including the demand response, flexible capacity, resource adequacy, frequency regulation, and energy markets. However, these markets are siloed, creating the potential for conflicts between contracts, making it difficult to coordinate resources, and causing grid impacts. A DSO can help coordinate all the resources at the distribution level to present a predictable and smooth load profile to the transmission system operator. With this local balancing, DSOs can work in coordination to flatten the local duck curves, or “duckling curves,” instead of allowing them to aggregate into the infamous duck curve at the broader system level.

The value of DER in general, and Community Microgrids in particular, comes from the coordination of these new technologies to provide services to energy customers and to the system as a whole. Think of the current behind-the-meter paradigm as a fourth-grade music class: there are cymbals crashing, horns blowing, and drums beating, but it would be generous to call this lack of coordination “music.” The future system of coordinated DER is a professional symphony, with perfected timing, smooth ebbs and flows, and synchronized rhythms and harmony.  

Many important policy discussions are happening in various working groups at the California Public Utilities Commission (CPUC) and the California Independent System Operator (CAISO). But these conversations are also siloed and missing a unified vision of the future. We now have an opportunity to come together around a shared goal of implementing and scaling optimized clean local energy systems that benefit entire communities; Community Microgrids are the most concrete example of this future.

Let’s get to work. 

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Matt Renner is the Development and Strategic Partnerships Director for the Clean Coalition.

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