Lessons Learned from California’s Pioneering Microgrids

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, 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 territory 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 (DC) 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.

“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 also 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 seeing
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 their 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 roadmap
. The draft roadmap was
prepared without state policy guidance.

But that changed with passage of legislation in 2018 (SB
1339
), which directed the California Public Utilities
Commission (CPUC) 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.

Source: FS – GreenTech Media
Lessons Learned from California’s Pioneering Microgrids