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So far, this year is a microgrid letdown. Here is what's next

Costs have fallen, out-of-the-box solutions are more common, and businesses and homes understand the expense of losing power. But policies and programs are lagging.

Equipment from Gridscape, one of several companies developing modular microgrids.

Equipment from Gridscape, one of several companies developing modular microgrids. Courtesy of Gridscape Solutions.

I had high hopes for microgrids this year. The cost has fallen, out-of-the-box solutions are more common and businesses and homes understand the expense of losing power. All signs pointed to this being the year of the microgrid. 

Yet here we are, at the start of the new fire season, and we’re just launching programs and soliciting proposals designed to add more resilience. What happened?

For one thing, regulation moves slowly. The California Public Utilities Commission fast-tracked a rule-making process in September to help accelerate the deployment of microgrids. With that process still underway, the regulator issued a short-term action to deploy microgrids in mid-June. You know, just a few weeks before the start of this fire season. 

It’s also tough for major utilities to gear up new technologies — and they’re juggling a lot: clean energy targets; COVID-19 complications; and in some cases, bankruptcy. Pacific Gas and Electric, California’s largest utility and the originator of 2018’s deadly Camp Fire, is simply not on track to ensure clean energy reliability. Instead, the utility is planning to deploy mobile diesel generators. This stop-gap measure is low-tech and dirty — but it should keep sections of communities online in a way that deployments of customer-sited energy assets wouldn’t.

To make matters worse, the coronavirus is slowing the deployment of microgrids. Shelter-in-place orders have delayed permitting, construction and interconnection of new projects. The first half of the year was the slowest period for microgrid deployments in four years, according to an analysis by Wood Mackenzie

Speeding up microgrid deployments 

Although 2020 has hit some hiccups (to put it mildly), California is well-positioned to see more microgrids soon. 

Utilities are mandated to increase energy reliability while meeting clean energy requirements, and service providers are motivated to secure major utility contracts.

The state is also working to address key barriers to accelerate deployment for customer-sited energy projects, according to Wood Mackenzie microgrid analyst Isaac Maze-Rothstein. 

Because modular microgrid components are all built primarily in factory, the construction timelines — and total system costs — can be significantly decreased.

Programs such as the California Public Utilities’ Self-Generation Incentive Program encourage more customers to install energy storage at home, and California’s SB 1339 aims to streamline interconnections, which will help bring more microgrids online and keep costs low. Additionally, more out-of-the-box microgrid solutions are coming, simplifying the whole process. 

"We are seeing the emergence of modular microgrids over the last year," Maze-Rothstein said in an email. "Because the components are all built primarily in factory, the construction timelines — and total system costs — can be significantly decreased." Examples include Scale Microgrid Solutions, Gridscape Solutions, Instant On and BlockEnergy.

The value of resilience 

A growing body of research is working to quantify the cost of inaction. 

We know outages — from extreme weather, natural disasters, physical attacks and cyber attacks — are becoming more frequent. And they’re expensive. Weather-related outages alone cost Americans $18 billion to $33 billion each year between 2003 and 2012, according to the Department of Energy. One of last year’s planned outages in California cost the local economy an estimated $1.8 billion.

At the same time, the technologies that would keep the lights on are maturing — and providing a potential new source of revenue. As energy assets become more interconnected and grid operators look for added flexibility, energy asset deployments look increasingly economically attractive.

Analysis from Rocky Mountain Institute modeled the economics of solar-plus-storage systems for the approximately 1 million customers affected by last year’s planned power shutoffs in California. It found that those customers would have enjoyed a combined net benefit of $1.4 billion, a calculation that takes into account the value of the energy assets’ contribution to the grid. 

In a separate report, RMI showed the falling cost of batteries coupled with better energy management technologies often make the payback period of solar-plus-storage shorter than solar alone. 

The calculations show the investments pay back faster for commercial customers, as the economic impacts of shuttering businesses are easier to quantify.

This article is adapted from GreenBiz's newsletter Energy Weekly, running Thursdays. Subscribe here.

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