California's Microgrid Market Has Potential, but Its Policies Need Better Alignment

California is often held up as a leader in clean energy, having passed legislation as early as 2006 mandating reductions in emissions contributing to climate change. The state has also committed to being 100% greenhouse gas free by 2045 along with other countries, states, and US territory Puerto Rico.

A study commissioned by the Civil Society Institute, Millennial Action Project, and Rocky Mountain Institute and carried out by Guidehouse forecast new jobs, GDP, and other economic benefits that renewable energy assets, energy storage devices, and microgrid controls can contribute. The report projects that microgrids deployed in the US featuring these technologies will generate $72 billion in GDP over the next decade.

The report also performed a deep dive on California and Puerto Rico—two jurisdictions in dire need of more sustainable forms of resilience. California’s microgrids tend to be cleaner than microgrids in the rest of the US, given progressive energy policies dating back to the 1970s. As a result, 166,000 jobs could be created by microgrids featuring clean energy resources over the next 10 years in California alone.

Disconnect on Diesel and Resilience

Despite these promising statistics, two recent moves illustrate that much more work needs to be done to align regulations and public policy in California for the state to meet its resilience and sustainability goals. The first was approval on December 2, 2021 for the state’s large investor-owned utilities to continue deploying diesel generators as their primary way to keep power flowing during wildfires or Public Safety Power Shutoffs to reduce risks from operating power lines. While acknowledging diesel generators are the least desirable option, state regulators claimed that this move was necessary. Not everyone agrees with that assessment. For example, combining modular microgrids financed under energy as a service agreements would allow private capital to flow into clean energy microgrids for businesses and critical facilities such as fire stations and water districts.

Secondly, there are other examples of how California is not connecting with a broader framework on climate resilience. A draft of the state’s climate adaptation strategy did not even mention microgrids, as reported by Microgrid Knowledge. Furthermore, the state’s push for EVs fails to recognize that EV batteries can also serve as mobile resilience technologies with new vehicle-to-grid offerings.

In 2021, The Climate Center, a California nonprofit, sponsored the Community Energy Resilience Act of 2021 introduced by state senator Bill Dodd that would have offered technical assistance for local governments to investigate clean energy microgrids for critical facilities. Like other clean energy resilience measures, the bill was killed in the State Assembly, notwithstanding unanimous bipartisan support in the Senate. Several other bills related to microgrids have also failed in the recent past, and regulatory decisions continue to send mixed signals. (Senator Dodd reintroduced the legislation—Senate Bill 833—in 2022.)

Hope on the Horizon

However, positive efforts exist from companies such as BoxPower, a small California company offering modular containerized microgrids featuring solar PV and batteries. These microgrids—which are now being deployed by Pacific Gas and Electric Company and being financed by ratepayers—can displace the need to upgrade distribution lines in rural areas. The first microgrid came online in April 2021. California could benefit from building on such modular solutions for other compelling use cases, allowing alternative funding for community resilience microgrids in urban areas for critical facilities.