Historically, municipal and investor-owned utilities have primarily controlled electric services in the U.S. with consumers positioned at end points of complex, interconnected grid systems. Today, with increasing development of distributed energy resources, including wind and solar power and on-site energy storage, microgrids — islands of self-contained power capable of operating on or off the grid — are changing the energy landscape.

The direct benefit of microgrids is twofold. They can serve as “islands” of backup electrical generation in the event of a temporary brownout or longer-term blackout, providing energy resiliency to a building or neighborhood. Microgrids also can assist the overall grid, serving a role in balancing power demands and smoothing the intermittencies of solar and wind generation when the sun goes down or the winds stop blowing.

The California Legislature and state energy regulatory agencies recognize these benefits and have prioritized microgrid expansion. For example, the California Energy Commission has awarded millions of dollars in grants to local governments, research institutions and technology providers through its Electric Program Investment Charge (EPIC) program to develop microgrids and related systems.

Regulatory roadblocks

Despite support for microgrids, the California Public Utilities Code and a current state electric rule are preventing their widespread deployment and need to be changed.

Code Section 218(b), known as the over-the-fence rule, prevents any entity other than a utility from distributing electricity generated at one property to more than two neighboring properties or to any nonadjacent property. When authorized, the ruling protected utilities from competition and consumers from unfair practices, but with the growth of locally generated on-site power, they restrict the potential for distribution of that power.

The City of Berkeley came up against this rule when investigating how to build a microgrid that shares solar photovoltaic generation and storage capacity among multiple buildings that are not located next to one another.

California Electric Rule No. 2 allows each investor-owned utility (IOU) to levy a “cost of ownership” charge or other charge on customers designed to recover the expenses for new grid infrastructure to support their service. It does not expressly apply to microgrids, but regulators have indicated they will assess its application on a case-by-case bais. This leaves unclear what microgrid components are included in the total infrastructure cost or how the cost is calculated for smaller projects located near existing distribution infrastructure. As it stands now, the ongoing cost of ownership fees can be higher than the capital costs to build the microgrid, rendering the project financially infeasible.

Further, there is no microgrid tariff or electric rate that considers the value of power sharing among multiple customer accounts or meters or recognizes the benefits of microgrids to “island” when the main grid goes out.

Possible solutions

Following are steps state officials, regulators and investor-owned utilities could take to resolve some barriers to wider microgrid adoption.

  • Section 218(b) – Consider amending the code to allow nonutilities to distribute power across property lines when doing so as part of a clearly defined microgrid, even if those properties are not adjacent
  • Rule No. 2 – Clarify what “cost of ownership” covers and assure microgrids are treated fairly
  • Initiate a new California Public Utilities Commission (CPUC) proceeding to create a microgrid tariff that outlines a clear interconnection process and recognizes the value of microgrids

What CSE is doing

CSE is actively tracking California Senate Bill 1339, currently in the Assembly Appropriations Committee. Introduced by Senator Henry Stern (D-Canoga Park), the bill, in its current form, requires that each electrical corporation and publicly owned utility (with 700,000 or more customers) develop and submit for CPUC approval a tariff or rate schedule for third-party electrical grid resiliency investments, which would cover microgrids. In support of renewables and increased GHG reductions, the bill prohibits microgrids that use diesel backup or gas-combustion generation.

We’re also exploring whether it makes environmental and economic sense to incorporate combined heat and power systems into microgrids as part of our administration of the Department of Energy’s Western Combined Heat and Power Technical Assistance Program.

Looking ahead

As the electrical grid of the future becomes more intelligently connected, microgrids can serve to encourage on-site renewable energy generation, build storage capacity and increase local resilience and control of energy resources. Supporting microgrid development and pushing forward favorable legislative and regulatory policies are important actions that could lead to more microgrids in California.

The U.S. renewable energy industry is focused on Hawaii as the island state takes a pivotal position in advancing clean generation technologies, serving as a test bed of what other states might do as the nation moves rapidly toward more sustainable energy technologies.

In the not-so-distant past, Hawaii depended solely on high-priced imported oil to generate most of its electricity, but today it gets about one-quarter of its power from renewable sources. It’s one of about 30 states with high targets for renewable energy production, and along with New York and California, it plans to achieve 50% renewables by 2030 and 100% by 2045 – and Hawaii Electric Industries says they can do it by 2040.

Achieving a higher penetration of renewable energy isn’t simply an environmental or economic issue in Hawaii, it’s also a survival tactic. With self-contained electricity grids on each major inhabited island, the state is isolated from any other power sources, and its grids are subject to the destructive forces of hurricanes, volcanoes, earthquakes, tsunamis and other natural disasters.

Clean energy summit

In mid-June, I had the opportunity to participate in the 2018 VERGE Hawaii: Asia Pacific Clean Energy Summit in Honolulu that explored clean energy policies, technologies and infrastructure and identified actions needed to deliver on the state’s 100% renewable energy mandate. One of the main topics was power resiliency – the ability of electrical and thermal systems to continue generation, transmission and distribution during emergencies and natural disasters.

At a roundtable with utility reps, state and local officials, insurance advisors, environmentalists and other energy stakeholders, we conferred on a variety of small and large generation sources that can be integrated to help form “resiliency hubs” that are reliable (always available) and resilient (capable of fast recovery).

What I brought to the table was attention to the role combined heat and power (CHP) systems, or cogeneration, can play in anchoring microgrids – “islands” of energy systems capable of operating independently from the main power grid – in the event of power outages. Using a variety of fuels and technologies, CHP systems supply electrical and thermal energy at or near the point of consumption and during outages can keep local power, lights, refrigeration and water treatment operations up and running.

Microgrids in Hawaii

In addition to strengthening Hawaii’s communities against disasters, microgrids are helping to achieve its renewable energy goals. A few customer-sited microgrids have been developed on Oahu, Hawaii and Maui islands at military bases and government operations and at commercial sites on Lanai and Molokai islands that are supported by solar photovoltaic installations.

A 50-megawatt microgrid at Schofield Barracks and an 8-megawatt microgrid at Honolulu International Airport are normally operated as part of the grid, but can be islanded in an emergency. In the wake of Kilauea volcano’s recent eruptions on Hawaii island – where transmission lines and distribution equipment have been destroyed by lava – Hawaii Electric Light is planning a small microgrid to serve isolated communities and vacation areas.

On July 10, 2018, Hawaii Gov. David Ige signed a bill to spur microgrid deployment throughout the state. It’s designed to help overcome barriers to their development by creating a standard microgrid service tariff and simplifying regulations for grid interconnection. It encourages and facilitates microgrids and leverages the related technologies for the benefit and security of the islands’ power systems.

Role of CHP TAP

Through the U.S. Department of Energy’s Combined Heat and Power (CHP) Technical Assistant Partnerships (TAP) program, the federal government promotes and supports microgrid deployment as a cost-effective and resilient way to utilize local fuels and enhance energy security.

Through the Western CHP TAP, we will be assisting the Hawaii Resiliency Energy Challenge Working Group in identifying vulnerability points, assessing them for CHP potential and establishing model projects. Our goal over the next year is to protect one pilot resiliency hub with solar photovoltaics, battery storage, gas generator, water access, refrigeration capabilities and food distribution infrastructure to ensure that the reference community has the capacity to withstand and recover from a climate-created disruption.

As one of the microgrid bill’s sponsors, Hawaii State Representative Chris Lee, said, “For islands, building a more resilient energy grid is a matter of safety and economic survival – microgrids help us do that.”

U.S. Department of Energy’s Western Combined Heat and Power Technical Assistance Partnership is administered by the Center for Sustainable Energy in California, Hawaii, Nevada and Arizona. It offers engineering support to commercial, institutional and government facilities to advance regional energy efficiency at no charge.

Photo: USGS, 2018

As our nation faces another summer season of hurricanes and wildfires it is clear to most that increasingly severe weather is caused by a warming climate. While many states are members of the U.S. Climate Alliance, and are on track to meet and potentially exceed their portion of our nation’s commitment under the Paris climate agreement, we can’t rely solely on our cities and towns, states or the federal government to solve all the issues related to creating climate change. It’s up to us, the people, to help shape the fate of our planet—and the best time to act is now.

Our homes can be a dynamic and restorative force in society and a powerful tool to address the climate crisis. If every home in the nation were renovated to be energy-producing, we would meet most of our Paris carbon reduction commitment. A positive energy home does just that—it produces more energy than it uses.

I created Massachusetts’ first positive energy renovated home several years ago in Gloucester. Behind the simple exterior is a super-insulated home that has no carbon footprint or net energy bills and is good for the planet. It is also a change agent in our neighborhood, inspiring 12 other neighbors to install solar on their homes.

Watch Livermore's award-winning video about his home energy upgrade at Healthy Home Healthy Planet.

Benefits of energy upgrades

While some carbon reduction strategies, such as dietary changes or reduced air travel, may be seen as restricting personal choice, our positive energy home actually enhances our lifestyle and our community. In addition to zero carbon and zero energy bills, this energy-producing home provides significant benefits that redefine what a house can do.

  • Improved comfort: Due to increased insulation, we feel warmer in the winter and cooler in the summer.
  • Improved health: With reduced air leaks and a ventilation system, the relative humidity stays in a healthy range where viruses and allergens don’t thrive—so less missed work and trips to the doctor.
  • Increased property value: With no net energy bills, solar power on the roof and greater resilience to power outages and storms, our estimated increased property value is over $40,000.
  • Benefits our community: We recently donated $1,000 of “banked” solar electricity on our electric bill to two Gloucester families struggling to pay their electric bills.

Renovating our house has also empowered us. When we started to take control of our carbon footprint, as we aligned our actions with our values, our feelings of being overwhelmed flipped into a sense of strength. We discovered we could make a meaningful difference without waiting for the government to lead.

Resources for financing

There are numerous resources, programs and tax credits available across the nation to most residents who want to take control of their home’s carbon footprint and make a positive impact. Tens of thousands of dollars in free services, rebates and incentives for energy efficiency and renewable energy are available through state, utility and local programs.

In most areas, you can obtain low-interest loans to cover costs for home upgrades and there are various incentives for energy-saving and renewable energy technologies. Even using standard loan products, bundling solar photovoltaics (PV) with energy-efficient renovations can result in positive monthly cash flow. The 30 percent federal tax credit significantly helps offset the cost of installing solar. 

Below are the costs for the home energy renovation of our 2,400-square foot house. They factor in all rebates and tax credits but do not include my time. The cost of solar continues to decrease so the expense would be less today.

Project cost breakout (approx.)

Lumber and materials: $9,000
Closed-cell foam insulation: $7,000
High-performance windows/doors: $19,000
Solar hot water system: $11,500
Solar PV system: $9,000
Attic insulation: $1,000
Other materials/labor: $4,000
Total: $60,500

When we think of our home as a tool to help preserve a livable climate, we are empowered to be part of the solution. Let’s act now to make a positive difference for our families, our communities, our economy and our planet. Together we can redefine what a house can be—we can redefine what’s possible.

This article originally appeared in CommonWealth magazine, September 30, 2017.

The California Energy Commission’s recent decision to require rooftop solar photovoltaic (PV) systems on most new homes has engendered praise from some quarters and criticism from others. Some see this as a positive force, helping to reduce the cost of solar and contributing to greenhouse gas (GHG) emission reduction. Others despair policymakers’ tendency to choose technology winners and losers and argue that the least-cost choices are usually best.

Regardless of where you are in the cheering section, allow me to offer several red flags to watch for when people put forth critical perspectives on requiring rooftop solar.

  1. When someone argues that rooftop solar is foolish because central station solar is cheaper, they are ignoring, or at least minimizing, several import factors, including the difficulty in siting central station solar, the decade-long process of making such a project happen, the direct land use impacts of that technology and the need for more transmission lines and their related land-use impacts.
  2. Beware of critics who say central station solar is the only way to go. There are strong arguments in favor of central station solar, but it is not credible to suggest that we will meet all our electricity needs with big solar farms in the desert. It isn’t an either/or situation. We need both.
  3. When someone criticizes the use of renewables by suggesting it could lead to higher bills, what is implicit is that we should continue relying on fossil generation that appears to be cheaper, even though much of that apparent price advantage results from the fact that the generators are not paying for environmental externalities such as air and water pollution and GHG emissions.
  4. When people argue that requiring rooftop solar is bad because it will reduce grid-based electricity sales and thereby leave the remaining customers with higher rates to cover fixed costs, think about what they are saying: a policy is bad if it reduces the demand for electricity from the grid. Should we stop encouraging more efficient use of energy?
  5. Beware of arguments based on the Duck Chart. This graph suggests that with the introduction of more solar, grid operators are stuck with more renewables than they can use during certain hours and therefore forced to curtail its use. When the grid operators do so, it isn’t because there is more solar generation than demand. It is because so much of the grid-based generation is too inflexible to respond to changes in solar output. It’s fixing the limitations of the grid that needs our attention.
  6. Take care when critics raise the specter of economic inequity. The suggestion is that a program is unfair if anybody other than low-income customers might benefit. Does the possibility that middle income or higher income end-use customers who adopt PV might save money mean that a policy should be rejected? Especially when the benefiting customers paid for the benefit by buying a new home with solar?
  7. When people argue that putting solar on all new rooftops won’t do much to reduce GHG emissions, beware of the drop-in-the-bucket argument – a favorite of people who want to dismiss any specific strategy to reduce emissions. When it comes to reducing GHG emissions, there is no magic beanstalk that will lead us to the golden egg of a carbon-free life. Deep decarbonization requires all hands on deck.

There is no disputing that the state’s new policy is a landmark event that could set the stage for broader solar adoption nationwide. One benefit of the policy is that it can help bring down the cost of solar. It is cheaper to install solar PV when incorporated in new construction, and doing so adds to overall demand, which can support further economies of scale.

Further, the development of more customer-sited generation supports the development of microgrids that can enhance local reliability and increase the likelihood of continued access to power after a natural disaster such as an earthquake or superstorm.

Maybe there are less expensive ways to produce carbon-free electricity. But will they be deployed in time to meet long-term GHG reduction targets? And when do we stop waiting for a better widget? The time to get fully invested in solar – of all types – is now.




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