The complexity of microgrids - the beauty and the curse. California needs flexibility to address complexity when it comes to microgrid policy and regulation to achieve the state's clean energy, resiliency and sustainability goals.

The beauty of microgrids is their complexity. They are technology neutral. They can integrate and optimize multiple energy resources. They can be fully independent from the grid, or provide the grid with valuable services. They are customized to meet unique customer needs. Microgrids are complex energy systems and are usually designed to achieve multiple energy management objectives. These unique and powerful systems present a challenge: how do we design policies and regulations that respect and embrace their complexity while not suppressing the full value microgrids can provide to the grid and customers?

When I say complex, I mean energy systems that go beyond simply having backup electricity for a day or two. Many microgrid applications to date are for campus-like environments and large facilities – colleges, hospitals, business parks, neighborhoods – because they optimize the use of not just electricity, but thermal energy systems as well. Think steam, heat, cooling, water. When you think about microgrids, you need to think about larger scale buildings than just a typical home. Think about even one commercial building like a 3-story office building – it doesn’t just need electricity to power its lights, it needs to provide hot and cold water for bathrooms, steam to generate heat for that water and heating/cooling the air of thousands of square feet of building. Most of that power is not electricity, it’s gas and other thermal generation. Propane is also very common in rural areas of California. Then you factor in that many businesses and public agencies these days don’t want to lose power with PSPS events proliferating across the state, so they incorporate backup power into their facilities. Sometimes this is a diesel gen set that will power the exit lights and elevators in an emergency. Other times this is making sure that the lights only flicker when the grid goes down with solar + 2-hr discharge duration battery that will work for ~4-10 hours without a charge in decently sunny conditions. Microgrids are meant to provide multiple benefits across the energy systems within facilities and optimized to ensure that all the energy resources utilized are being operated in an efficient manner that is also cost effective to the customer.

There are real world constraints we must consider when designing and operating any energy system. Electrification and 100% renewable energy goals are important and should be pursued as long-term sustainability strategies. One thing that is troubling is the lack of acknowledgement of policymakers about the real-world conditions we are living in today and designing policies accordingly. For example, electric heat pump hot water heaters are a pretty new technology and most buildings across the state, country and world are NOT currently all electric, especially large commercial buildings. Nor does it necessarily make sense for them all to be based on the current needs and operations of the building and its occupants. The cost of 100% electrification for large commercial buildings often outweighs the benefits it would conceptually provide, and on a technical and practical perspective, it makes more sense to achieve significant efficiencies with optimizing its electric and thermal energy, the use of natural gas for heating, steam, etc. instead of trying to convert the entire building (usually suite of buildings) to all electric. Microgrid applications can be applied to existing buildings and infrastructure tailored specifically to their needs and uses.

We don’t have to render the entire natural gas system obsolete today – we can use it more efficiently as technology evolves. We can modernize the system by incorporating cleaner fuels such as renewable natural gas, biofuels and hydrogen as they become commercially available and cost-effective. The natural gas system doesn’t have to become such a “stranded asset” for California and we don’t have to keep using natural gas forever. If we focus on phasing in new technologies and fuels thoughtfully and practically over the next 10-20 years, we will avoid stranding assets and costs while ensuring our energy system becomes more resilient and sustainable. Solar and batteries alone are not a silver bullet. We need a diverse portfolio of energy resources – solar and storage are important, but so are flexible fuel resources like biomass and fuel cells.

There is significant value and efficiency gains that are achieved when a building goes from 30% efficient using 0 or minimal clean energy resources for all its energy needs, to a system like a microgrid that is something like 70% more efficient using 80% renewables and only 20% non-renewables that are controlled by advanced software that is only deploying the non-renewable resources when it’s really needed. We should not be disregarding these efficiency gains that can be made today. In the next 10 years, it is very likely that if we give our innovators space and pathways to innovate that they will create products and solutions that give us even higher efficiency gains or eliminate emissions completely by getting us to achieve that aggressive 100% carbon-free goal. Not letting them have time to iterate and improve their technologies will lead us to failure to achieve our goals because we didn’t provide a runway or bridge to allow them to have meaningful opportunity to get there in the first place.

When I worked in construction and studied engineering, I hated the term value engineering. It’s the term used for designing and engineering a structure or machine to operate within a set of physical and financial constraints and still be structurally/mechanically sound and achieve the basic foundational goals it was designed to achieve. Basically, any engineer/designer/innovator/etc. will always design the best and most optimal solution technically possible when there aren’t any constraints and/or cost is not a factor. Once you add in constraints, especially cost, that is when you make concessions to the design to operate within those constraints and optimize for value accordingly so that the system still functions as intended, is worth the time and cost of building, and is affordable to the purchaser. This is when your typical engineer gets frustrated with the company or manager they are working for because the engineer has designed a perfect system to achieve its goals, gives the design to the higher ups for review, and the executives’ feedback is that it needs to be done cheaper or with sub-optimal equipment to make any profit and be worth investing time/money in deploying. This is the reality with every business.

When it comes to microgrids, we really aren’t yet at the point where 100% renewable microgrids make commercial sense in many applications in the market today. Except those customers who are investing without any cost constraints. There are some policy stakeholders asking the state to disallow new non-renewable resources used in microgrids because they would produce any emissions at all. And through regulation, are thereby forcing customers to either invest in 100% renewable microgrids or not realistically have the option of building a microgrid because all-renewable microgrids are expensive for most.

The biggest concern I have with equity is that by regulating what technologies/fuels can and can’t be used, instead of creating policies based on outcomes such as emissions standards, it will just result in some customers (usually those that are most vulnerable) doing nothing because they can’t afford the extremely high cost of the mandated renewable microgrid. Whereas maybe if they were given a less expensive option, that may be less optimal to the state because it has some emissions instead of none, but still achieves resiliency goals needed for survival in today’s world, they would be better off. Because they were able to have some microgrid, even if it was not 100% renewable, instead of none because the state demanded that the microgrid be composed of certain technologies in order for it to be built, because the state is prioritizing its clean energy goals over the basic human needs of its citizens to have power.

General market/middle class customers will dig deeper into their pockets and sacrifice something else in their lives because they are able to readjust their budgets to afford something like an all-renewable generator/microgrid if it is the only option approved by the government that will enable them to maintain electric service which is essential for human survival today. Those that can’t afford to readjust their budgets for even basic things like electricity, and that don’t have the same education and access to full subsidies, will not be able to do anything because the state is only allowing the deployment of certain technologies that are unaffordable to low income/DAC/vulnerable pops. Solar was different in that it was a “nice to have” power option for people, so those that had $ to afford it in the early days got it. PSPS and backup power options are not the same, as we are now talking about “need to have” power to survive in the 21st century. Equity issues will not be solved and may be exacerbated in communities if we do not allow a diverse suite of technologies to be implemented that prioritize resiliency in the name of our SB 100 goals. The state should be allowing and incentivizing a diversity of resilient technologies (that have a wide range in costs) so that everyone is able to access the technologies that they can afford so that everyone can protect themselves to a certain extent. There is no one size fits all approach. A rising tide lifts all ships.

We must design and implement solutions based on the current real-world situations we live in, not conceptual “well everyone should switch to all-electric because good public policy on eliminating GHG emissions says so and otherwise we aren’t paying for it”. When designing truly successful policies and regulations, we are effectively designing bridges to get technologies, markets, and their actors to change their behavior and mold it to align with the goals that public policies have been established to execute on and solve. The state snapping its fingers and demanding that any microgrids interconnected under SB 1339 be 100% renewable because California has enacted aggressive climate goals with SB 100 and many other policies will hinder the short and long-term benefits that mixed resource microgrids can provide the state. There is significant value in mixed resource microgrids that can be derived today, as well as providing that bridge for innovators to iterate designs that evolve and get better at achieving our goals like SB 100 over time. If the microgrid as a whole meets the well-established and widely accepted CARB standards required by the statute, the state should be welcoming them, even if they are not 100% renewable. The less we add on top of that in regulation, the better off we will be. The market will adapt to meet those standards.

The state of California should not let perfection become the enemy of the good. The industry will evolve over time to support all the goals, but today, we must operate within the constraints of human behavior, technology, cost and the need to quickly deploy solutions before more devastation hits. Fires and PSPS don’t discriminate. Let’s promote ALL efficient and resilient energy technologies so that EVERYONE has an opportunity to protect themselves and access clean energy solutions.