Equitable Adaptation Legal & Policy Toolkit

Enabling Public Purpose Microgrids

Communities are increasingly looking to encourage the development of public-purpose microgrids that, powered by distributed energy resources with energy storage, can maintain power for critical community assets (e.g., hospitals, senior care facilities, schools) during a power outage. Identified as a prominent solution to modernizing the grid, microgrids are portions of the electric grid which are powered by distributed energy resources (DER), like solar and energy storage, that can operate either independently, or as part of the larger grid.1 According to the Environmental Law Institute, public purpose microgrids can provide a range of resilience and equity benefits, including ensuring that critical services for frontline populations are not disrupted during power outages, increasing community ownership and control of energy generation and storage, reducing energy costs for critical community assets, and enhancing broader grid resilience.2 To encourage deployment of public purpose microgrids, some jurisdictions are implementing pilot microgrid projects (e.g. Bronzeville Microgrid, Chicago, Illinois). Other states and local governments are exploring opportunities to adopt programs and policies to reduce legal and regulatory barriers and create incentives to encourage deployment of microgrids to support both adaptation and mitigation efforts.

Considerations of Enabling Public Purpose Microgrids

Economic
  • Microgrids have high upfront costs because they are expensive to install and maintain.
  • Microgrids can provide economic benefits to customers or communities by enhancing integration of renewable energy sources that can reduce losses from power outages and reduce energy bills. 
  • Microgrids can also provide the opportunity for community ownership and control of distributed generation and storage.

Environmental
  • Microgrids can be used to ensure that critical facilities, like wastewater treatment facilities, remain operational during power outages, thereby reducing other environmental impacts from outages, like discharges of untreated sewage into water bodies.

Social /Equity
  • Public purpose microgrids can deliver significant social benefits by ensuring that assets providing critical community services — like hospitals, senior care facilities, and schools — remain operational during power outages.
  • States may need to evaluate net-metering rules to ensure that the financial burdens of maintaining the grid do not fall on low-income ratepayers.3
  • Communities should determine the siting and uses of public purpose microgrids based on an assessment of needs and priorities.
  • There should be a transparent process that allows community members to suggest the types of critical infrastructure (e.g., hospitals) that should be served by microgrids.

Administrative
  • Microgrids can be technically difficult to develop and administer because they often require coordination among multiple participating entities (including customers, regulators, and the utility) and funding streams to establish a microgrid campus.

Legal
  • Microgrids face regulatory barriers in many states because microgrid developers, as energy distributors, are often regulated as a “utility”, subject to all of the rules governing rate recovery, environmental protection, safety, etc.
  • In many states, utilities are prevented from owning or controlling storage and, therefore, from deploying microgrids in a community to enhance grid resilience.4
  • No standard has been established for determining the resilience value of microgrids, which limits rate recovery for these investments and can discourage private investment in microgrids.5

Lessons Learned

  • As more and more microgrids go into implementation, it is important to hone in on the co-benefits of siting microgrids, so that they power critical facilities to the benefit of the community.
  • When powered by renewable sources, microgrids can deliver environmental benefits by reducing GHG emissions and air pollution.
  • Policymakers should ensure that frontline communities and critical assets serving frontline populations are prioritized when making investments in microgrids.
  • In addition to the upfront work needed to establish a microgrid, the parties need to develop long-term deployment plans for operating the service during regular operating hours and during emergency events.
  • Like several states have done, encourage legislation to streamline regulatory requirements for microgrid developers to encourage projects that deliver broad public benefits.

 

 

1. Robert Lasseter, CERTS Microgrid Concept, Consortium for Electric Reliability Technology Solutions View Source (last visited July 22, 2020). | Back to content

2. Miriam Aczel, Microgrids, Distributed Energy, and Resilience, ELI (January 31, 2018), View Source | Back to content

3. Net metering is when electric customers who generate their own electricity can sell excess electricity back to the grid. Critics of net metering have argued that these programs may shift costs to lower-income customers and others who are unable to participate. However, if properly designed, these programs can have benefits for all ratepayers. See Mark Muro & Devashree Saha, Rooftop Solar: Net Metering is a Net Benefit, Brookings Institute (May 23, 2016), View Source. | Back to content

4. Resiliency Through Microgrids Task Force Report, Maryland Energy Administration (June 23, 2014), View Source. | Back to content

5. Rosana Francescato, How a Standardized Value of Resilience Will Proliferate Community Microgrids (July 19, 2019), View Source. | Back to content

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