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.See footnote 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.See footnote 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.See footnote 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.See footnote 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.See footnote 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.

 

Related Resources

 
Bronzeville Microgrid - Chicago, Illinois

The Bronzeville Microgrid project deployed in a neighborhood on the South Side of Chicago, Illinois demonstrates how utilities can invest in pilot microgrid projects to benefit underserved communities. Commonwealth Edison Company (ComEd) implemented a 7.7 MW community microgrid that will provide service to approximately 770 customers in the historically black neighborhood of Bronzeville Chicago. The project, which is a key component of the utility’s “Community of the Future Initiative”, will serve an area that includes facilities that provide critical services, including hospitals, police headquarters, fire departments, a library, public works buildings, restaurants, health clinics, public transportation, educational facilities, and churches. Bronzeville, considered to be a climate-vulnerable urban area, was selected using a data-driven process, which was based on many socioeconomic factors including income, public health, and lack of investment in the community’s existing infrastructure. The neighborhood was identified within ComEd’s service territory as the area that would most benefit from the additional resilience capabilities enabled by a microgrid. The area has experienced high winds, snowstorms, extreme heat, and cold temperatures that have regularly threatened power distribution in the community. The microgrid went through a simulated islanding test where it successfully operated in April 2019 which marked the completion of the first phase of the project. The 2.5 megawatts of load in phase one included 484 kilowatts of solar panels on the Dearborn Homes public housing complex and a 500-kilowatt battery, as well as portable generation used for the test. The full microgrid construction is expected to be completed in the first half of 2020, and its performance and impact, including a cost-benefit analysis, will be studied over the next 10 years. A broad range of metrics will be used to evaluate the project and its ability to positively impact the resilience of the overall energy system and of the Bronzeville community and its critical infrastructure.

Designing new models of energy distribution: Hunts Point Community Microgrid, New York City

The Hunts Point Microgrid Project — an initiative of the New York City Economic Development Corporation and the Mayor’s Office of Recovery and Resiliency (ORR) — is designed to protect important citywide infrastructure during emergencies that threaten energy distribution and to address critical vulnerabilities for both community and industry. The project integrates energy technologies that minimize power disruption in times of extreme weather in an area that serves as a major food-supply hub located in the Bronx, NY. Hunts Point was identified as a priority area for resilience initiatives after Hurricane Sandy, as the potential impacts of the storm exposed the importance and vulnerability of the food systems infrastructure in the region. The project studied the feasibility of a district cogeneration facility to provide electricity, steam, and refrigeration to local food markets, nearby businesses, and the residential community facilities in the area. In addition to its vulnerability to climate impacts, the Bronx has socioeconomically vulnerable residents — the average household income in the borough is 40% lower than the city average and 34% lower than the national average. The South Bronx, where Hunts Point is located, is 57.1% Latinx and 39.8% black. The South Bronx neighborhood is also home to a major wholesale food cooperative located at the Hunts Point Food Distribution Center (FDC), as well as 12,300 residents and one of the City’s larger wastewater treatment plants.

Hawaii Microgrid Tariff

Hawaii is the first state to begin a utility commission proceeding to create a tariff to pay microgrid owners and streamline the interconnection processes. The Hawaii Public Utilities Commission opened a docket and proceeded to “Investigate Establishment of a Microgrid Services Tariff” in response to the passage of Act 200, which directed the Public Utilities Commission to study the establishment of the potential tariff. The Act was passed after extreme weather and volcanic activity on Hawaii Island threatened to cut off several communities or make access to them extremely difficult. The Act acknowledges that Hawaii is more vulnerable than other states to disruptions in its energy systems due to extreme weather events, and notes that microgrid solutions could provide community-scale power on an emergency basis without connection to the island-wide grid. A microgrid tariff would allow for easier development of customer-sited, islandable systems. Hawaii has existing microgrids on several of its islands that are already helping to make the state’s electric grid more resilient and reliable. In the wake of Kilauea’s recent eruptions on the island of Hawaii — where transmission lines and distribution equipment have been destroyed by lava — Hawaii Electric Light (HELCo) has also started planning a small microgrid to serve isolated communities and vacation areas threatened by lava encroaching on residential subdivisions.

Buffalo, New York Medical Microgrid - NY Prize

Microgrid projects selected for funding through the NYSERDA NY Prize competition, including a project serving the Buffalo Niagara Medical Campus, demonstrate how states can fund microgrid pilot projects and evaluate the resilience benefits delivered by these types of projects. The Buffalo Niagara Medical Campus (BNMC) secured $1 million in funding from the New York Energy and Research Development Authority’s (NYSERDA) NY Prize to deploy a microgrid project to serve vital medical facilities in the city. The project covers nine health care, life science research, and education facilities including New York’s only freestanding pediatric health facility. The project also serves portions of the adjacent Fruit Belt low-income residential neighborhood, which shares common electric infrastructure with the medical campus. BNMC’s proposal emphasized the importance of enabling the health and cancer research facilities to maintain 100% service quality during extended power interruptions. The proposal also stressed engaging with surrounding communities to identify priority investment areas, building on existing neighborhood assets by planning a multipurpose community center, advancing a collaborative workforce development strategy, and establishing a land bank program for example. The proposal used the Industrial Economics, Inc. (IEc) model to evaluate the costs and benefits of the microgrid project for critical services. The state of New York created the competition to spur microgrid development in light of climate change impacts and called for a variety for microgrid designs involving Combined Heat and Power (CHP), renewables, energy storage, alternative fuel/generation, and controllable loads. The Buffalo Niagara Medical Campus microgrid project was selected for funding as part of an initiative to upgrade and redevelop the campus and its surrounding neighborhoods.

  Supporting the Development of Resilience Hubs Funding Tools for Resilient Energy