Barriers to non-utility ownership of DER stripped from California bill

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For the past 30 years, California has led the transition to renewable energy in the United States, and this is particularly true in terms of policy action to unlock the potential of distributed energy in remaking the power grid. And while a bill making its way through the California legislature threatened to shut solar and battery storage not owned by utilities out of providing services, this has been averted.

SB 1088 is a bill to establish standard for utilities to reduce risks from natural disasters, such as the wildfires that recently ravaged the state. However, the original form of the bill included language that would have prevented utilities from contracting with customer- or third party-owned distributed energy resources (DER) to provide reliability services.

This drew opposition from a wide variety of environmental and renewable energy organizations, and the bill was modified in later versions to merely provide an indemnity clause, putting all the risk of any damages on the owners of these systems. According to Ed Smeloff, the California regulatory director for Vote Solar, this would have made such projects un-financeable.

However, yesterday bill author Senator Bill Dodd (D-Napa) was finally persuaded to remove such language, as the bill made its way through in the Senate Appropriations Committee. Instead, there is a requirement that customer- and third party-owned DER participating in reliability programs carry insurance – which Smeloff says is already a de facto requirement of such systems.

Vote Solar’s Smeloff says that the removal of this language was a major win for clean energy advocates. “It would have given them a monopoly on DER that was being used for distribution infrastructure deferral,” Smeloff told pv magazine.

Smeloff further describes this this as a return to the original purpose of the bill. “Our contention is that all this language related to indemnity didn’t have anything to do with wildfires, except that DER take load off the transmission system, and lessen the likelihood of fires.”

In its opposition to the original version of the bill, NRDC had taken this idea further, noting that DER help to mitigate Climate Change, which is driving the increased incidence of wildfires.

In order for California to avoid the devastating impacts of climate change, including wildfires, we need to continue to rely more on clean energy resources and less on fossil fuels to power the state’s homes and businesses, and we need to use every tool available,” noted a blog post by Lauren Navarro, EDF’s senior policy manager, California clean energy.

The new bill does include a section that requires utilities to submit reliability and resiliency plans, including a requirement for utilities to investigate microgrids and DER that can be islanded to provide power to schools, hospitals, water pumps and other critical services and infrastructure.

The bill is now expected to advance through the Senate and to the California Assembly, as it has the support of the president pro tem of the California Senate, Toni Atkins. It has also been supported by IBEW union locals that represent utility workers, however California’s utilities have not made any public statements of support.