California utilities commission advised to block solar and storage microgrid application


In another move that is a boon to large investor-owned utilities in California and a bane to market competition, a distributed solar and storage microgrid proposed by Sunnova was advised to be rejected.

The Public Advisor’s Office (PAO) suggested that California Public Utilities Commission (CPUC) deny solar and storage provider Sunnova from providing microgrid services in the state. The decision comes on the heels of the passage of NEM 3.0, which signals a deeper regulatory moat-digging around the centralized utility business model.

“Our application clearly outlines the reliability, rate, environmental, and other public interest benefits that community microgrids can provide. This proposed decision is troubling and disappointing for a state that has set such bold climate targets yet is struggling with making steady progress on them,” said Meghan Nutting, executive vice president of government and regulatory affairs.

Sunnova proposed the “micro utility” service in September 2022, seeking to equip new construction homes with solar and storage and aggregate them in a microgrid. Distributed energy aggregation is a proven more efficient way to supply resilient renewable energy than the centralized utility model. Read more about the wide set of promising benefits of aggregation here.

“It is curious and concerning that the PAO, a presumably independent division of the CPUC who is charged with representing the public interest, is seeking to dismiss our microgrid application before it gets any opportunity to be heard through a public hearing,” said Nutting.

The PAO proposed decision to deny can be found here. CPUC retains the authority to approve or deny the application regardless of PAO’s suggestion.

As stated on its website, the PAO is designed to represent the public interest, shielding it from unfair practices by utilities. “The office’s mission is to advocate for the lowest possible monthly bills for customers of California’s regulated utilities consistent with safety, reliability, and the state’s environmental goals. As the only State entity charged with this responsibility, the PAO represents utility customer interests before the CPUC,” said the PAO site.

Despite this, Sunnova argues that the PAO’s proposed decision to deny flies in direct contrast to its stated mission. The company said its project provides market-based rates, no diminishment in safety, consumer choice about how they obtain and use energy, greater reliability, and meaningful advancement toward the state’s environmental goals.

In its 2021 to 2022 transmission plan, the California Independent System Operator (CAISO) announced 23 transmission projects at an estimated cost of $2.9 billion. These costs are pushed to homeowners in the form of electricity rate increases. A significant portion of these costs could be avoided if California instead pivoted to a decentralized model of energy.

“We see a future where communities, neighborhoods, and businesses can operate independently from the legacy grid with sustainable energy sources that provide uninterrupted power. We believe microgrids address a strong need in the market for more robust energy solutions and better connectivity. The Sunnova Adaptive Community will provide consumers with the ability to produce, share, and deliver power when it’s needed most,” said William J Berger, founder and CEO of Sunnova.

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