Microgrids reframe how we generate and consume energy

As California works toward its ambitious clean energy vision, an almost counterintuitive challenge has emerged: The state is, at times, generating more solar energy than it can handle. It’s gotten to the point where loads of clean energy are going to waste.

Renowned for its progressive strides toward a clean energy future, California faces an ironic and pressing dilemma. On one hand, most days, the state is generating more renewable energy than it can use, which seems like a great problem to have. On the other, this surplus is bottlenecked by an overburdened and inefficient grid, hindering both new energy generation and the integration of new business operations that require significant energy.

The heart of the problem lies in a grid that is clogged and outdated, offering no clear path for interconnecting significant new users of energy or generation sources. While many look to battery storage solutions to absorb excess energy and smooth out supply and demand, this is not the only way—nor is it likely the optimal one.

The solution? Embracing strategic siting of generation assets alongside new load to take advantage of the existing midday surplus of energy without adding stress during peak congestion times. This approach allows us to get more out of the existing grid without upgrades, shields ratepayers, and accommodates new load to drive industry.

Visit the CAISO price map on any sunny afternoon, and you’ll witness a peculiar sight: dozens and dozens of blue dots representing negative electricity prices. This means energy producers are effectively paying to supply power to the grid.

While seemingly a boon for consumers, it’s also a glaring symptom of systemic inefficiency. The grid is saturated, often functionally operating outside the rated effective load carrying capacity. Simultaneously, new large-scale business operations—like data centers, EV charging hubs, & onshoring new manufacturing facilities —are facing prohibitive costs and lengthy timelines to connect to this congested grid. Integrating these substantial loads requires significant grid upgrades, which are both time-consuming and expensive.

Consider a new data center seeking to establish operations in Silicon Valley. The demand for such facilities is skyrocketing, with many tech companies seeing data center capacity as an existential key to their business. However, when attempting to connect to the grid, the data center faces a daunting reality: multi-year timelines and exorbitant costs for grid upgrades. The process is so inefficient that it threatens to derail the project entirely. This isn’t an isolated incident; it’s a recurring theme across the state. Large new load applications are met with lengthy interconnection studies, costly infrastructure investments, and no guarantees of timely completion.

Meanwhile, renewable energy producers are disincentivized from adding new generation capacity due to the grid’s inability to clear the existing interconnection queues and handle existing surplus. The paradox is stark: California has both the supply and the demand for energy, but the grid stands as a barrier between the two. The inefficiency not only wastes clean energy but also hampers the state’s economic and environmental objectives.

Many point to battery storage as a solution, storing excess energy during periods of surplus and releasing it during peak demand. While energy storage systems can play a role, they’re not a panacea. Batteries are expensive, has environmental impacts associated with battery production and disposal, and does not address the underlying issue of grid congestion during peak times. Moreover, relying solely on storage solutions doesn’t make full use of the existing surplus in real-time, nor does it alleviate the bottleneck for new energy-intensive operations needing grid access.

The effective, scalable solution lies in a reframing of how we generate and consume energy – strategically siting new loads with microgrids to align consumption with periods of surplus generation. By collocating energy-intensive operations with decentralized or onsite generation, we can take advantage of the existing midday surplus without adding stress during peak congestion times. This allows for better utilization of the current grid infrastructure, shields ratepayers from the costs of grid upgrades, and supports new industrial growth.

Take, for example, a manufacturing facility in Fresno. By strategically timing its highest energy consumption to coincide with peak solar production and integrating with a microgrid that includes onsite renewable energy generation, the facility can significantly reduce its reliance on the congested grid during peak times. This approach not only alleviates pressure on the grid but also provides the facility with energy cost savings and resilience against outages. Unlike relying on battery storage alone, this method directly matches energy consumption with surplus generation, optimizing the use of available resources.

Decentralized solutions like microgrids also offer resilience against grid failures and natural disasters—a crucial consideration in a state prone to wildfires and earthquakes. Microgrids can operate independently during outages, ensuring that critical facilities and new business operations remain operational. By aligning energy-intensive operations with periods of surplus generation and integrating them within microgrids, we create a synergistic relationship that benefits both the grid and the consumer.

Policymakers need to prioritize streamlined, adaptive regulations that encourage rapid deployment of decentralized energy systems and strategic load siting. This includes simplifying interconnection procedures, offering incentives for onsite generation and flexible consumption patterns, expanding microgrid tariffs and programs, and removing barriers that currently hinder progress. Here are three examples of policies that would move the needle:

1. Rather than defining all power generators as public utilities and carving out a subset of exceptions, set narrow and strict criteria for public utilities to reduce the regulatory burden on private energy ventures.
2. Modernize microgrid definitions and tariffs with an intent to be more permissive, including relaxing parcel ownership and siting criteria to make more sites eligible for collocated energy solutions.
3. Allow private energy producers to wheel power on public utility lines for a fee, where there is capacity, to get further utilization from existing infrastructure and allow flexibility in siting new energy resources.

By focusing on strategic load siting and decentralized solutions, California can transform its energy landscape, overcoming inefficiency through innovation. Each successful deployment of a microgrid or onsite generation project not only demonstrates the feasibility of this approach but also serves as a catalyst for broader change. These projects showcase how aligning energy consumption with periods of surplus generation can effectively meet demand, reduce strain on the grid, and make productive use of renewable energy that might otherwise go to waste.

Decentralized generation and strategic load siting align with California’s environmental and economic objectives. They accelerate the adoption of renewable energy, reduce greenhouse gas emissions, and promote energy independence. They also spur job creation in the burgeoning clean energy sector, fostering economic growth while addressing climate change.

The transition to this model isn’t just a technological shift; it’s a paradigm change in how we perceive and manage energy. It empowers communities and businesses to take control of their energy futures, fosters innovation, and enhances resilience. It moves us away from an outdated, centralized model that no longer serves our needs toward a flexible, efficient system designed for the realities of the 21st century.

The path forward requires collaboration among policymakers, energy practitioners, businesses, and communities. It demands a shift from complacency to action, from centralized control to localized empowerment. The challenges are significant, but so are the opportunities. By unlocking the grid through strategically siting generating resources alongside new load, California can continue striding into future.

Kevin Pratt is the chief operating officer of Pacifico Energy, a commercial and industrial energy developer. He joined Pacifico Energy in July 2020, after roles in the U.S. Army, the FBI, and Boston Consulting Group. Pratt holds an MBA from the University of Southern California.

The views and opinions expressed in this article are the author’s own, and do not necessarily reflect those held by pv magazine.

This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: editors@pv-magazine.com.