Distributed Energy Resources (“DERs”) have long been part of California’s efforts to reduce greenhouse gas (“GHG”) emissions and ratepayer costs; however, the California Public Utilities Commission (“CPUC”) is currently exploring how third party DER providers can strengthen the reliability of the electric distribution grid.
On September 19, 2019, the CPUC instituted a rulemaking to facilitate the commercialization of microgrids for distribution customers of large electrical corporations. A microgrid is an interconnected system of loads and energy resources, such as DERs, within a clearly defined electrical boundary that can isolate or be managed apart from the larger grid. Track 1 of the rulemaking focuses on the CPUC’s goal of deploying resiliency planning in areas that are prone to outage events and wildfires. The CPUC hopes to adopt microgrid strategies in these vulnerable areas by Spring or Summer 2020. Reply comments on the Track 1 Microgrid and Resiliency Strategies Staff Proposal were submitted February 6, 2020. Next, the CPUC will issue a proposed decision, which will allow for a comment period. Track 2 of the microgrid proceeding will focus on accomplishing California’s broader policy goals, such as reducing GHGs, adapting to climate change, and planning for catastrophic events, in the context of supporting microgrids.
In March 2020, the CPUC wrote to Pacific Gas & Electric (“PG&E”), Southern California Edison (“SCE”), and San Diego Gas & Electric (“SDG&E”) encouraging them to begin their adoption of microgrid solutions. The letters asked the IOUs to implement directives “that are reasonably likely to result from a Track 1 Decision in the Microgrid and Resiliency proceeding.” The CPUC asked each IOU to “anticipate the impacts on its own operations from directives that could come from the proceedings” and to begin taking steps of “no regrets.” Building the resiliency of the electric distribution grid through DERs before the next wildfire season is a high priority for the State and the CPUC.
DERs may also be used to defer or avoid traditional distribution upgrades. PG&E recently issued its 2020 Distribution Investment Deferral Framework (DIDF) Request for Offers (“the RFO”). The RFO is seeking at least 4.4 MW of DERs to cost-effectively defer PG&E investment in traditional distribution system upgrades that will otherwise be necessary in 2022. The DER projects can be located in-front-of-the-meter or behind-the-meter.
Project offers for the RFO were submitted March 15, 2020. By April 29, 2020, PG&E will make a shortlist of potential projects to be implemented. The project offers will be judged on a quantitative basis, e.g., project cost and Distribution Deferral Value, and a qualitative basis, e.g., project viability and safety. PG&E may select any subset of shortlisted offers for execution of an agreement by August 2, 2020. PG&E will submit agreements for CPUC approval by September 1, 2020. Not all RFOs make it to final implementation. On March 26, 2020, PG&E filed Advice Letter 5794-E to cancel solicitations for its Calflax distribution investment deferral opportunity that was associated with its 2019 DIDF.
SCE has also released its 2020 DIDF RFO. The request is limited to DERs at five locations listed in the 2020 DIDF RFO Bidder’s Conference Presentation. The MWs needed at each location is also described in the presentation. Offers were due March 3, 2020. SCE will offer its final selection of eligible projects on April 27, 2020. SDG&E did not implement a 2020 DIDF RFO.
For more information please contact Lynn Haug or Brian Biering.