Microgrids – Key Regulatory Perspectives

California regulators have opened the discussion on the interconnection and interaction of microgrids with the larger grid.
Published: Fri 15 Aug 2014

Recognizing the inevitable development and growth of microgrids the California Public Utilities Commission (PUC) has started to explore the regulatory issues around these technologies.

Microgrids – part of grid modernization

In a recent publication from the PUC, the authors argue that state utility commissions must play a role in enabling the development of microgrids as part of the larger process of grid modernization.

State the authors: “This development [of technologies for production, delivery, and consumption of electricity] is happening whether the utility, or regulator, encourages it or not; the larger question is what does the utility, and regulator, do to utilize these technologies effectively, both in their own operations, but also in planning their future needs.”

The challenges

The authors state the key jurisdictional challenges associated with microgrids revolve around the definition and management of the connection of the microgrid to the distribution and transmission systems. They identify three key challenges that need to be addressed:

1. Role of electric utility

The role of the electric utility will change. In most areas of the United States, the existing distribution system is owned and operated by a monopoly distribution system operator (DSO), usually under a local franchise agreement.

Options include modification to the franchise agreement to allow independent microgrid development Another would be to transform the role of the utility into a DSO responsible for ensuring the available capacity for distribution of electricity generated either behind the meter, connected on the utility side, or flowing from the transmission grid.

2. Standards

Appropriate standards and requirements are needed to ensure that microgrids interconnect and interact with the distribution grid in a reliable and safe manner.

Standards can also be used to ensure that all system components use the same set of

Interfaces, and along with an open architecture will allow for competition among system components vendors.

3. Siting

Siting is a critical factor related to the cost of microgrid deployment. First it enables the benefits to be optimized if located in or near areas of the macro‐grid that experience congestion or other issues; and second costs can be reduced through siting in preferred locations, such as near existing distributed generation, or where grid infrastructure upgrades are not required.

Such locations should be determined through mapping of the distribution grid.

Further Reading

California Public Utilities Commission-Microgrids: A Regulatory Perspective[pdf]