Now, this is what happens when folks like PG&E (Pacific Gas & Electric) fail to improve our electric grid.  (You have been hearing that the heat dome in California will force the state grid to either shut down or reduce power dramatically.)

A solar energy provider has requested permission from the California Public Utilities Commission (CPUC) to build it’s own mini-grid to allow some neighborhoods to use solar panels and batteries.  Sunnova Enery (one of the largest rooftop solar providers) is targeting new communities with fewer than 2000 units.  The premise is that their electricity system will be some 20% cheaper than that provided by PG&E.  This micro-utility (aka, a microgrid) provides a model that is in contravention to most state laws.  Lennar homes has agreed to use this system, assuming the state approves the program. The goal is to have solar panels and batteries at each home- but also in the common areas of the development (consider the clubhouses)- all tied together.

Sunnova projects that outages won’t exceed 30 minutes- a year (2 hours a year is more the state standard).  Each homeowner will receive a simple bill, depicting energy production, how much they used, and the net benefit or the net cost.

Sunova also expects to be able to connect to the state grid (supplied by PG&E, SoCal Edison, and/or San Diego Gas & Electric) to sell excess power- or to cover needs in an emergency.  Even so, the micro-grid is expected to save each homeowner about $ 60 a month, when compared with the municipal utilities.

The CPUC is not enthralled with the idea, saying that it is in contravention of state regulations.  Except Sunnova claims that a two-decades-old law, developed to benefit Lake Tahoe development, does provide an avenue for their approval process.  In that case, the Kirkwood Mountain Resort employed a micro-utility for it’s diesel powered system for years- except its costs were in the neighborhood of $0.70 a kilowatt hour (about three times the state’s going rate).  Which is why the town eventually took over the grid and connected it to the state system.

The problem is that states have arranged for electric utilities to have a monopoly on power supply as long as they serve everyone and adhere to state regulatory authorities.  But, our current electric grid system is not flexible enough to handle alternative energy.  So, the solar and wind power vendors are having a rough time selling their products, since excess energy can’t be funneled into the conventional electric grid.

On top of that, most local governments preclude residences who employ solar panels and batteries from disconnecting from the conventional electric grid, claiming that connection is essential.  (That connection can cost tens or hundreds of thousands of buck- which means the off-grid system in remote areas is cheaper.  Or, it’s also possible that the local grid is already at capacity and cant take on newcomers.)

This is what obtained for the COO of one of our firms some four decades ago.  He found what he considered to be the perfect location for his home- in the middle of the Blue Ridge Mountains of Virginia..  And, he built it from scratch.  But, then, to connect to the local power company- and the local telephone company- he was assessed a bill exceeding $ 10,000- and that was FOUR decades ago.  Oh- and it took those utilities two months to get him hooked up!

But, besides avoiding sky-high connection fees, these microgrid systems are appealing because the operating costs (and maintenance) are often considerably below what the public utility charges- and are not subject to when the local utility feels it is due to receive a major rate hike.  (Consider the electric rate jumps that have occurred lately due to the Russia-Ukraine episodes disrupting the natural gas prices.)

Moreover, most state utilities have been pressing the regulators to reduce the compensation they must provide solar-powered homes that send excess electricity to the grid.  They claim these folks aren’t contributing to the cost of maintaining the grid- and are granted power credits that are too generous (in their opinion).

This should be an interesting scenario to watch.

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