Published on Nov 01, 2021
On Friday, the California Public Utilities Commission (CPUC) preliminarily denied a Bloom Energy (BE) proposal to create a microgrid capacity services tariff to provide electricity to the grid during outages. Under its proposal previously reported on by The Capitol Forum, Bloom requested receipt of $2 per kilowatt-hour, the same amount given to utility companies from the state during emergency periods.
The CPUC’s rejection of Bloom’s proposal came as part of a proceeding to address Governor Gavin Newsom’s July 30 emergency proclamation mandating that utilities purchase and install increased backup power to prepare for wildfires and extreme heat in 2022 and 2023.
Administrative law judge Anne Simon turned down Bloom’s proposal in the Proposed Decision, indicating that it was outside the scope of the proceeding. Simon also wrote that “we are not adopting new subsidies that would result in a cost-shift prohibited by [the statute creating the microgrids regulatory proceeding].”
The issue of cost-shifting has also previously arisen in the microgrids proceeding within another track, The Capitol Forum has reported, with a previous proposal by Bloom to suspend standby charges for microgrids struck down by the CPUC. Microgrids are electricity-generating arrays able to run in tandem with or islanded from the larger utility-supplied grids, often designed to flip on during outages.
In nullifying Bloom’s proposal, Simon instead opted for a plan giving the reins to Sempra Energy (SRE) subsidiary San Diego Gas & Electric (SDG&E) and Pacific Gas & Electric (PGC) to procure electricity under their energy storage microgrids program and Temporary Generation Program, respectively. Under the San Diego Gas & Electric microgrids program, the utility can construct up to four circuit-level energy storage microgrid installations with a capacity of up to 160 MW.
“Collectively, PG&E and SDG&E’s proposals will support the state’s broader goal of ensuring electric reliability to preserve community continuity,” wrote Simon.
In response to the Proposed Decision, PG&E told The Capitol Forum it believes “Microgrids can play a role in enhancing resilience for our communities. We are reviewing the CPUC’s proposed decision and look forward to collaborating on this critical work for our customers.”
SDG&E, for its part, told The Capitol Forum that “We are reviewing the proposed decision and will file comments by the Nov. 10 deadline.”
In recent months, Bloom has pointed to its microgrids as vital sources of electricity generation during grid outages of the type envisioned in the proclamation order and as an important way to site its fuel cells. In May, Bloom told The Capitol Forum that it has 31 microgrid installations in California.
But the CPUC Proposed Decision signifies that in the near-term during grid outages, the state will lean heavily on the utilities to provide backup electricity generation via their microgrids, potentially creating a barrier for Bloom to scale its microgrids. Bloom did not respond to a request for comment.
The Capitol Forum has previously reported that microgrids have taken on increasing importance for Bloom in California as it faces greenhouse gas emissions standard compliance issues in its largest regulatory program, net energy metering for fuel cells (FC NEM), a greenhouse gas standard for which will be finalized in early 2022 that the company may face issues meeting.
“It is not yet clear that the FC NEM tariffs will be available for new installations after December 31, 2021 and installations that are currently on FC NEM tariffs will have to meet more stringent greenhouse gas emission standards to remain eligible for the FC NEM tariffs,” the company wrote in its most recent quarterly disclosure.
“Recognizing this, we are working through the appropriate regulatory channels to establish alternative interconnection opportunities through an active proceeding at the California Public Utilities Commission,” Bloom further detailed. “The proceeding, which is focused on the commercialization of microgrids, is currently ongoing, and we anticipate clarity on interconnection opportunities by late 2021.”
The Final Decision for the CPUC is due November 18, with opening comments and reply comments from parties to the proceeding to come on November 10 and November 16, respectively.
