Community Microgrid Deployment - California Climate and Energy Collaborative

Barrier 11: Community Microgrid Deployment

Barrier Statement

Community-scale microgrids remain financially and technically difficult to deploy due to restrictive utility rules, undervaluation of battery reserves, and high coordination needs for EV fleets and other DERs. These challenges, compounded by PSPS outages and slow permitting, prevent microgrids from delivering reliable and cost-effective community resilience.

Filterable Database

How communities are experiencing this barrier

View the details on what communities have shared with SLECC from across the state.

Key challenge discussed in - San Francisco Bay Area, Los Angeles, San Diego, Statewide

Slow and Restrictive Permitting and Interconnection for Microgrids and Distributed Storage. Permitting and interconnection for microgrids and distributed storage are slow, inconsistent, and bureaucratic, with unclear requirements, restrictive rules (such as limits on cross-parcel energy exchange), and prolonged utility reviews causing months-to-years of delays and higher costs for local governments.

Key challenge discussed in - San Francisco Bay Area, San Diego, Statewide

Communities vulnerable to Public Safety Power Shutoffs (PSPS) see microgrids as a solution, but deployment lags far behind need. As PSPS events grow more frequent, local governments struggle to deliver reliable, cost-effective microgrids fast enough to protect vulnerable communities from prolonged outages.

Key challenge discussed in - San Francisco Bay Area, Los Angeles, Statewide

Cost-Benefit and Market Frameworks Fail to Value Microgrid Resilience Benefits. Current cost-benefit analyses and market structures undervalue community resilience benefits—such as wildfire safety, PSPS protection, and emergency services—while preventing developers from capturing the full value of behind-the-meter storage. As a result, community microgrids are rarely financially viable without CCA or public intervention.

Key challenge discussed in - San Francisco Bay Area, Los Angeles, Statewide

Utility-Controlled Regulatory Frameworks and Incentives Undermine Community Microgrids. CPUC processes, IOU rules, tariffs, and utility business incentives prioritize load growth and centralized infrastructure over distributed, community-scale microgrids. These frameworks restrict multi-meter and cross-parcel configurations, discourage DER solutions, and push CCAs and local governments away from viable community microgrid projects.

Key challenge discussed in - San Francisco Bay Area, Statewide

Lack of coordination across agencies and actors creates confusion and slows project development. Microgrids require interagency alignment across utilities, local governments, DER developers, fleet managers, and regulators—but coordination is weak.

Local Solution Opportunities

SLECC stakeholders have brainstormed the following solution opportunities that can be taken by local leaders. Existing examples of progress or pathways to make further progress are highlighted if known.

Local Solution

Partner with CCAs to support local DER and resilience project development. Participants explicitly identified CCAs as entities that help local governments plan and implement clean-energy projects, including DER portfolios relevant to microgrids.

Existing Examples of Progress:

Further Progress Pathways

Region(s): San Francisco Bay Area, Statewide

Local Solution

Leverage municipal EV fleets as resilience assets by pairing their batteries with local microgrids. Coordinated planning to reserve capacity for emergencies, alongside stationary storage at critical facilities, can unlock supplemental energy storage during outages and strengthen community resilience.

Existing Examples of Progress:

LA Metro’s electric bus fleet demonstrates the potential of EV batteries as supplemental storage for microgrids, but in practice buses often return from routes with depleted batteries, limiting their resilience value. Stakeholders emphasized that realizing this potential will require coordinated planning to reserve capacity for grid use and pairing EVs with stationary batteries at critical facilities.

Further Progress Pathways

Region(s): Los Angeles, Statewide

Local Solution

Deploy solar microgrids with guaranteed battery backup at critical community sites (city halls, libraries, schools, water treatment plants).

Existing Examples of Progress:

LA and Ventura Counties microgrid projects where they are guaranteeing battery backup capacity as part of a solar microgrid projects. The first round includes 11 sites focused on city halls, libraries, cooling centers, and emergency operations centers; second round will target critical community sites like school districts, water treatment plants, and transportation headquarters. Projects aim for design and permitting by the end of the year.

Further Progress Pathways

Region(s): Los Angeles, Statewide

State Solution Opportunities

SLECC stakeholders have brainstormed the following solution opportunities that can be taken by state leaders. Existing examples of progress or pathways to make further progress are highlighted if known.

State Solution

Reform Regulatory and Interconnection Rules to Enable Community-Scale Microgrids and Power Sharing. The state should reform CPUC and utility rules to allow multi-site community microgrids, enable power transfer across parcels and public rights-of-way, streamline interconnection, and support electrification of buildings and transportation using locally produced electricity. Coordinated state and federal action is needed to remove utility-imposed constraints and make community microgrids feasible at scale.

Existing Examples of Progress:

Further Progress Pathways

Region(s): San Francisco Bay Area, Los Angeles, San Diego, Statewide

State Solution

Long-term monitoring and evaluation – Fund multi-year demonstration projects to assess the effectiveness of microgrids and DER coordination over time

Existing Examples of Progress:

Further Progress Pathways

Region(s): San Diego

Solution Spotlight

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Additional Resources

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