With thanks to Angie Hacker and Gabriela Yamhure for researching and writing this piece for CURRENTS.
Just when we dared to hope we were out of the woods and onto recovery, variants, wildfires, and storms have reminded us that we’ll be facing ongoing “outbreaks” and the “long haul effects” – of both the pandemic and the climate crisis – for years to come.
Amid this constant disruption, local governments are trying to pave the road to greater resilience, and we can’t afford to go it alone. In order to continue tackling energy and climate goals – among other pressing community needs – it will be more necessary than ever to work effectively alongside other local agencies, regional bodies, community-based organizations, universities, utilities, and nonprofit and for- profit service providers. With less than 30 years to get to net-zero emissions and keep under 1.5 degrees celsius of global warming (according to the IPCC), we need all hands on deck.
Meanwhile, state and federal agencies are making important decisions about how to allocate and implement major investments to support local and regional energy and climate action. As programs like the Strategic Growth Council’s Regional Climate Collaboratives program, OPR’s Community Economic Resilience Fund, the CPUC’s Microgrid Incentive Program, and decarbonization initiatives proposed in the Governors’ 2022-2023 budget are being developed, important questions are being raised about how to leverage more collaboration throughout the state to achieve better outcomes in emission reductions, equity, and economic recovery. These discussions elevate the need for greater clarity around what roles local governments and other community partners should play.
This paper is the first of a 3-part series exploring timely examples of how local governments can achieve energy and climate goals by forming or supporting collaborations across agencies, sectors, and jurisdictional boundaries. The three parts do so by evaluating three types of local energy and climate initiatives, all of which typically demand cross- agency and cross- sector collaboration:
- Energy Resilience Projects (this paper)
- Electrification Plans
- Regional Climate Collaboratives
The final paper will also summarize key learnings, themes, and relevant literature about the roles local governments are uniquely suited to play, among their partners, in energy and climate initiatives. We hope this preliminary analysis can begin to help communities, as well state and federal governments, make the most of their investments in energy and climate action.
Recurring disasters and grid infrastructure weaknesses are leading to more frequent power shutoffs and failures, threatening the local systems that rely on stable energy to protect community wellbeing. In response, local governments are considering how to build greater energy resilience through collaborative public and private projects like microgrids.
We explore this topic in two ways below. First, we share relevant results of a Local Government Sustainable Energy Coalition (LGSEC) Forum workshop activity, which presented template project examples, and asked participants to identify the roles that various community partners should play. We also explore an implemented project, to understand the roles that various partners played.
Fictitious Example: County of Powerouta (LGSEC Workshop Results)
At a LGSEC workshop in late October 2021, roughly 85 staff from local governments, the state, companies and non-profits came together to network and brainstorm. This included discussions that identified the best partners and roles for several fictitious local energy initiatives, including one on the topic of energy resilience, as you can see in the prompt below:
The County of Powerouta is largely rural and prone to heat, fire, and power outage events. It also aims to reduce local emissions and create local jobs. After initial analysis, the City believes a community-scale, solar-plus-storage microgrid to support key economic drivers could be an important way to advance local resilience, decarbonization, and economic vitality, but it can’t do it alone. A State funding opportunity presents itself and the City needs to pull together a proposal, including partners.
In response, participants matched the following roles with the following partners:
Clearly, the implications here are limited: they represent the consensus view of only a few dozen attendees, all of whom attended this single event. Nevertheless, this consensus is clarifying, as it represents divergent perspectives that are rich with real-world expertise. And it represents a central tension:
- Local governments can play a vital and necessary role. Participants shared examples where local governments played a convening role, soliciting RFPs, and conducting community engagement alongside NGOs and CBOs.
- Collaboration with other partners is necessary. One of the participants who spoke about their experience (which successfully established a community microgrid) said their jurisdiction simply could not have shouldered the burden alone; the support and collaboration of their partners was vital.
Real Local Example: City of Gonzales Agricultural and Industrial Microgrid Project
Now that we’ve explored a fictitious example, let’s explore a real-life project to see how partners collaborated to improve community energy resilience.
Project description
Located in a rural area of California’s Salinas Valley, the 8,500-person City of Gonzales is developing a 35-Megawatt, $70 million advanced community microgrid – a small, autonomous energy grid that can supply power to a limited area, and can connect and disconnect from the grid. It is anticipated to be the largest multi-customer microgrid in California. Solar panels will supply upwards of 80 percent of the microgrid’s power. Batteries will store that power for 24-hour use with natural gas engines playing a supporting role and providing high levels of reliability. By 2022, the microgrid will provide low cost, clean, reliable energy for several structures, including an industrial park, and an expanded wastewater treatment facility.
The City decided to create a microgrid to protect its population of 9,000 people and its agricultural community after it lost power for several days due to a Public Safety Power Shutoff (PSPS) event, which resulted in huge losses for food businesses that rely on refrigerated warehouses. A major impetus of the project was to create jobs and support economic development in the agricultural and industrial sectors, which represents a major employer in the area. If it succeeds in offering clean, reliable power at lower cost, Gonzales expects to enhance its attractiveness to industrial customers looking to build or expand facilities, particularly companies involved in Salinas Valley agriculture, one of the most productive agricultural regions in the country. Industrial growth can not only provide new jobs to residents, but can also boost the city’s tax base, thereby helping finance other city activities. Project partners say the microgrid may one day be expanded to supply power not just to industrial customers but to residential customers as well, making Gonzales a self-sufficient community that would sell power to the grid rather than buying from it.
“Among the stumbling blocks for communities trying to get into the microgrid game is the significant cost and the question of distribution: who will own the lines and bill customers for power. Solving that question can be a bureaucratic challenge dealing with a complex web of regulation.” – Case Study
Collaborators and roles
- City of Gonzales: The City had adopted a sustainability policy and climate action plan years before starting this microgrid project. It had made strides in solarizing all city buildings, and prioritizing local, clean, low-cost, reliable power. When the City realized that grid improvements were urgently needed, a microgrid wasn’t its first choice. The city started by trying to convince PG&E to upgrade infrastructure and provide more reliable power to the city’s industrial parks. When that effort showed little progress after years of trying, the city changed course in 2017, adopting a clean energy strategy and hiring consultants to explore new avenues. Working with its private consultants, the City conducted early feasibility studies. It also crafted a new governmental entity, a publicly-owned utility called the Gonzales Electric Authority, to develop a microgrid that could serve as a net exporter. These early efforts had considerable upfront costs, which were factored into the overall viability of the project. Once complete, the City will also manage revenues from the microgrid project to fund future infrastructure improvements and reinvest in the Gonzales community.
- ZeroCity: ZEROCITY, LLC is a private company that works with municipalities to reap the benefits that accrue from hosting community-scale microgrid projects. It assisted the City in the early stages of development and feasibility studies.
- Our Energy: OurEnergy is a private technical consulting, engineering, and project development services company which helps clients navigate complex energy programs and projects from planning through implementation and operations. It assisted the City in the early stages of development and feasibility studies and ongoing advising.
- Gonzales Energy Authority:The Gonzales Electric Authority (GEA) was formed by the Gonzales Utility Authority via the City of Gonzales in 2018 as a joint powers authority. GEA was created for the purpose of operating and managing the City’s municipal electric enterprise system, the Gonzales Municipal Electric Utility (GMEU). It issued an RFP for a microgrid developer and selected Concentric Power. The GEA will own the local distribution lines and sell electricity at retail to local industrial customers hooked up to the microgrid. GEA and GMEU will sell the power to Business Park customers — at retail rates lower than PG&E’s through retail customer agreements. The authority will borrow $10 million to pay for its part of the project, which is anticipated to be repaid through electricity sales revenue. GEA will also assist the City in the development of cost-effective, efficient, and reliable clean energy opportunities, and to facilitate smart growth, local economic development, competitive and sustainable business within the City.
- Concentric Power: Concentric Power Inc. is a private intelligent microgrid developer that won the RFP to design, build, own, operate, and maintain the new microgrid. Concentric will also finance most of the project’s $70 million price tag, earning back its money over 30 years by selling power on a wholesale basis to the GEA. It will be providing engineering, procurement, construction, and long-term services to the project. In the future, it will connect to and sell excess power back to the regional grid. The distribution assets will be transferred to GMEU.
- Bodega Microgrid Generation LLC: Bodega Microgrid Generation is a private company that provides electric power and energy services to GEA on a wholesale basis via an Energy Services Agreement (ESA). It financed 85% ($60M) of the project.
- Gonzales Agricultural Industrial Business Park: The Industrial Park is the primary customer of the microgrid, buying power from GEA and GMEU through retail customer agreements.
- PG&E: The primary role of the utility will be to execute a Memorandum of Understanding (MOU) to connect the microgrid to the grid.
“What distinguishes Gonzales is how the town is bringing together different entities—a savvy start-up applying advanced technology and financing power to microgrids, big energy customers in agriculture and food processing, a new municipal energy authority, and a method for selling power capacity back into the state grid—to surmount those obstacles.” – Article in Mercury News
References and resources
Microgrids are a great example of a type of project that demands collaboration amongst a range of partners. For community-serving microgrids, local governments play essential roles including defining how the microgrid will serve key community needs based on local policy priorities, obtaining or allocating initial planning dollars, conducting initial feasibility studies, establishing new entities, engaging customers, CBOs, NGOs, IOUs, and other stakeholders, and determining how to re-invest revenues in other community projects. As in the case of the Gonzales microgrid, this project, and the market opportunities it is creating, would not exist if not for the City’s willingness to lead and leverage its unique position and authorities.
Local governments have an opportunity to further clarify and raise these essential local roles, along with related challenges and needs, as CPUC engages stakeholders in its Microgrid Proceeding and the development of its $200M Microgrid Incentive Program, which will provide funding for community, local and tribal government-driven, reliability and resilience projects (anticipated to launch in 2022). Local governments can also keep their eye on funding opportunities like through the California Energy Commission EPIC program that can support the development of energy resilience projects like community microgrids.
Stay tuned for the next papers in this series, which will similarly explore how local governments are collaborating on electrification plans and regional climate collaboratives.