By Meghan Briggs
In 2022, electricity costs in the United States rose by 14.3% for the average consumer compared to 2021. Power outages due to severe weather have doubled since 2002, causing extended losses of electricity and endangering lives. In the absence of affordable cooling, heatwaves threaten the lives of the most vulnerable in our society. Microgrids, among other emerging energy technologies, can help make the U.S. energy grid more resilient and reliable in the face of these challenges. If implemented in a way that centers energy equity and justice, microgrids can also help make the U.S. energy system more equitable. This article explores microgrids and discusses how they are being deployed to improve energy reliability and resilience and to support energy equity and justice for vulnerable communities.
Microgrids have the potential to contribute significantly to the DOE’s energy grid modernization initiatives by improving grid resilience and reliability.
A microgrid is a system for production, distribution, and consumption of electricity in a limited geographical area within an electrical boundary. Microgrid systems are intelligent, controllable, and localized. While microgrids can run entirely off renewable energy, they can also run off fossil fuels or a combination of the two. Microgrids may include storage, such as batteries or fuel cells, to offer further protection from fuel supply disruptions.
The defining characteristic of a microgrid is its ability to (1) separate from the grid and operate autonomously as an independent energy system or (2) operate as part of the central grid. Microgrids are often used in remote areas, where there is no central grid. However, a microgrid connected to a central grid provides significant value too. A grid-connected microgrid can support the central grid by providing generation or grid-services needed for reliable operation to the central grid and yet continue to serve some or all users within its boundary during a failure of the central grid. This flexibility provides a valuable reliability benefit, particularly during and after extreme weather events, such as hurricanes.
On a small scale, microgrids can serve a single entity supplying only that entity’s energy needs. Examples include military bases, airports, and university campuses. These microgrids are typically owned by the entity that is the beneficiary, although they may be built and operated in conjunction with a microgrid service provider. Of particular interest for the purpose of this article, a microgrid might also be operated for the benefit of a vulnerable or disinvested community, which could include multiple users. In these cases, the microgrid could be operated by a community member or a collective, by a microgrid service provider, or the same utility that owns the surrounding central grid.
Another advantage of microgrids is the ability to select a microgrid’s energy source or sources. For example, microgrid owners and users seeking to reduce greenhouse gas emissions might choose to pair solar panels with battery storage or hydrogen fuel cells, rather than using the local energy mix, which may include natural gas or coal. Others might combust a waste product (or fossil-fuel) and productively use the co-generated electricity and thermal output within the microgrid. Microgrids can also be used to assure the continuous and consistent quality of the electric power, which can be important to sensitive electronic uses.
Microgrid-powered community emergency resiliency shelters, such as the one at Maycroft Apartments in Washington, D.C., can be of particular importance during emergencies for people who rely on electricity for health needs. Maycroft’s microgrid serves its community room, allowing residents to refrigerate medications, charge medical devices and cell phones, and heat food, even during power outages.
Microgrids can also be useful in rural and remote areas that are difficult to connect to the larger grid. These communities may be especially vulnerable to power outages due to the increased risk exposure of long transmission lines. In some cases, local utility companies have embraced microgrid technology as a solution for providing power to remote communities. For example, California’s public utility, PG&E, partnered with a microgrid company called BoxPower to provide more reliable energy to rural California communities that are inadequately served by the distribution system. Instead of replacing or upgrading the distribution lines at ratepayers’ expense, ratepayers are financing the move to microgrids.
Duke Energy, a North Carolina-based utility company, installed a microgrid project to solve reliability problems for Hot Springs, NC (population approximately 600). Previously, Hot Springs received all its power from one 10-mile-long transmission line connecting the mountain town to the central grid. This could result in prolonged outages. Because the microgrid runs on solar energy and only has enough storage capacity to serve the town’s needs for a maximum of twelve hours, overnight outages can still leave residents without access to power. But, despite these limitations, the microgrid still provides significant relief, shortening the amount of time that residents might go without power. As storage technology advances, microgrids will become more and more effective solutions for energy reliability in remote communities.
The Blue Lake Rancheria Low-Carbon Community Microgrid Project, implemented in partnership with PG&E, highlights the diverse benefits of microgrids for utility companies and the communities they serve. The Blue Lake Rancheria microgrid provides reliable power to a remote and historically under-resourced tribal community of about 200 people. The microgrid uses renewable (wind and solar) energy to generate electricity, thus reducing negative environmental impacts from the fossil generation that would otherwise be used. Further, the microgrid is designed to reduce demand from the central grid during peak use times, when prices are highest, thereby reducing the energy cost burden on community members. In the case of power outages, the microgrid is designed to operate independently both for short and long duration outages. The microgrid enables the community to provide relief during disasters to the tribe and surrounding communities by, for example, supporting a Red Cross certified shelter and serving as a base for firefighters during wildfires. This project demonstrates that microgrids can serve important energy policy and energy security goals while simultaneously advancing energy equity.
The Blue Lake Rancheria and Hot Springs examples demonstrate that utility companies can better serve customers by placing microgrids in places that the larger grid cannot reliably serve. In addition, there are other entities and communities that could benefit from microgrids, as Maycroft’s residents do, but whose needs may not align as well with utility interests or may not justify ratepayer support. These entities and communities could instead be served by non-utility service providers.
Issues surrounding utility regulation, access to funding, and technological development could mitigate the benefits of microgrids for environmental justice communities. Steps to center these communities must be implemented from the outset to avoid re-entrenchment of existing energy inequities.
As with any emerging energy technology, the successful large-scale implementation of microgrids depends on the resolution of several regulatory, policy, and technological questions.
The main regulatory challenge lies in the way that the utility industry is organized and regulated. A fundamental role for utilities is the distribution of electricity, and in many jurisdictions, the incumbent utility is either the exclusive or primary supplier of electricity to retail consumers as well. Regulation assures the utility provides adequate service to the public at just and reasonable rates. So, when a non-utility owned microgrid is used to generate, distribute, and sell electricity to consumers (other than for the owner’s use), the owner might be classified as a utility under current regulatory regimes, even though it is not serving the general public like the incumbent utility. This can create an undue burden on the microgrid owner. Thus, presently, the most feasible models for microgrid ownership are one entity supplying itself (e.g., military bases, airports, university campuses, or single buildings) or utility-owned systems that serve multiple customers. The opportunities for a privately owned microgrid to serve multiple community customers is limited to unique situations, which is a significant barrier for communities hoping to decrease their energy burden, increase reliability, or control their fuel source through the use of this technology.
Another barrier is economic access to competitive markets for the exchange of energy. In “blue sky” scenarios (that is, under normal operating conditions), microgrids that are connected with and operating in parallel with a central grid are capable of either providing power to, or receiving power from, the central grid. The extent to which a microgrid does so depends on whether the consumers on the microgrid need more or less electricity than is being produced and the most economic source for meeting the consumers’ needs. However, non-utility microgrid owners may be restricted from exchanging energy and being fairly compensated for the excess energy they export by a lack of competitive access to suppliers or purchasers of power. Microgrids that meet the stringent requirements necessary to secure competitive access to the market through the federal Public Utility Regulatory Policies Act (PURPA) or qualify for local Net Energy Metering (NEM) systems benefit from a simplified process for receiving compensation for their excess energy, which is particularly important for owners of smaller microgrids and those without market expertise. However, although PURPA has benefited several microgrids in New York State, it has very limited applicability, and NEM rules and regulations may not always include microgrids within the scope of eligible systems. Removing economic transactional barriers would make microgrids more cost-effective and empower the owners to become full market participants.
Policy issues center on capacity-building and information sharing. Grant funding can be critical to overcoming the cost-barrier of creating a microgrid. Grant programs that favor projects with up-front funding will risk making microgrids a technology for the rich and cutting off those who need the reliability and resilience offered by micro-grids the most. While wealthier communities may have the capital to invest in building the technical capacity to submit an application for grant funding, communities that cannot provide the upfront capital and technical knowhow will be excluded. For example, while California’s Microgrid Incentive Program has attempted to address capacity-building and funding issues by providing technical assistance to prospective grant applicants, the funding comes in the form of after-the-fact reimbursements, which do little to expand access to under-resourced communities. The Microgrid Equality Coalition has urged the California Public Utility Commission (CPUC) to provide technical assistance during the grant application process in order to mitigate these inequities, but the CPUC has yet to rule on the issue.
There are also technical and financial challenges related to microgrids in general.
Energy Storage: Microgrids that rely on renewable intermittent generation technologies (e.g., solar, wind) require energy storage to increase the duration of energy supply beyond the periods in which generation is available. Therefore, the pace of improvements in battery storage and fuel cell technology will play a critical role in the expansion of microgrids that use only renewable, intermittent generation sources.
Cybersecurity: Though the adaptability of microgrids might allow for greater resilience in the face of cyberthreats, new technological advances will likely be necessary to maintain the cybersecurity of smart microgrids.
Access to Technology: Technological advancements leading to cost reductions for microgrid controllers and storage will also be key, as these technologies are currently cost-prohibitive for many communities.
Fortunately, increased funding and support from government initiatives at the federal and state level could provide a solution to some of these issues.
Both federal and state governments have recognized the value of microgrids to a clean energy future. A consequent increase in funding targeted to environmental justice and under-resourced communities could help ensure that the U.S. energy future is not only clean but also equitable.
The federal government has sought to incentivize the implementation of microgrid projects in environmental justice and under-resourced communities through tax credits and grant funding. For example, the Inflation Reduction Act (IRA) introduced the Low-Income Communities Bonus Plan to provide tax credits for wind and solar energy projects, including solar-powered microgrids, microgrids located in low-income areas or on “Indian land.” Though not specifically targeted to low-income communities, Microgrid Controller Tax Credit Rates provide tax incentives to reduce the cost of expensive yet critical microgrid technology, such as grid controllers and storage.
FEMA’s Building Resilient Infrastructure and Communities (BRIC) program provides grant funding and direct technical assistance for projects that aim to bolster resilience and mitigate the impact of natural disasters. In April 2022, for example, the BRIC program awarded $20 million to the government of Washington, DC, for a microgrid project at a local hospital. FEMA also recently approved $10.2 million in funding for solar-powered microgrids in Puerto Rico, where many residents went without power for almost a year after Hurricane Maria exposed the severe vulnerability of the island’s energy grid in 2017.
Some states have also made funding available for microgrid technology. For example, the California Public Utility Commission’s Microgrid Incentive Program, mentioned above, earmarked $200 million in funding for vulnerable communities. Maryland also introduced $3 million in funding for microgrid and resiliency hub development as part of it 2023 Resilient Maryland Program (though the application period is now closed).
While increased funding from federal and state microgrid incentive programs stands to spur the development of a burgeoning U.S. microgrid industry, these programs remain susceptible to the equity, regulatory, and technology challenges discussed in this article. A targeted approach focused on bridging regulatory barriers and technological, funding, and information gaps will be necessary to ensure that environmental justice and under-resourced communities share equally in the resiliency, reliability, and environmental benefits of renewables-based microgrids.
Meghan Briggs
George Washington University Law School JD candidate ‘24
