Senate Bill 1339 Briefing Paper

We are in the midst of an energy revolution. Our grid-centric energy infrastructure status quo is being challenged by consumers, technology providers and developers who desire energy solutions with enhanced reliability and user control. California legislation has responded to this call with the trailblazing Senate Bill 1339 (SB-1339), which puts Distributed Energy Resources (DERs) developed into microgrid solutions in the spotlight. With emerging governmental support and continued community pressure, we anticipate that microgrids will successfully become an economical, safe, and reliable commercial solution. The achievements, challenges, and implementation strategy of SB-1339 will be a great learning opportunity for the entire country.

This briefing paper explains where we are in the CA legislative process, and what it is trying to achieve.

‍Senate Bill No. 1339 (SB-1339) – A summary

*includes language directly from the bills text*

This bill was enacted in 2018 and requires:

• The Public Utilities Commission (PUC) to facilitate the commercialization of microgrids.
• The governing board of a publicly owned electric utility to develop and make available a standardized process for the interconnection of a customer-supported microgrid (including separate electric rates and tariffs as necessary).

Some useful definitions as set forth in the bill:

• Distributed energy resource: an electrical generation or storage technology that complies with emissions standards set by the State Air Resources Board of Section 94203 of Title 17.

• Microgrid: an interconnected system of loads and energy resources, including, but not limited to, DERs, energy storage, demand response tools, or other management, forecasting, and analytical tools appropriately sized to meet customer needs within a clearly defined electrical boundary that can act as a single, controllable entity, and can connect to, disconnect from, or run in parallel with, larger portions of the electrical grid; or can be managed and isolated to withstand larger disturbances and maintain electrical supply to connected critical infrastructure.

The bill mandated that the following actions be taken by December 1, 2020.

Develop:  

1. Microgrid service standards necessary to meet state and local permitting requirements.
2. Methods to reduce barriers for microgrid deployment.
3. Guidelines that determine what impact studies are required for microgrids to connect to the grid.
4. Separate large electrical corporation rates and tariffs as necessary to support microgrids. These new rates and tariffs should not compensate a customer for using diesel or natural gas generation, except as pursuant to Section 41514.1 of the Health and Safety Code, or except for natural gas generation that serves as a DER. 
5. Standards for direct current metering to streamline the interconnection process and lower associate costs.
6. And finally, to form a working group to codify standards and protocols needed to meet microgrid requirements.
7. ‍

An important priority was to make these appropriate changes without shifting costs to rate payers.

Implementation of the Bill

Track 1

Track 1 was approved in June 2020. It provided shorter-term solutions to accelerate deployment of microgrids and resilient solutions in preparation of the 2020 wildfire season. Specific actions of this track included:

• Streamlining interconnection applications that would deliver resiliency. This was done as a formal acknowledgement that interconnection applications for DERs that can island are historically much more complex, and thus slow. However, island capabilities are crucial for a truly resilient solution.

• Maximize resiliency benefits of existing tariffs.

• Increase local government’s access to utility infrastructure and data.

Track 2

On January 14, 2021 CA regulators approved Track 2 of the bill that established microgrid tariffs and incentives. This track works to reduce implementation barriers while maintaining ratepayer equity and supporting vulnerable & low income communities. It has been criticized for creating a program that favors utility control over microgrids rather than 3^rd party developed microgrids. Some highlights of Track 2 include:

• SCE must revise its Rule 2 to permit installing facilities microgrids
• All three Investment Owned Utilities (IOUs), SCE, PG&E, and SDG&E, must:
• Revise rules to allow local government microgrids to service critical customers on adjacent parcels. This was specified in response to the prohibitive “over-the-fence” CA rule, which has limited microgrid opportunities from serving multiple customers.
• Create a renewable microgrid tariff to prevent cost shifting.
• Together, develop a state-wide $200 million incentive program for microgrid development in disadvantaged communities that are vulnerable to grid outages.
• Develop pathways for evaluating and approving low cost and reliable electrical isolation methods.
• Engage local air quality agencies to ensure temporary generation complies with regulations.

What now?

Track 3

The CPUC will now focus efforts on approving Track 3 to create a Resiliency and Microgrid Working Group (RMWG). The RMWG is led by the CPUC and is open to the public’s participation via WebEx. Past RMWG meeting agendas and presentations are available online at cpuc.ca.gov. The working group will focus on identifying alternative approaches to speed microgrid development. Some of their higher priority items include:

• Tariff and procurement approaches for multi-parcel microgrids.
• Investigating how to standardize metrics for measuring resiliency and reliability. E.g. how tariffs might be adjusted to consider the unique benefits of different energy technologies such as higher resiliency and reliability, a smaller carbon footprint, etc. 

With Track 3 in progress, implementation of SB-1339 continues. Though development has been slower than many have wanted, the CPUC is ironing out processes to answer hard questions such as how interconnection applications and tariff structures can be modified to facilitate microgrids. These challenges will be faced by all states that aim to increase microgrid participation. Keeping an eye on the PUC and IOUs further plans to put the CPUC’s mandates into action will be the real tell of how this bill will progress.

Sources:

California Legislative Information: SB-1339 Electricity: microgrids: tariffs.

California Public Utilities Commission: Resiliency and Microgrids

Microgrid Knowledge “California Approves Microgrid Tariffs as Grassroots Groups Push for More Local Control of Energy” by Elisa Wood

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