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Microgrids: Utility Friend or Foe?

June 23, 2023
Whether a microgrid is a utility’s friend or foe relies heavily on application and state regulations.

Microgrids are seen by some large energy users as a solution to meet sustainability goals, ensure resiliency, and in a few instances, replace their dependency on traditional utilities. Many utilities see them differently — as a competitor and a threat. Some utilities, however, are learning that microgrids can help them improve grid reliability and resiliency and mitigate capacity restraints. I recently attended Microgrid Knowledge 2023, an event that T&D World’s parent company Endeavor Business Media acquired last year. This one-of-a-kind event covers all things microgrid, including what some of the largest utility companies in the U.S. think about microgrids and how they are integrating them into their grids of the future.

One panel session titled “Friends or Foe? The Future of Utility Microgrids” featured three investor-owned utility representatives: Jason Handley, Duke Energy; Chris Lynn, Arizona Public Service Co. (APS); and, Jeremy Donnell, Pacific Gas & Electric (PG&E). It became clear early in the discussion that whether a microgrid is a utility’s friend or foe relies heavily on application and state regulations.

Duke Energy has completed and is operating two microgrids. It has five additional microgrid projects in progress, according to Handley, who said microgrids can be both friend and foe. Handley explained that in most of Duke’s service territories, the utility is ultimately responsible for grid reliability and has been for 120 years. Therefore, Duke has much to consider before installing its own microgrid, or integrating another company’s microgrid. “I’m not a dinosaur. I think we need microgrids and other DERs (distributed energy resources) and I’m positioning us (Duke) to accept all forms of DER,” he said. But Handley also stressed that the application or use case must show that the microgrid is the least-cost service option and will be available, resilient and reliable. Duke Energy must always consider what is best for the grid and its customers.

Chris Lynn had a different opinion. He said microgrids are friends. They provide APS with the opportunity to add capacity and keep money in the communities they serve, which in turn creates economic resources that help APS.  Lynn also talked about a buyback program that allows APS to buy into on-site generation with end-use customers. The utility in certain areas is working with hospitals and other large energy users, encouraging them to install microgrids. In successful installations, APS can work with the customer to get dispatchable power exactly where they need it. One caveat: “Everyone must understand the rules.”

Jeremey Donnell, who represents the largest utility in California, said that “unequivocally” microgrids are friends, if they are safe, reliable and affordable. Donnell’s outlook is not a surprise when you consider that as early as 2018, California legislators began creating laws that promote the use of microgrids. Lawmakers created a bill that directed the state’s Public Utility Commission (PUC) to work with the California Energy Commission and CAISO to create regulations that accelerate microgrid deployment and related resiliency solutions The PUC also authorized in January 2021 a $200 million Microgrid Incentive Program to fund clean energy microgrids to support critical needs and to test new technologies and regulatory approaches to help with future infrastructure planning. So, it’s reasonable for PG&E to be outpacing other utilities when it comes to integrating microgrids into their business and resource plans. Donnell highlighted PG&E’s Blue Lake Rancheria Microgrid Project as a solution that delivers clean, reasonably priced electricity to a remote area without adding constraints to the utility’s transmission system, all while mitigating wildfire risk and increasing resiliency.

This one friend-or-foe question early in the discussion illustrated the unique and somewhat opposing opinions related to utility-scale and utility-owned microgrids. Later discussion, however, revealed that the three gentlemen on the panel also agreed on a lot, including:

1. Microgrid adoption at utilities is in the early stages, and there is still much to be learned.

2. Microgrids are too expensive in most cases, and costs must be lowered.

3. There are opportunities to improve on deployment and interconnection.

4. FERC’s interconnection process requirements take too long and must be streamlined. They have been known to cause three or even four-year delays.

5. Supply chain issues exist. The industry needs to work with suppliers to speed delivery of equipment and components.

The need to get away from serial/custom installations was identified throughout the event as one of the biggest challenges. I heard more than once “If you’ve seen one microgrid, you’ve seen one microgrid.” It was obvious, however, that the attendees at this event, which were primarily large energy users, project developers and component and software companies, firmly believe that microgrids are the future. They see them as the answer to capacity constraints,
a reliable and resilient power source, and key to electrification and zero carbon energy.

Time will tell if this vision is true. I think microgrid use and adoption will continue to vary from utility to utility and state to state for several years. With or without utility participation, microgrids will be a part of the energy future.

If you want to learn more about microgrids, I encourage you to visit We will also be covering utility-scale microgrids at our T&D World Conference and Exhibition this September. There you can learn more about Duke Energy’s experience with inverter-based microgrids, as well as hear representatives from Cobb EMC and the city of Lodi, California, discuss their microgrid installations.

Details are available at

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