State regulatory bodies are realizing that out-of-date regulatory rules are limiting Microgrid adoption and are working to change regulation. States such as New York, Connecticut, and Minnesota have allocated funding and started conversations on how best to change the state regulation to allow for Microgrids to be adopted.More
On October 29th, 2012, Superstorm Sandy slammed into New York City’s shoreline. In the days and weeks that followed, the New York City Subway system and all but one of the road tunnels entering Manhattan with severely flooded, entire neighborhoods were decimated and millions of customers in New York City and on Long Island lost power – many for days and weeks. Microgrids kept the lights on at New York University in Manhattan, Princeton University in New Jersey, South Windsor High School in Connecticut and Co-op City in the Bronx during Sandy storm and its aftermath. In addition to providing greater resilience compared to the conventional power grid, microgrids have also been recognized as a key strategy for improving energy efficiency, deferring or avoiding capital investments in new transmission and distribution infrastructure and mitigating cyber security risks. Microgrid financing may also lower a customer’s total cost of energy. In the aggregate, these forces are moving microgrids from the margins into the mainstream of America’s energy economy. The following eBrief is a first in a three part series describing the key regulatory, technical and microgrid financing issues affecting projects. This eBrief describes the regulatory issues likely to affect a microgrid project, including the risk of violating franchise laws and the possibility that the microgrid will be subject to economic regulation under state utility law. In addition, the eBrief provides strategies for avoiding these pitfalls in order to realize the maximum value from a Microgrid.