NARUC, NASEO issue microgrid policy framework to assist regulators

Microgrids can play a significant role in providing energy resilience and reliability, making it important for utility regulators to understand the technology and how it can benefit customers, according to a new report written for state public utility commissions and energy offices.

The technology’s resilience attributes “brings up regulatory and policy questions ... particularly with regard to cost allocation,” according to the analysis published Monday by the National Association of Regulatory Utility Commissioners and the National Association of State Energy Officials.

The “State Microgrid Policy, Programmatic, and Regulatory Framework” is intended to assist regulators working to expand the use of microgrids and distributed energy resources, NARUC and NASEO said. It is designed to act as a “thorough resource” for PUCs and state energy offices to reference while considering microgrid policies and decisions, the groups said.

“This framework highlights the unique considerations and circumstances affecting the ways in which our diverse state members approach microgrid policies, programs and regulations,” NARUC Executive Director Greg White said in a statement.

Microgrids provide a “tiny fraction of U.S. electricity” but are growing, according to the Center for Climate and Energy Solutions. Beginning this year, the U.S. had almost 700 microgrids installed with a capacity of almost 4.4 GW, according to the group’s data.

U.S. microgrid capacity is up more than 10% in the last four years, C2ES said.

The new policy framework will be a “valuable resource” for state officials as they “develop and implement policy and programmatic opportunities and public-private partnerships that move microgrid projects forward across the country,” NASEO President David Terry said in a statement.

The average cost of a microgrid, depending on its purpose, runs $2 million to $4 million, according to the framework, citing data from the National Renewable Energy Laboratory.

“State Energy Offices, PUCs, and project developers will be looking for different financial mechanisms to support the development and deployment of these projects, as well as the ability to draw lessons out of funded projects to facilitate the implementation of similar projects in the future to provide increased benefits at lower costs to ratepayers and/or taxpayers,” the framework said.