Seven lessons other states can learn from New York’s energy resilience approach
Energy resilience has quickly become a priority for many states as they recognize the importance of uninterrupted power to their economic development and safety. Connecticut is into a second year of their Microgrid Grant and Loan Program, New Jersey launched a $200 million energy resilience bank last year, and Maryland and other states have done comprehensive studies on energy resilience and are now ready to consider program options.
In the midst of this activity, New York State has developed its own suite of efforts to tackle energy resilience. The ongoing Reforming the Energy Vision (REV) effort has been paired with a community-scale microgrid grant program called NY Prize, administered by the New York State Energy Research and Development Authority (NYSERDA).
Although there is a certain amount of trial and error inherent in all of these pioneering programs, there are important lessons that every state can learn from New York’s aggressive approach. Seven of the most important takeaways from the New York program are listed below:
1. Be aggressive and flexible in reforming regulatory barriers and utility disincentives for distributed generation. Today’s microgrids are using proven technologies and attracting the interest of a variety of project funding sources. However, states need a regulatory framework that will enable project developers to see clear pathways to success, and ensure that utilities will be able to leverage these systems as grid support tools. Without these conditions, these projects will be complex and difficult to replicate in multiple locations. Through the REV effort, New York is sending a clear statement to the market that these barriers can be eliminated. The state is not just creating a new set of rules they believe will work well, they are working with developers as projects are implemented to help identify barriers and modify state laws and utility incentives to overcome them.
2. Create a flexible funding competition that is designed to promote the natural development of microgrid projects. A few states have offered microgrid grant programs in the last couple years. One hurdle for these programs is that they often require applicants to come to the table with projects well into the design phase. NYPrize is offering funding for initial feasibility projects, asking for short but clearly thought-out proposals. This lowers the bar for the vast majority of communities that are interested in improving energy resilience but have not developed specific plans. NYPrize also allows communities that have already done feasibility studies to apply for design and implementation grants. This kind of flexibility is going to engender greater success in what is still a relatively new solution market.
3. Make it about communities. Developing a microgrid project for a single entity is difficult process, especially considering the regulatory issues and dynamic market. Building a microgrid that serves multiple customers in different facilities is an even greater challenge. Yet microgrids can provide terrific energy resilience benefits at that community scale, and the engineering issues involved are well understood by industry experts. New York is requiring grant applicants to describe projects that cover multiple entities, and is dedicating state expertise and regulatory support to facilitate innovative business models to make this work. A focus on communities over single institutions will be necessary for microgrids to realize their greatest value for community energy resilience.
4. Focus on highly replicable projects. There is still a clear need to support the testing, proof of concept, and commercialization of new energy technologies, and NYSERDA is doing this with their Clean Power Tech Innovation Program. However, the microgrid market can move forward today with readily available, proven technologies. NY Prize was designed to promote innovative but replicable business models designed to benefit entire communities. Emerging technologies are important, but they are not the silver bullet to dramatically increase energy resilience in the next five years. By focusing on replicable business models, NYPrize is building a bridge over the commercialization ‘valley of death’ for microgrids and distributed generation.By focusing on replicable business models, NYPrize is building a bridge over the commercialization ‘valley of death’ for microgrids and distributed generation.
5. Focus microgrid deployments in areas where they will have the greatest impact on grid resilience and utility planning. Microgrids can be an excellent way to improve the energy resilience of a community. However, they can also improve the resilience and lower investment costs for the energy grid at large. New York is ensuring that its program will accomplish both of these objectives. The state has worked in partnership with utilities to create a ‘heat map’ showing areas where utilities are experiencing or anticipate transmission system constraints. By focusing new microgrid development in these areas, the state will help reduce system congestion and possibly defer expensive infrastructure investments. Other states looking to develop microgrid programs should find similar ways to create statewide benefits from local resilience projects.
6. Make critical facilities a priority. Grid outages typically occur at the time that we need our critical facilities the most. These include police stations, fire stations, hospitals, public shelters, Red Cross centers, etc. These facilities, above all, need to have electricity, light and HVAC ready to help the community through the power outage and whatever event precipitated it. New York understands this and is requiring that all NYPrize projects cover at least some of these facilities. Energy resilience is a local security issue and a national security issue. As states support the development of these kinds of projects, focusing on first responders and safe havens will ensure maximum benefit when challenges arise.
7. Ensuring that all projects directly involve the local utility. Opposition from the local utility is often cited as the biggest hurdle to implementing microgrid projects. This is often true, and for good reason. If a new microgrid means that a utility will sell less electricity but still be required to be able to provide peak load to that customer when needed, and pay for investments they have made in transmission and distribution assets related to that customer, it can seem like a raw deal for the utility. However, when considering the bigger picture of how microgrids can help support grid resilience and potentially avoid some costly T&D enhancements, microgrids can be as valuable for the utilities as for the end users. By working to remove the disincentives and flawed market signals for utilities around this issue, New York is working to make utilities a strong partner in future microgrid projects. By requiring that all NYPrize applications involve local electric utility participation, NYSERDA is opening a dialog all over the state about how utilities and end users can partner to make these projects work.
While there is much to be learned from New York’s energy resilience efforts, the solutions that arise will be tailored for New York. Each state has its own mix of resources, energy market factors and resilience priorities. With so much to be gained, every state should be pursuing energy resilience efforts to create a more robust energy grid, mitigate potential grid failure impacts and stimulate economic development.
For more information on how to implement community energy resilience planning, please see our new book Energy Resilient Buildings and Communities: A Practical Guide, available now from The Fairmont Press.
