A Solar Firm's Plan to Build Off-Grid Neighborhoods in California

Sunnova is one of America's largest rooftop solar companies, according to the New York Times. But they've now applied to California's Public Utilities Commission for permission to become the state's first solar (and storage) micro-utility, initiating formal steps to qualify and "request a certificate to construct and operate microgrids," targetting new home developments that aren't yet connected to the grid. "We see a future where communities, neighborhoods, and businesses can operate independently from the legacy grid with sustainable energy sources that provide uninterrupted power," says the company's founder and CEO. "We believe microgrids address a strong need in the market for more robust energy solutions and better connectivity...." But he's also offering touting another possible benefit: "relief that the existing transmission and distribution system will experience given that most of the power that will be consumed by these communities will be generated locally from renewable resources." The company likes to point out that America's recently-passed climate bill included tax incentives to encourage microgrids. But the New York Times describes it as "a business model that is illegal in much of the United States."Sunnova said it would offer those residents electricity that was up to 20 percent cheaper than the rates charged by investor-owned utilities like Pacific Gas & Electric and Southern California Edison. If approved by regulators, the micro-utility model, also known as a microgrid, could undermine the growth of those larger utilities by depriving them access to new homes or forcing them to lower their rates to keep that business. Sunnova executives argue that the approach they are seeking approval for was authorized under a California law passed almost two decades ago for a resort just south of Lake Tahoe. In addition, the company says advances in solar and battery technology mean that neighborhoods can be designed to generate more than enough electricity to meet their own needs at a lower cost than relying on the grid. "If they don't want to choose me, that should be their right; if they don't want to choose you, that should be their right, too," said John Berger, the chief executive of Sunnova. A small number of homeowners have gone off the grid as the cost of solar panels and batteries has fallen. But doing so can be hard or impossible. Some local governments have rejected permits for off-grid homes on health and safety grounds, arguing that a connection to the grid is essential. But connecting a single home to the grid can cost tens or even hundreds of thousands of dollars, which means an off-grid system may actually be cheaper - especially for properties in remote areas, or in places where the local grid is at its capacity and would require significant upgrades to serve more homes. Off-grid setups can also be appealing because once a system is paid off, the cost of operating and maintaining it is often modest and predictable, whereas utility rates can move up sharply.... The nationwide average retail electricity rate increased 11 percent in June from a year earlier, according to the Energy Information Administration. But the kind of micro-utilities that Sunnova hopes to create have also had problems. The utopian visions of generating electricity where it is used have often run into maintenance and other problems. Many tiny utilities created under such models in the United States and Canada were later swallowed up by larger power companies.... Sunnova's microgrid approach could suffer a similar fate. But the costs of solar panels and batteries have tumbled over the last decade, making the energy that off-grid systems generate much more affordable.... Utilities have been pressing regulators to reduce the compensation homeowners receive for the excess solar energy their rooftop systems send to the grid. The companies have argued that customers with solar panels are being offered generous credits for power that they are not contributing adequately toward the cost of maintaining power lines and other grid equipment.... Building and operating microgrids could provide a steady source of income to companies like Sunnova. That could essentially transform the rooftop solar companies into the kinds of utilities that they have long fought against. Sunnova bills itself as an "Energy as a Service" company, and they expect their microgrids to experience 30 minutes or less of outages each year, the Times points out, "compared with an average of two hours a year at California's large investor-owned utilities." In the article, the chief executive of home-building company Lennar says they've already formed a partnership with Sunnova. "We value the current electric grid and we're intrigued by new microgrid solutions that can supplement and support the traditional utility grid and help solve reliability during extreme weather and peak demand."

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