A solar company’s plan to build off-grid neighborhoods in California

According to the New York Times, Sunnova is one of America’s largest rooftop solar companies. But they have now applied to the California Public Utilities Commission for permission to become the state’s first solar (and storage) micro-utilityinitiating formal steps to qualify and “apply for a certificate to build and operate micro-grids”, targeting new residential developments that are not yet connected to the grid.

“We see a future where communities, neighborhoods and businesses can operate independently of the existing grid with sustainable energy sources that provide uninterrupted power,” says the company’s founder and CEO. “We believe that microgrids address a strong need in the market for more robust energy solutions and better connectivity….” But he also offers another possible benefit: “the relief that the transmission system and existing distribution network will experience since 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 the climate bill recently passed by the United States included tax incentives to encourage microgrids. But the New York Times describes it as “an illegal business model in much of the United States.”
Sunnova said it would offer those residents electricity up to 20% cheaper than 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 micro-grid, could undermine the growth of these large utilities by denying them access to new homes or forcing them to lower their prices to keep this activity. Sunnova executives say the approach they seek approval for was authorized under a California law passed nearly two decades ago for a resort just south of Lake Tahoe. Additionally, the company says advances in solar and battery technology mean 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 pick me, that should be their right; if they don’t want to pick you, that should be their right too,” said John Berger, Sunnova’s chief executive.

A small number of owners have off the grid that the cost of solar panels and batteries has gone down. But it can be difficult, if not 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 can actually be cheaper, especially for properties in remote areas or locations where the local network is at its capacity and would require significant upgrades to serve more homes. Off-grid setups can also be attractive because once a system is paid off, the cost of operating and maintaining it is often modest and predictable, while utility rates can increase significantly. The national average retail electricity price rose 11% June from a year earlier, according to the Energy Information Administration.

But the kind of micro-utilities Sunnova hopes to create has also run into problems. Utopian visions of generating electricity where it is used have often run into maintenance and other issues. Many small utilities created according to such models in the United States and Canada were later gobbled up by larger power companies…Sunnova’s microgrid approach could suffer the same fate. But the costs of solar panels and batteries have fallen over the past decade, making power generated by off-grid systems much more affordable….

Utilities have lobbied regulators to reduce the compensation homeowners receive for the excess solar power their rooftop systems send to the grid. The companies have argued that customers with solar panels are offered generous credits for electricity they do not adequately contribute to the cost of maintaining power lines and other network equipment….

Building and operating microgrids could provide a stable source of revenue for companies like Sunnova. This could essentially turn rooftop solar companies into the kinds of utilities 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 to an average of two hours per year at the big Californian investor utilities.”

In the article, the general manager of home building company Lennar says that they have already formed a partnership with Sunnova. “We value the current power grid and are intrigued by new microgrid solutions that can complement and support the traditional power grid and help solve the problem of reliability during extreme weather and peak demand.”