Renewable Energy From Local Sources — California Edition

Founded in 20212, Sunnova has a goal — to power energy independence so homeowners have the freedom to live life uninterrupted. To reach that goal, it offers customers one stop renewable energy shopping that includes rooftop solar, residential battery storage, and the software to manage a home’s entire energy ecosystem. Using what the company calls its Adaptive Home technology, Sunnova helps make any home able to produce and store renewable energy. It optimizes energy sources and consumption by monitoring current energy needs, solar production, stored energy levels, grid health, time of day, energy price signals, and other inputs.

Recently, the company announced that it has applied to the California Public Utilities Commission to develop a first of its kind solar and storage “micro-utility” in California. This innovative renewable energy platform allows residents, communities, and businesses to share excess clean power and “island” from the legacy distribution system when necessary.

Sunnova calls its business model “energy as a service.” By equipping new communities with solar and storage, it will provide consumers with a better energy service that allows them to live in a more resilient home and community with the latest energy management infrastructure. For this new initiative it has formed a wholly owned subsidiary called Sunnova Community Microgrids California to develop self sustaining micro-utilities. Focusing primarily on new construction, SCMC will work with developers to design and implement distributed solar power microgrids that will provide Sunnova Adaptive Communities with clean, resilient, and reliable power​.

“Community micro-grids are the future as they offer the unique ability to share excess electricity, putting the power in the hands of homeowners and significantly enhancing the resiliency of communities,” says John Berger, CEO of Sunnova. “Sunnova is breaking new ground by expanding its distributed energy service platform from homes to whole communities. We see a future where communities, neighborhoods, and businesses can operate independently from the legacy grid with sustainable energy sources that provide uninterrupted power.”

“We believe microgrids address a strong need in the market for more robust energy solutions and better connectivity,” he adds. “The Sunnova Adaptive Community™ will provide consumers with the ability to produce, share, and deliver power when it’s needed most. SCMC’s application highlights the 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. We hope the CPUC moves expeditiously to approve our application so that we can begin serving new communities.”

On August 16th, President Biden signed the Inflation Reduction Act, which brings incentives for renewables and the clean technology required to monitor and control microgrids where communities share power and can island from the grid. Since the IRA became law,  SCMC has taken formal steps to qualify as a “micro-utility” and to request a certificate to construct and operate microgrids under Section 2780 and Section 1001, respectively, of the California Public Utilities Code.

Sunnova views micro-utilities as a path forward for qualified companies to plan micro-grids that interconnect multiple residential and commercial properties in California. If its application is approved, it will be the first solar and storage focused “micro-utility” company in California certificated to own and operate nano-grids (behind the meter) and community assets, including the distribution infrastructure (front of the meter), as part of integrated micro-grid communities. SCMC community assets will provide complete distribution infrastructure and energy assets including solar, battery storage, and emergency generation.

According to the New York Times, Sunnova claims its customers would see up to a 20% decrease in the cost of electricity compared to the rates charged by large investor-owned utilities like Pacific Gas & Electric and Southern California Edison. If approved, microgrids could undermine the growth of those large utilities by depriving them of access to new homes or forcing them to lower their rates. “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,” Berger says.

Renewable Energy Micro-Grids Face Hurdles

The first renewable energy micro-grid in California was built to replace a local diesel generating system at Kirkwood Mountain Resort near Lake Tahoe. But the electricity it produced sometimes cost up to 70 cents per kWh — three to five times as much as what the larger utilities in the state charged. Eventually, the town of Kirkwood took over the utility and connected it to the state electric grid.

The vision of generating electricity where it is used and uncoupling from large utility companies has a Utopian allure, but the systems often have maintenance and other problems that take the shine off the dream. Many tiny utilities created under such models in the United States and Canada were later swallowed up by larger power companies. Some local governments have rejected permits for off-grid homes on health and safety grounds, arguing that a connection to the grid is essential.

Sunnova has lined up a powerful partner in Lennar, one of the largest home builders in the US. “We are a proud partner of Sunnova’s and support highly qualified participants seeking to solve some of the world’s most important problems,” said Stuart Miller, Lennar’s executive chairman. “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.”

The Takeaway

Energy independence is a hot topic today, with the barbaric war on Ukraine causing the price of electricity to spike in many European countries and even in the US, where higher prices for unnatural gas are causing utility companies which rely on burning methane to power their generating stations are also affected.

Micro-grids offer autonomy to local communities who often see themselves as captives of the local utility. Controlling their own electricity provides a sense of empowerment to homeowners and small business owners in places like Puerto Rico where unstable grids and unexpected increases in utility rates play havoc with homeowners, business, and health providers.

We reported yesterday on how the movement toward localizing energy sources is accelerating in Europe. The democratization of electricity is happening and will fundamentally alter the traditional way electricity is generated and distributed. The key question is whether the new models can offer the same reliability as the old way. That’s still a question that has not been resolved. The Sunnova experience in California may get us closer to a definitive answer.

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