Why the Microgrid Could Be the Answer to Our Energy Crisis

By: Anya KamenetzWed Jul 1, 2009 at 2:00 PM

Why small-scale, local power -- the microgrid -- could be the answer to our energy crisis. And why the big utilities are fighting it with all they've got.

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In Massachusetts, Jonah Decola teaches locals to build home power systems, like Sue Butler's 5.5-Kilowatt setup. | Photograph by Bob O'Connor

It's a similar story in North Carolina. "Because of its rate structure, Duke Energy has acted as the greatest impediment in the state to the rapid adoption of energy efficiency and renewables," says Ivan Urlaub, the executive director of the North Carolina Sustainable Energy Association, who has worked closely with the state utility commission and with Duke to draft policy. "They've explained to us that net metering puts them at higher risk of losing revenue."

Jim Rogers, Duke Energy's CEO, told Fast Company he's a fan of putting solar panels on his customers' homes and businesses -- he just thinks Duke should own them. "I believe at the end of the day, we'll be able to do it cheaper and better than everybody else." But Urlaub says, "We know that's not true," pointing out that Duke recently submitted a public bid for a utility-owned 20-megawatt rooftop-solar program and came in higher than several independent, nonutility solar companies.

Nowhere is the conflict between the utilities' business-as-usual and a swift transition to clean energy more stark than in Los Angeles. The Los Angeles Department of Water and Power is the biggest city-owned utility in the country. You may remember it as the shadowy villain of 1974's Oscar-winner for Best Picture, Chinatown, which dramatized the true 1930s tale of how water was siphoned from California's farmlands into private hands. The hard-bitten private eye played by Jack Nicholson asks the Machiavellian executive played by John Huston what he could possibly need to buy with all his money, and Huston responds, "The future, Mr. Gittes! The future!"

The LADWP has been fighting the green future for at least 10 years. (It declined to comment for this article.) In 1999, when the first green-energy incentives were passed in the city, the LADWP quietly cut a deal with the city's top 30 users of electricity, offering them 5% discounts for 10 years in exchange for not building on-site generation or installing solar power. This includes L.A.'s public school system, the biggest energy customer in the city, which was then launching what would become a $20 billion renovation -- building 100 new schools that by now could have had solar. At the same time, the utility assessed an extra fee to other customers, like the Los Angeles Community College District, which did choose to generate its own power.

Sunny L.A. currently employs just 1% solar energy, but pressure has been mounting to raise that figure; Mayor Antonio Villaraigosa's goal is 20% renewables by next year. So last fall, the LADWP introduced Measure B, a ballot proposal calling for 400 megawatts of rooftop solar on large commercial, industrial, and government-owned buildings. So far, so good. The catch was that all of it had to be installed, owned, and maintained by the LADWP on private property, at a cost of $3.5 billion -- underwritten by ratepayers via an estimated 2% to 4% increase in utility bills. There was no benefit to the property owners themselves. And an independent consulting firm hired by the city questioned the LADWP's ability to handle the logistics of such a project at all.

Enter Ron Kaye. Kaye arrived in L.A. as part of the entourage of an Indian guru in 1980, and for 23 years was the editor of the Los Angeles Daily News, the second-biggest paper in the city. Last year, after he was put out to pasture by the paper's new owners, he reinvented himself as a blogger and full-time rabble-rouser. He appears on an amateur video on his Web site, sitting by his pool, flanked by pink bougainvillea, rattling off tales of city council malfeasance like a civic-minded Walter Matthau. The way Measure B was rushed onto the ballot raised red flags for Kaye, and he put together an ad hoc coalition to oppose it. Measure B supporters sued him and his coalition, but the case was thrown out of court; Kaye's side finally defeated the measure by less than 1%, spending $75,000 to the LADWP's $1.6 million.

Despite the vote, the LADWP remains publicly determined to retain control of any renewables built in the city. "Every day of this has been a learning experience," says Kaye. "This whole thing explains why L.A. has the most coal-burning power plants in the country, why it's reliant on fossil fuels and lagging behind other utilities in getting renewables." The problem, he says, is "LADWP's need to monopolize resources."

Electric monopolies were supposed to have been busted a decade ago, but thanks to the Enron debacle, deregulation is a half-finished experiment. Almost no one wants to get rid of the utilities entirely, but it may be time for them to go the way of their rough contemporaries, the railways. In the late 19th century, railroad companies were the biggest, baddest, most dynamic and capital-intensive industries in the country; their owners and financiers -- the Astors, Vanderbilts, and Cunards -- amassed piles of Monopoly money as they laid track from coast to coast. Today, the rail network is still crucial for freight and commuters alike, but it's only one component of a far more diverse, faster, more flexible transportation system.

From Issue 137 | July 2009

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Recent Comments | 17 Total

July 5, 2009 at 2:52pm by rick winrod

How is this even possible?
"He calculates the payback on Butler's $60,000 system at four-and-a-half years or less."
The homeowner would need to sell back to the utility at about 40 cents per kwh to make those numbers work. And that takes into account the $25K grant.

Why the Microgrid Could Be the Answer to Our Energy Crisis

Recent Comments | 17 Total

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