Small California Town Builds Its Own Micro Grid
Recent winter storms in Texas and elsewhere around the United States, as well as the rolling blackouts in California, are just the latest example of how vulnerable cities and residents are to sudden shocks to their electrical grids. Big utility companies have a near-monopoly, but Gonzales, a small town in the heart of Salinas Valley (one of the most productive agricultural regions in the country), is looking to change this.
Gonzales, a small farming town in California with a 9,000 population, is creating California’s largest multi-customer microgrid – a small, autonomous energy grid that can supply power to a limited area. Gonzales is creating a microgrid that supplies multiple users rather than just one designated customer and will enable the city to independently supply power to its industrial companies (mainly produce-processing plants).
In essence, Gonzales is building its own electricity island to help attract and retain a strong agricultural and industrial base and protect companies doing business there from unplanned power outages and poor power quality. The microgrid system will allow the Gonzales Industrial Park to separate from the wider energy grid, ensuring that end users have reliable, high-quality power 24 hours a day, 365 days a year, even when facing planned or unplanned grid outages.
Overcoming Microgrid Barriers
The idea of microgrids isn’t new. But efforts to establish microgrids face complex obstacles, from scarce financing to opposition from utilities and regulatory barriers. What sets apart the Gonzales microgrid project is how the town is bringing together different entities to overcome those obstacles. The project brings together an unusual combination of a technologically advanced microgrid developer with massive financing power, a new municipal energy authority, and big energy customers in the agriculture and food processing industry.
The $70 million project will be funded primarily by Concentric Power, with supplemental funding from Gonzales Municipal Electric Utility (GMEU) and the Gonzales Electric Authority (GEA) towards ownership of the distribution infrastructure. Concentric power will develop, design, build, operate and maintain the microgrid assets, including both generation and distribution. Concentric will earn back its money over 30 years by selling power on a wholesale basis to the city’s new utility, Gonzales Electric Authority.
With a mix of roughly 80 percent renewable energy and 20 percent natural gas, the power will be cleaner than what PG&E – the investor-owned utility servicing Gonzales and much of Northern and Central California – currently supplies. The microgrid’s power will cost about 11.75 cents per kilowatt-hour, higher than typical California wholesale electricity rates. But the retail service agreements being crafted for business park customers will offer lower flat rates than utility rates and without the demand charges that add cost and complexity to the bills of commercial and industrial customers.
Gonzales Microgrid: A Model for Other Small Towns and Cities
The problems that drove Gonzales to build a microgrid are familiar across the country. The poor reliability of the current grid poses a serious challenge for companies relying on steady power. PG&E is so far behind in maintaining the existing grid that many communities can’t get the upgrades necessary for growth.
It could take up to three years for the utility company to upgrade its energy infrastructure to provide more effective and reliable power to the city’s industrial parks and enable growth there. Also, PG&E’s use of regional power shutoffs to prevent fires has made finding local power sources that won’t shut down even more urgent. During one 2019 shutoff, Gonzales lost power for two days, resulting in multimillion-dollar losses for local companies.
If the microgrid works, the solar, battery, and natural-gas-powered system could provide a new model for towns and cities looking for reliable and clean energy options. According to Concentric Power, the microgrid may one day be expanded to supply power not just to industrial customers but also to residential customers. This will allow Gonzales to become a self-sufficient community whose contribution to the regional grid will be selling power to it instead of buying from it. It’s undeniable that the small city of Gonzales is setting a powerful example of local power, especially for rural communities trying to protect or grow industry.
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