Microgrid Incentive Program
Funding clean community microgrids that support the critical needs of vulnerable populations most likely to be impacted by grid outages.
About the Program
On Jan. 21, 2021, the California Public Utilities Commission (CPUC) issued Decision D.21-01-018. Among other items, this decision approved $200 million statewide for a new Microgrid Incentive Program (MIP) intended to fund clean energy microgrids that support the critical needs of vulnerable populations impacted by grid outages.
Three large electric utilities — San Diego Gas & Electric Company (SDG&E), Pacific Gas and Electric Company (PG&E) and Southern California Edison Company (SCE) — jointly held a series of stakeholder workshops during summer 2021 to help shape the development of an MIP that was approved in early 2021 by the CPUC.
Incorporating feedback from the workshops, the utilities filed the Proposed Microgrid Incentive Program Implementation Plan of San Diego Gas & Electric Company, Pacific Gas and Electric Company, and Southern California Edison Company on Dec. 3, 2021. Parties filed opening comments on the plan on Jan. 14, 2022, and reply comments on Jan. 28, 2022. An administrative law judge (ALJ) ruling requesting comment on the MIP staff proposal was issued on July 7, 2022. Comments and reply comments by parties were submitted in August 2022.
On Feb. 9, 2023, the CPUC issued a proposed decision on the MIP implementation plan to adopt implementation rules. Comments and reply comments by parties were submitted in March 2023.
On April 14, 2023, the CPUC issued Final Decision D.23-04-034 to target placement of community microgrids in disadvantaged vulnerable communities (DVCs) to support populations impacted by grid outages.
MIP Application Schedule
MIP Resilience Consultations are available beginning January 2, 2024. Complete the Resilience Consultation form (available below) and submit it to [email protected]. Upon successful submission, a program representative will contact you to schedule a Microsoft Teams conference call for the Initial Resilience Consultation.
MIP Technical Consultations are available beginning January 16, 2024. Complete the Technical Consultation form (available soon) and submit it to [email protected]. Upon successful submission, a program representative will contact you to schedule the Microgrid Technical Consultation.
The MIP Application Incentive Request (AIR) application window is July 15, 2024 to August 14th, 2024.
Program Intent
The MIP is intended to provide funding that supports, but is not limited to, the following:
- Developing a program delivery plan that will describe program guidelines, project eligibility and scoring criterion, and the program implementation process.
- Establishing program criteria eligibility to ensure that incentives are dispersed in accordance with the CPUC-approved implementation plan.
- Reviewing project proposals and distributing incentives to eligible projects.
The MIP aims to meet the following objectives and goals:
- Increase electricity reliability for critical public facilities in communities that are at higher risk of electrical outages in the next five years and have a lower historical level of electric reliability.
- Prioritize communities with higher proportions of low-income residents, access and functional needs residents, and electricity-dependent individuals.
- Enable communities with lower capacity to self-fund development of backup generation to maintain critical community services during grid outages.
Program Funding
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Program Budget |
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SDG&E |
$17,460,000 |
Program Eligibility
To qualify for the MIP, a portion of the proposed community microgrid project must be geographically located in an area that is (A) vulnerable to outages and is considered a (B) disadvantaged vulnerable community (DVC) and/or a (C) community facility serving a DVC.
A. Vulnerable to Outages
A portion of an eligible MIP community microgrid is required to be geographically located in an area at higher risk of electrical outages, either a:
- Tier 2 or 3 High Fire Threat District (HFTD);
- Location with a prior public safety power shutoff (PSPS) event;
- Location prone to strong, damaging earthquakes; or
- Location with lower historical levels of electricity reliability, defined as one of the top 1% worst-performing circuits on the utility’s system in either of the prior two years’ public Utility Annual Electric Reliability Reports.
B. Disadvantaged Vulnerable Community
To be considered a disadvantaged vulnerable community (DVC), the community must meet at least one of the following criteria:
- Have census tracts with a median household income less than 60% of the state median income;
- Be a recognized tribal community;
- Be a community in the top 25% most disadvantaged census tracts, as identified in the current version of CalEnviroScreen at the time of the application submission; or
- Be identified as a Rural Area by the U.S. Health and Human Services Administration (HHSA).
C. Community Facility Serving a DVC
The primary purpose of an eligible community facility must be to serve a geographic DVC, as attested by the local government or tribal community (as applicable) with jurisdiction over the area. An eligible facility includes either a:
- Critical facility, as defined by the CPUC;[1] or
- Facility that provides important community resilience services, as attested by the local government or local authority having jurisdiction over the area.
Equity and Access Grant Program
Visit the California Public Utilities Commission (CPUC) website to learn about community microgrid funding through the Equity and Access Grant Program.
What Is a Microgrid?
Pursuant to Senate Bill 1339, the statutory definition of a microgrid is:
an interconnected system of loads and energy resources, including but not limited to, distributed energy resources, energy storage, demand response tools, or other management, forecasting, and analytical tools, appropriately sized to meet customer needs, within a clearly defined electrical boundary that can act as a single, controllable entity, and can connect and disconnect from or run in parallel with larger portions of the electrical grid, or can be managed and isolated to withstand larger disturbances and maintain electrical supply to connected critical infrastructure.
The Department of Energy defines microgrids as “a group of interconnected loads and distributed energy resources within clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid. A microgrid can connect and disconnect from the grid to enable it to operate in both grid-connected or island-mode.”
In simpler terms, a microgrid is an electricity generating facility (consisting of one or more generators and/or load management devices) that has the capability to operate and serve either (i) one customer’s electrical needs when isolated from the utility distribution system, or (ii) multiple customers’ electrical needs when a portion of the utility’s distribution system is isolated from the remainder of the utility’s electrical system. The MIP is available only to microgrids that use utility-owned facilities and will serve multiple customers.
The utility must review all microgrid projects to ensure that the microgrid is capable of powering critical loads when disconnected from the larger distribution system. When disconnected from the larger distribution system, the utility will operate the microgrid to ensure customers are served safely and reliably.
More Information
Visit our microgrids page to learn more about how SDG&E is modernizing the grid for greater community resilience.
To sign up for our mailing list, please email [email protected].
For more information on this proceeding, visit cpuc.ca.gov/resiliencyandmicrogrids.
Community Microgrid FAQs
The Community Microgrid (CMG) Authority is the entity that represents the community seeking to develop a community microgrid. This entity receives the incentive award and undertakes the obligations of the contractual agreement governing the development and operation of the microgrid for the term of the agreement. The community will select this entity and notify the utility of its selection during the consultation process. The entity may be the community itself, individuals or groups of individuals, a consultant, a developer, or some other third party.
Different elements of a community microgrid are owned by different entities. The CMG Authority Resources, such as solar photovoltaic (PV) systems and batteries, and any other facilities on the customers’ side of the meter that are required to operationalize the community microgrid (Balance of System facilities such as plant controllers), may be owned by:
- The community
- A Community Choice Aggregator (CCA)
- Another third party
SDG&E, as the distribution system operator, will own any upgrades of its distribution system that are necessary for SDG&E to safely and reliably operate the community microgrid. Such upgrades may include new distribution facilities necessary to accommodate the interconnection of new CMG Authority Resources and microgrid special facilities, such as the microgrid controller and grid isolation devices.
The CMG Authority is responsible for all costs associated with operating and maintaining the facilities owned and controlled by the CMG Authority pursuant to the provisions of the Microgrid Operating Agreement (MOA).
Community Microgrid Functionality FAQs
Interconnection of each CMG Authority Resource (e.g., solar PV system, battery) requires submittal of a generator interconnection application and finalization of an Interconnection Agreement. This occurs pursuant to the Electric Rule 21 (if the CMG Authority Resource does not intend to participate in the California Independent System Operator’s (CAISO) wholesale market) or the Wholesale Distribution Access Tariff (WDAT) (if the CMG Authority Resource intends to participate in the CAISO’s wholesale market) interconnection processes. The interconnection process is handled independently from the microgrid development process and can take significant time. Investing time during the Consultation process to appropriately size your microgrid and identify the needed resources will help to facilitate timely development of the microgrid as it can prevent rework and minimize the risk of incomplete interconnection applications.
Yes. The CMG Authority’s Resources, such as an IFM solar photovoltaic system and battery, can participate in wholesale markets for energy and related services, both when the microgrid is operating in parallel with the larger grid (“Blue Sky Mode”), and when disconnected from the larger grid (“Island Mode”).
While the community microgrid will allow SDG&E to provide an increased level of service reliability to customers within the microgrid boundary (i.e., providing electric service when the larger electric system has a power outage), it is not possible to anticipate and prepare for every possible circumstance that could result in customers within the microgrid boundary losing power. For example, if a CMG Authority Resource experiences an unplanned outage during Island Mode operation, SDG&E may be unable to maintain acceptable frequency and voltage and the community microgrid may experience an outage. Another example is if a vehicle makes contact with an SDG&E facility during Island Mode operation. Potential damage to SDG&E facilities could result in the community microgrid losing power.
In ideal cases, the customer will not experience an outage when the microgrid transitions from Blue Sky mode to Island mode. However, there may be circumstances where a brief break in service is necessary in order to make the transition.
No. The purpose of a community microgrid is to provide energy resilience when the larger grid is down. As such, most of the time the microgrid is operating in parallel with the larger grid (“Blue Sky Mode”). For the safety and reliability of the grid, and because SDG&E has the obligation to provide Distribution Services to all its customers, the utility will (i) determine when the community microgrid will be isolated from the larger distribution system (transition from Blue Sky Mode to Island Mode), (ii) coordinate operation of the microgrid with the CMG Authority in Island Mode, and (iii) determine when to reconnect the microgrid to the larger distribution system (transition from Island Mode to Blue Sky Mode).
No. Customers within the microgrid will continue to receive service as an SDG&E, Community Choice Aggregator (CCA) or Direct Access (DA) customer and will be billed according to their selected rate plan.
Yes. Communities served by a CCA or a DA provider can develop a community microgrid. CCAs and DA providers procure electricity on behalf of their customers. In all cases, however, SDG&E, as the provider of Distribution Services, delivers this energy to the CCAs’ and DA providers’ customers. This delivery service is provided to customers within the microgrid boundary in both Blue Sky Mode and Island Mode.
CMG Authority Resources, such as an IFM battery energy storage system, can participate in wholesale markets for energy and related services both during “Blue Sky Mode” when the microgrid is connected to the larger grid, as well as during “Island Mode.” However, these resources do not directly “sell power” to customers within the microgrid boundary at any time. Customers will continue to be served by SDG&E, a CCA, or a DA provider during both “Blue Sky Mode” and “Island Mode”.
Microgrid Incentive Program (MIP) Funding FAQs
MIP incentive funds will reimburse the community for costs of their In-Front-of-the-Meter (IFM) resources and for reconfiguring certain Behind-The-Meter (BTM) facilities. The community pays, with limited exceptions, for upgrades and additions on the customer side of the meter. SDG&E ratepayers pay for the costs of upgrades to SDG&E's facilities up to the amount of the MIP allowances. Costs above the MIP allowances are paid by the community or resource owner as applicable.
There are several stages in the MIP application process. Please refer to page 13 of the MIP handbook to review the application process.
No. The CPUC has determined that the cost of BTM resources may not be reimbursed with MIP funds. Also, the CPUC has specified that the MIP is available only to communities comprised of at least two premises connected by utility-owned distribution facilities. Single customer microgrids are not eligible for the MIP.
The Clean Energy Access (CEA) Grant Account will award grants up to $500,000 for work that will address access to or education about the Microgrid Incentive Program (MIP) and other clean energy programs.
Due to the highly technical nature of the MIP, the CPUC will provide technical assistance. A Clean Energy Subject Matter Expert (SME) will provide technical assistance based on the needs of the applicants and grantees.
For technical assistance requests related to the CEA Grant account, contact the Business and Community Outreach Office at [email protected].