A California regulatory judge preliminarily rejected a move by Sunnova Energy International Inc., one of America’s biggest rooftop-solar companies, to build small self-contained power grids for new residential communities.
(Bloomberg) — A California regulatory judge preliminarily rejected a move by Sunnova Energy International Inc., one of America’s biggest rooftop-solar companies, to build small self-contained power grids for new residential communities.
The proposal threatens to further erode the monopolies of PG&E Corp. and California’s two other big investor-owned utilities — and could provide a road map for other solar and battery providers. While a formal rejection would be a blow to Sunnova and others, the push to make microgrids mainstream is only just getting started.
Sunnova in September submitted an application to the California Public Utilities Commission to build and operate microgrids as part of new master-planned residential communities, essentially making it the utility for individual neighborhoods. But an administrative law judge said in a proposed decision issued Tuesday that the company had failed to provide the information required for the state to grant it permission to build microgrids, including how it would provide public safety and offer fair rates.
“Our application clearly outlines the reliability, rate, environmental, and other public interest benefits that community microgrids can provide,” said Meghan Nutting, Sunnova’s executive vice president for government and regulatory affairs. “This proposed decision is troubling and disappointing for a state that has set such bold climate targets yet is struggling with making steady progress on them.”
The company’s shares rose as much as 3.8% on Wednesday.
PG&E, Edison International’s Southern California Edison and Sempra Energy’s San Diego Gas & Electric opposed the proposal and asked that regulators establish rules on the formation of microgrids before considering Sunnova’s proposal. The state’s powerful utility union and the Utility Reform Network, a consumer advocate group, also opposed the plan.
The five-member commission will need to vote on the proposed rejection to make it official. That could happen as early as April.
ClearView Energy Partners analysts said in a Wednesday research note that they weren’t surprised at the preliminary rejection because approval would have been a “notable precedent” that could have threatened the existing utilities.
(Updates with analyst comment in final paragraph.)
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