If California is lucky, our energy future could look like a small town in the rural Salinas Valley.
Long-time readers of this column will not be surprised to learn that the town in question is Gonzales, the California version of the “Little Engine That Could.” The small working class population of just 9,000, including many farm workers, has tricky local government problems from universal broadband to access to health care and from economic planning to children's development.
Now Gonzales is facing one of our state's most persistent challenges: developing local sources of cleaner, cheaper, and more reliable electricity when our state's aging power grid falters.
Tiny Gonzales' solution? Creation of the largest multi-customer micro-network in California. In essence, Gonzales is building its own island of electricity among the Central Coast vegetable fields to provide uninterrupted power from mostly renewable sources for the agricultural and industrial companies that provide the tax base to support their ambitious local programs.
The idea of microgrids – local power grids that can be separated or connected to the larger grid – is not new. In California they are seen as instruments to make the power supply more resilient and to better integrate renewable energy sources such as sun and wind into the power grid. However, efforts to set up microgrids face complex obstacles, from tight funding to regulatory barriers preventing utilities from distributing power over different grids to resistance from established utilities. What sets Gonzales apart is how the city brings together different entities – a savvy start-up that leverages advanced technology and funding power to microgrids, large energy customers in agriculture and food processing, a new municipal energy agency, and a method of selling back electricity capacity to the state Grid – to overcome these obstacles.
The effort is actually greater than the city. The $ 70 million microgrid is the most expensive public works project in the city's history and dwarfs a $ 5 million redesign of the thoroughfare on Alta Street. However, if the microgrid is successful – power generation is slated to begin next year – Gonzales could be a model for other California communities, especially those in rural or remote areas that are poorly served by the existing grid.
“People want to see if we can make it,” says Rene Mendez, Gonzales' longtime city manager. “We don't agree with the idea that you can't do that just because you're small.”
The problems that prompted Gonzales to build a microgrid are well known across California. The poor reliability of our current power grid poses serious problems for companies that rely on steady sources of electricity to run advanced technology – like the refrigeration and processing machines used by food manufacturers at Gonzales Agricultural Industrial Park.
Pacific Gas and Electric Co., the investor-owned utility that serves Gonzales and much of northern and central California, has lagged so far in maintaining the existing grid that many communities, especially in remote locations, are making the necessary upgrades for the equipment can not get reliably to deliver additional power. Gonzales city records indicate that it can take PG&E up to three years to update local energy infrastructure to serve new AG and industrial facilities that may move to the city.
With PG&E using regional power cuts to prevent fires, it has become even more urgent to find local power sources that cannot be turned off. During a shutdown in 2019, Gonzales lost power for two days, resulting in multi-million dollar losses for local employers. Earlier this month, a PG&E attorney said these deliberate failures will continue indefinitely.
Officials spent a decade unsuccessful convincing PG&E to upgrade their infrastructure around Gonzales before the city partnered with ZeroCity, a Monterey-area company that works with communities on energy resilience, and OurEnergy, a Santa Claus, in 2017 , Cruz provided technical and technical advice on an on-site power generation plan. Realizing that the existing municipal utility could not afford to finance a microgrid itself, Gonzales founded a municipal energy agency in 2018 that was able to draw on private funding and overcome some regulatory blockades.
Last fall, Gonzales agreed to work with Salinas-based microgrid developer Concentric Power to design, build, own, operate, and maintain the new microgrid. Concentric will also fund most of the project's $ 70 million prize and make its money back over 30 years by selling electricity on a wholesale basis to the city's new utility company. The new Gonzales Electric Authority will contribute approximately $ 10 million and take over the distribution assets. The municipal utility will sell the electricity – at retail prices below PG&E.
Around 80% of the electricity will come from renewables and around 20% from natural gas (which could possibly come from a renewable gas facility that the city also operates). The microgrid includes a substation that enables the sale of excess capacity to the state system or to Central Coast Community Energy, which serves residential customers in Gonzales.
In fact, Gonzales is betting that his new microgrid will not only keep existing food processors in town, but also make it easier to attract other businesses and strengthen the tax base that supports his civic innovation. In addition, the microgrid was intended to complement the two giant wind turbines towered over Gonzales, local landmarks already serving local food processors. A third turbine could be in sight.
“This is a community-scale microgrid business model that has never existed in the past,” said Brian Curtis, a native of Salinas, founder and CEO of Concentric Power, who is already working on microgrid projects in the Central Valley and elsewhere on the Central Coast . “It will be a turning point for the state.”
Should the Gonzales microgrid begin and successfully serve customers, it will be a strong example of local power, especially rural communities trying to protect or expand the industry. Most microgrids serve a single customer or landowner, or are owned by the utility companies themselves.
For the past several years, California has funded microgrid pilots – from the Blue Lake Rancheria tribal land in the far north to Borrego Springs in northern San Diego County – but it has struggled with the complicated task of creating a regulatory structure that would encourage communities to do so to produce more microgrids. A particularly difficult subject is the creation of a system of “microgrid tariffs” to regulate how the costs and benefits of different grids are shared.
By building his own microgrid, Gonzales refuses to wait for the rest of California to work together. One of the smallest cities in our state is once again setting a very great example.
Joe Mathews writes the Connecting California column for Zócalo Public Square.