Microgrids: The secret weapon for commercial developers?

It’s no secret that California’s electric grid is struggling. Over the past decade, extreme weather like heat waves and wildfires have threatened aging infrastructure already strained by rising electricity demand. The resulting electricity shortfalls and power outages have an enormous impact on the California businesses that depend on the grid. For commercial and industrial facilities, power disruptions can halt operations, inflate costs, damage inventory, and cause risks to employee health and safety. 

Increasingly, commercial developers have also been forced to contend with extended and often crippling delays when attempting to connect new construction projects to California’s grid. Over the last year, the backlog of projects waiting for interconnection has ballooned, setting off a domino effect of cascading delays that have driven up development costs to staggering degrees – and even forced some developers to abandon projects entirely. 

For developers that need to speed up project timelines or simply want the certainty that their project will reach completion, onsite microgrids – integrated onsite energy systems that can produce and store continuous energy, independent of the central electric grid – guarantee cost-effective access to reliable, cheaper, and cleaner energy access. 

A growing interconnection nightmare

It typically takes a few weeks to energize a new construction project with a connection to the electric grid; however, in California, interconnection wait times have been driven up to multiple months and even years. Of the 319 construction-ready commercial projects that were ready in February for interconnection in utility Pacific Gas & Electric (PG&E)’s territory, 42% had been waiting for more than two months and almost 30% had been waiting for more than three months. PG&E also placed a temporary hold on interconnection for all new residential and commercial projects in the southern region of Humboldt County, stating that even smaller projects would face significant delays. While PG&E and other utilities state that they are actively working to clear interconnection backlogs, a lack of visibility into the utility’s progress has created additional uncertainty that threatens the success of projects, as well as the health of the market overall.     

While waiting to be connected to grid power, most developers choose one of two options: Some find a temporary power solution for tenants, often in the form of diesel generators, which can cost hundreds of thousands of dollars to fuel and operate continuously. Others simply put their project on hold, with nothing to do but wait as project costs continue to multiply. 

It’s clear that developers need a new solution. Enter: microgrids. 

Achieving energy independence with a microgrid

Last year, Origo Investments approached distributed energy solutions provider Scale Microgrids with a request for an off-grid microgrid for Amond World, an enormous state-of-the-art refrigerated cold storage facility that will require large amounts of continuous power. The integrated energy system comprised of rooftop solar, battery energy storage, and natural gas generators will guarantee energy access for Amond World, completely independent of the central grid. Not only will it speed up Origo’s development timeline, it will continue to provide cleaner, reliable power and predictable long-term energy savings to the facility. 

Construction for both the facility and microgrid are underway. With end-to-end expertise in designing, building, financing, and operating cutting-edge distributed energy assets, Scale will both finance and operate the microgrid. Its vertical integration and modularized products enable close coordination with Origo to maximize efficiency and value in every step of a microgrid’s development. Amond World’s off-grid microgrid can serve as a blueprint for other California developers looking to find ways to accelerate project timelines and reduce costs for themselves and their tenants. 

Microgrids are the future

In the race to develop new commercial projects, efficiency, timing, and coordination are critical. Developers must simultaneously juggle multiple priorities to ensure timely, cost-effective delivery. By investing in an onsite microgrid for new build projects, California developers can not only bypass the development delays and uncertainty of utility interconnection, but also set their clients up to take charge of their energy independence and future-proof their operations.