Regulations forbid utilities from building energy resiliency

See Texas Power Crisis Points to Wider Dangers by K.R. Sridhar.

"The Texas power crisis demonstrated the fragility of the nation’s electricity infrastructure. Outmoded policies and regulations have disabled the creation of a market for resiliency.

In most states, utilities are regulated monopolies. A Public Utility Commission sets rates based on state laws, many of which allow utilities to charge a premium for renewable electricity. That has induced utilities to install gigawatts of wind and solar capacity.

But there are no such incentives for resiliency. Not only aren’t utilities required to provide more-reliable power; they can’t offer resiliency at a higher price because rates are fixed. It is as if the National Highway Traffic Safety Administration didn’t require air bags or seat belts and forbade automakers to charge a premium if these safety features were provided.

Worse, many states penalize customers who try to implement their own resiliency solutions. In California, essential businesses are forced to pay punitive charges to the utilities if they generate nonintermittent onsite power. PUCs and utilities suggest that these charges ensure that customers pay their “fair share” to fund wildfire mitigation and energy-efficiency programs.

To build a resilient power marketplace, lawmakers and PUCs should create incentives for resiliency, as they encouraged renewable energy. They should authorize higher rates for resilient electricity, so that utilities can make long-delayed infrastructure upgrades.

Upgrading the entire grid will take more than a decade. In the meantime, microgrids can fortify critical infrastructure systems to ensure uninterrupted power. Microgrids are islands of energy resiliency. Using fuel cells, rooftop solar panels and energy storage, they provide power when the grid isn’t available. My company has deployed 89 microgrids, which have protected customers from more than 1,700 power disruptions since 2018. Customers and utilities can purchase these technologies on their own. But to do so, states and municipalities have to remove the penalties for installation and ease permit requirements.

Policy makers should also resist efforts that would further diminish the resiliency of the energy system. Cities such as Oakland and Berkeley, Calif., have banned natural-gas connections to buildings. Advocates lobby for replacing gas with electricity to reduce carbon emissions. But this would create a single point of failure. Without gas pipelines, homes would be without heating, hot water and cooking fuel when the grid fails.

Instead of banning pipelines, authorities should strengthen and upgrade them and focus on using them to distribute lower-carbon fuels. This piping infrastructure could become the backbone of our renewable hydrogen economy. With the right policies, Americans won’t have to worry about being left in the dark when the weather is bad.

Mr. Sridhar is founder, chairman and CEO of Bloom Energy."