What's an investor-owned utility to do when cities and towns (not to mention campuses and military bases) it serves explore a microgrid solution, in the wake of reliability issues? IOUs in Connecticut, where grids took a big weather-related hit last fall, may be asking that question as various stakeholders gathered last month to consider the future of power in their communities.
Reliability and sustainability—consider them related concepts, as sustainability is reliability over time—get bandied about these days with some frequency.
Like the weather, everybody's talking about it but nobody's doing anything about it. (Work with me here, we both know that's not entirely true.)
While utilities of course constantly explore new means to reliability and sustainability, today they have company. Specifically, cities and towns in Connecticut are actively exploring microgrids and distributed generation. Just as microgrids are sought in developing economies in lieu of a centralized power grid, so microgrids have become the focus of entities—cities, towns, campuses (military, hospital, university)—in the de-evolution of centralized power in developed countries.
These trends pose a challenge to today's electric utility. Should the intelligent utility accommodate the desire of its customers to create self-sustaining units that can reduce demand, but may offer benefits, including that reduced demand? (Can "islanding" of microgrids benefit a local utility? What about a microgrid's ability to deliver power back to the grid in an emergency?) Or should today's utility fight this trend if it cannot control the outcome?
In response to a past column we published on the topic, one reader articulated certain issues.
"Investor-owned utilities will continue to resist microgrids unless they can own them, because to do otherwise is tantamount to allowing unfettered competition, loss of market share and a process of voluntarily shrinking the regulated business," this correspondent wrote. "What are regulators likely to do? Candidates for microgrids may also want to own them because doing so is clearly cost-effective, but allowing unfettered private ownership affects not only the utility, but potentially customers that do not choose the microgrid option."
We've written a few columns on the topic, which may serve as background to today's discussion. See "Grid-tied Microgrids: A Utility's Best Friend?,"  "Outages Drive Smart Grid, and Muni Legislation ," "Solar Forecasting and Microgrids " and "Big Picture Thinking: Lab to Market!" 
It's not difficult to imagine Connecticut's interest, following last fall's one-two punches by a tropical storm and a crushing early winter snow, which led to extended outages, egg on the face for local investor-owned utilities, well-publicized finger pointing, investigations by the state attorney general and the resignation of Jeff Butler, former CEO at Connecticut Light & Power.
As a new white paper spells it out, towns and cities in Connecticut are exploring "a desire to supplement the existing utility company grid to increase reliability and also to lower costs and environmental footprints. They envision that local microgrids will be collectively owned and run by energy users in Energy Improvement Districts (EIDs) enabled by state law in 2007 or, alternatively, as Connecticut Electrical Cooperatives enabled in 1971."
On the Massachusetts side of the border, affected by the same weather events last fall, communities are finding their quest for similar control through municipalization considerably more difficult, as enabling legislation continues to be killed off year after year. (See "Lexington, Mass.: Another Muni Candidate .") Of course, the poster child for municipalization is Boulder, Colo., now in a well-publicized struggle with local provider Xcel Energy. (See "Boulder Seeks Divorce From Xcel .")
Exploring the central issues in Connecticut's deliberations means addressing pressing questions in technology, regulation and finance. According to a white paper written by Pareto Energy, a microgrid vendor which facilitated the Connecticut discussion last month, those issues include the following challenges.
To be sure, there are more complex questions, some addressed in the Pareto white paper. I've tried to cite the most broadly pertinent ones. But the bigger questions, particularly for the investor-owned utility industry, revolve around how to deal with these grass-roots efforts. Get out ahead and lead on microgrids, in order to influence the outcome? Work with "break-away" communities to facilitate their chosen solution? Or fight for the status quo? Are there other options?
Readers, what are the upsides and downsides of such initiatives? And what are other issues in technology, regulation and finance not touched upon here?