If California is lucky, our energy future could look like a small town in the rural Salinas Valley.
The town in question is Gonzales, the California municipal version of the Little Engine That Could. Its small, working-class population of just 9,000 has ingeniously solved tricky problems, from broadband to health care access to child development.
Now Gonzales is tackling one of our state’s most stubborn challenges: how to develop local sources of cleaner, cheaper and more reliable power as our aging energy grid falters.
Tiny Gonzales’s solution? Creating the largest multi-customer microgrid in California. At $70 million, it’s also the most expensive public works project in the city’s history, dwarfing a $5 million street re-do. In essence, Gonzales is building its own electricity island to guarantee uninterrupted power for the agricultural and industrial businesses that provide the tax base to support its ambitious local programs.
The idea of microgrids — local power grids, either separate or connected to the larger grid — is not new. In California, they are seen as tools to make electricity service more resilient and to better integrate renewable energy sources, like solar and wind. But efforts to establish microgrids face complex obstacles, including scarce financing, regulatory barriers and utility opposition.
What distinguishes Gonzales is how the town is bringing together different entities — a technologically advanced microgrid developer, agricultural businesses and a municipal energy authority — to surmount those obstacles. If the microgrid launches successfully next year, Gonzales could provide a model for other communities, especially those in outlying areas poorly served by the existing grid.
“People want to see if we can pull it off,” says Rene Mendez, Gonzales’ longtime city manager.
The problems that drove Gonzales to build a microgrid are familiar across California. The poor reliability of our current grid poses serious problems for companies that depend on steady power — like the food processors in the Gonzales Agricultural Industrial Park.
PG&E, the investor-owned utility servicing Northern and Central California, is so far behind in maintaining the existing grid that many communities can’t get the upgrades necessary for growth. It could take three years for PG&E to update its Gonzales infrastructure to serve agricultural-industrial facilities that might move to town.
And PG&E’s use of regional power shutoffs to prevent fires has made finding local power sources that won’t shut down even more urgent. During one 2019 shut-off, Gonzales lost power for two days, resulting in huge losses for food businesses.
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 price tag, earning back its money over 30 years by selling power on a wholesale basis to the city’s new utility. The new Gonzales Electric Authority will contribute about $10 million. The municipal utility will sell the power — at retail rates lower than PG&E’s.
About 80 percent of the power will come from renewables and about 20 percent from natural gas (which could eventually come from a renewable gas facility).
Effectively, Gonzales is betting that its new microgrid won’t just keep existing food processors in town, but also will make it easier to attract other companies, strengthening the tax base that supports its civic innovation.
“This is a community-scale microgrid business model that hasn’t existed in the past,” says Salinas native Brian Curtis, the CEO-founder of Concentric Power. “It’s going to be a watershed project for the state.”
In recent years, California has funded microgrid pilots — from the Blue Lake Rancheria in the north to Borrego Springs in San Diego County — but it has yet to create a regulatory structure to incentivize more localities to produce more microgrids.
By building its own microgrid, Gonzales is refusing to wait for the rest of California to get its act together. Instead, one of our state’s smallest towns is setting a very big example.
Joe Mathews writes the Connecting California column for Zócalo Public Square.