About a decade ago, a utility-backed advocacy group floated the idea that states subject microgrids to the same regulations as investor-owned utilities.
Many in the microgrid industry saw the requirement as a competitive play by utilities to undercut the microgrid market. Few microgrid owners had the size, scale or deep pockets to participate in regulatory proceedings common to the utility industry.
Now, a New Mexico state senator has revived the idea, but this time, for different reasons and with data centers as the impetus.
Subscribe to the free Energy Changemakers Newsletter
Sen. Jeff Steinborn, a Democrat, has proposed the Microgrid Oversight Act, which would give the New Mexico Public Regulation Commission jurisdiction over large microgrids (at least 20 MW). The commission could set rules, approve operations, and oversee how microgrids interact with the grid.
In a news release posted on Facebook, Steinborn says, “there is nothing micro” about the microgrid projects being designed by data centers in New Mexico. Three proposed projects would collectively produce two to three times the electricity currently consumed by the entire state, according to the post.
Steinborn says he’s concerned that data center microgrids will rely on fossil fuels and undermine the state’s renewable energy goals. New Mexico investor-owned utilities and electric cooperatives must meet a renewable portfolio standard (RPS) of 50% by 2030 and 80% renewable generation by 2040.
The bill would create a microgrid renewable portfolio standard, requiring that 50% of a microgrid’s generation come from renewables by 2030 and 80% by 2024. By 2045, all microgrid generation would have to be zero carbon.
“If the state is serious about reducing our carbon emissions and confronting climate change, we must close the gaping loophole in our microgrid power generation law, and establish meaningful renewable energy and water conservation standards for new data centers and microgrids,” Steinborn said.
The bill attempts to differentiate between microgrids and utilities by saying that “a person who only provides [self-source generation sales] or sells electricity from a self-source generation resource to that person’s employees or tenants, when the service or commodity is not resold to or used by others, shall not be considered an electric public utility.”
In addition to creating the microgrid RPS, the bill would also prohibit energy transactions between utilities and microgrids if doing so would increase utility customers’ rates. And it would require microgrid owners report to the state on their annual water, energy use and other possible metrics.
Steinborn is a Democrat who has served as a state senator since 2017 and, before that, was a member of the state House of Representatives. His committee memberships include Senate Finance, Radioactive and Hazardous Materials, and Water and Natural Resources.
