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MICROGRIDS FOR MICRO-COMMUNITIES: REDUCING THE ENERGY BURDEN IN RURAL AREAS

Rural communities currently face some of the highest energy costs and lowest reliability in the country, due in part to long transmission distances and low population densities. The North American Supergrid (“NAS”) has been proposed as a solution for increased grid stability, resiliency, and renewable generation with decreased carbon emissions and energy cost across the lower 48 states. Although the NAS could help with these energy goals, it is likely that benefits of the NAS would bypass many rural or isolated communities outside of the transmission step-down points. As the NAS will not help rural communities, states can take regulatory action aimed at promoting microgrid systems of locally generated renewable energy. Remote communities in Alaska have already taken advantage of microgrid systems, and Alaska’s microgrid policies could serve as a model for rural communities in the lower 48. This Note proposes regulatory changes to states’ microgrid policies, based on Alaska’s policies, to bolster renewable generation based microgrid system development for rural communities by (1) identifying and clearly defining important factors affecting microgrid implementation, (2) setting high renewable portfolio standards, (3) increasing financial investment, and (4) collaborating with other states and interest groups to share information. By considering Alaska’s policies as a prototype, states across the country can increase rural residents’ access to affordable energy.


Introduction
On a warm day in America, the buzzing of transmission lines can be heard among the sounds of birds, crickets, and cicadas. Electric infrastructure, although considered an eyesore by some, has become part of the everyday landscape, moving energy from its birthplace to the homes of millions.
Despite the grid's visibility, few people in the U.S. consider the efforts necessary to keep the grid functioning: power has nearly always appeared instantly at the flip of a switch. Yet major blackouts occurred in 2003, 2011, and 2012, 1 and approximately 36.7 million people experienced power outages in 2017. 2 The grid is known to be vulnerable to electromagnetic and cyber threats, 3 and electricity costs are projected to continue rising. 4 On top of these issues is the recognition that greenhouse gas emissions from old electricity generation techniques contribute to global catastrophic climate change. 5 The current grid is facing challenges that its nineteenth century designers could not have anticipated. One suggestion to meet these challenges is the North American Supergrid ("NAS"), a proposed transcontinental update to our energy system designed to transmit abundant renewable energy from the windy center and sunny southwest of the country to the more populous, energy-hungry coasts, while keeping voltage stable across the system. 6 The proposed NAS has the attractive goals of making our electricity infrastructure more resilient and cost-effective while reducing power sector carbon emissions. 7 Unsurprisingly, a system of this magnitude will encounter an abundance of legal issues, specifically the lack of backstop siting authority for the Federal Energy Regulatory Commission's ("FERC's") use of eminent domain, as well as dormant commerce clause considerations, among other challenges. 8 If the large legal hurdles involved in siting such a system can be overcome, the NAS would deliver cleaner, cheaper, and more reliable energy across the country. Despite these benefits, the NAS would A full discussion of these issues is outside the scope of this Note, but for a comprehensive overview, see Alexandra B. Klass, The Electric Grid at a Crossroads: A Regional Approach to Siting Transmission Lines, 48 U.C. DAVIS L. REV. 1895REV. , 1914REV. -16 (2015; CLIMATE INST., supra note 7, at 65-67. [Vol. 26:145 fail to address energy costs in rural areas located outside the NAS's endpoints or intermediate step-down feeder line locations. 9 These rural, often low-income areas experience some of the highest energy costs and lowest reliability in the country but would be unable to benefit from the NAS due to the continued cost of transmission to their remote locations.
One way to help these rural communities, with or without the implementation of the NAS, would be to increase the use of localized generation and microgrid systems. Of all the states, Alaska is most familiar with these systems due to its rugged terrain, remote communities, and complete grid isolation from the lower 48 states. If states were to follow Alaska's lead in adopting pro-microgrid policies, with an emphasis on renewables, rural communities would have access to benefits similar to those provided to NAS beneficiaries without the added cost of long-distance transmission.
The United States desperately needs to overhaul its energy systems, 10 and the NAS would help the United States reach goals of energy system resilience combined with cost and carbon reductions. Other than the overall carbon reduction, however, NAS benefits are unlikely to help those living in rural areas that face high energy burdens. This Note proposes that microgrids, rather than the NAS, provide a better solution for rural communities, and that regulatory changes to states' microgrid policies will assist in microgrid development. Part I provides an overview of the energy burden faced by rural communities and the current grid and regulatory system. Part II discusses the proposed NAS and microgrids and posits that microgrid systems are more beneficial to rural communities than the US's current system or the NAS. Part III considers Alaska's policies as a prototype for microgrid implementation in rural areas in the lower 48 states, and proposes that states can use their regulatory systems to reduce energy burden in these areas by (1) identifying and clearly defining important factors affecting microgrid implementation, (2) setting high renewable portfolio standards, (3) increasing financial investment, and (4) collaborating with other states and interest groups to share information.

I. The Need for Improvements
This Part I provides an overview of the U.S. grid system and regulation in Section A, followed by an examination of the high energy burden experienced by rural consumers in Section B, and concludes that the current sys-9.
The NAS would primarily be a transmission line with the purpose of moving energy long-distances; as a 52-node system, it is not designed to connect to step-down transformers to distribute energy at many points along its route. See generally CLIMATE INST., supra note 7. For a detailed explanation of how the grid functions refer to How the Electricity Grid Works, UNION OF CONCERNED SCIENTISTS, https://www.ucsusa.org/clean-energy/howelectricity-grid-works (last visited June 30, 2019). 10.
Bayless & Petri, supra note 7. tem fails to provide a method to address this burden. Part II explores two proposed solutions to ease the energy burden across the US, the North American Supergrid and microgrids, while changes to regulatory policy modeled after Alaska's policy is discussed in Part III.
A. Overview of the Current Grid System

The Grid
Unlike the U.S. highway system, the energy grid was developed slowly and piecemeal as local demand grew across the country. 11 What we now commonly call "the grid" is not one integrated system across the country, but a collection of systems, each containing three components: (1) generation facilities where power is created, (2) transmission lines carrying highvoltage electricity over long distances, and (3) local distribution where transformers "step-down" the power to a lower voltage to be carried through local distribution lines to buildings. 12 These three components combine to create local grids, which connect with a larger system of neighboring grids, forming large systems called "interconnections." 13 Interconnections allow electricity to flow between smaller grids within the interconnection along multiple routes, creating redundancy that enables generators to supply electricity to various load centers (areas of electricity demand) even when more local systems are disabled or unavailable.
14 This networking and redundancy in the system helps prevent interruptions in service when a transmission line or power plant fails. 15 In the US, three large interconnections connect smaller regional electricity grids: the Eastern Interconnection, Western Interconnection, and Electricity Reliability Council of Texas ("ERCOT") Interconnection. 16 These regional interconnections operate largely independent of one another. 17 [Vol. 26:145 Utilities are independent of, but operate within these interconnections. According to the U.S. Department of Energy, a utility is "a power company that generates, transmits, and distributes electricity for sale to customers." 18 Any one utility, however, does not need to provide all three functions. 19 Within the US, there are more than 3,200 utilities of varying types. Utilities can be investor-owned; not-for-profit public (sometimes called municipal utilities); cooperatives (not-for-profit entities owned by their members); federal power programs (e.g., the Tennessee Valley Authority), which are wholesale-only and provide electric service functions to other utilities; or independent power producers (non-utility generators), which are privately owned businesses. 20 Sale and delivery of electricity takes one of two forms. Traditional state-regulated systems employ a vertically integrated model, where utilities are responsible for generation, transmission, and distribution in a specific geographical area. 21 Costs are monitored by a state's regulatory commission, 22 and utilities are granted a state-approved monopoly over their particular service areas. 23 This model is based on the idea that utilities are "natural monopolies" because of the interconnected nature of the system and the large amounts of capital investment required to build the system. 24 The second form treats electricity as a tradeable commodity, 25 including activity in wholesale and retail markets. In wholesale markets, electricity sales are regulated by FERC (with the exception of the ERCOT Interconnection). States regulate retail electricity rates. 26 The Public Utility Regulation Policies Act ("PURPA"), enacted in 1978, was designed to encourage more efficient use of fuels by allowing non-utility generators to enter the wholesale power market. This disrupted the "natural monopoly" philosophy of utilities, and in 1992 Congress passed the Energy Policy Act ("EPACT"), which further supported a breakdown of vertically integrated models by opening access to interstate transmission networks to non-utility generators. 27 States began to consider whether the second, competitive approach to energy markets would lower costs to consumers, and in 1996 California and Rhode Island were the first states to pass deregulation legislation. 28 By November 2018, thirteen states and the District of Columbia had residential retail choice programs allowing customers to elect to purchase their electricity directly from their choice of energy suppliers, delivered by a local utility. 29 2. Federal Regulatory Authority Authority over interstate electricity transmission, as well as natural gas and hydropower projects, rests with FERC, an independent agency within the U.S. Department of Energy. 30 FERC uses regulatory and market means to obtain energy services at a reasonable cost to consumers, and promotes the development of energy infrastructure that serves the public interest. 31 FERC regulates the transmission and wholesale sales of electricity in interstate commerce; licenses and inspects private, municipal, and state hydroelectric projects; protects the reliability of the high-voltage interstate transmission system through mandatory reliability standards; monitors and investigates energy markets; enforces regulatory requirements; administers accounting and financial reporting regulations; and supervises the conduct of regulated companies, among other duties. 32 However, FERC's authority was quite limited until The Energy Policy Act of 2005 expanded FERC's authority to enforce reliability regulations. After the Act, FERC designated the North American Electric Reliability Corporation ("NERC"), a nonprofit entity, to be the government's electrical reliability organization to oversee grid reliability and security. 33 NERC's role is to develop and enforce reliability standards, assess reliability, monitor the bulk power system, and educate industry personnel. 34  The US's bulk electric system consists of more than 360,000 miles of transmission lines connecting to about 7,000 power plants. 36 Individual utilities are responsible for coordinating and developing transmission plans, unless a territory is part of a regional transmission organization ("RTO") or an independent system operator ("ISO"). 37 RTOs and ISOs are entities formed at the recommendation of FERC to operate the transmission system within a certain region. 38 Not all areas of the country are covered by RTOs or ISOs, and participation is optional. 39 Utilities that are not part of an RTO or ISO system are subject to FERC oversight, as are the RTOs and ISOs themselves. In areas that do participate, ISOs operate the electricity grid, administer the region's wholesale electricity markets, and provide reliability planning for the region's bulk electricity system. 40 RTOs perform these functions and also have greater responsibility for the transmission network, coordinating, controlling, and monitoring operation of the power system within their territory. 41 ISOs and RTOs gage their region's infrastructure needs and engage in region-wide planning. There are currently seven ISOs and four RTOs within North America. 42 Despite FERC's significant regulatory power in interstate electricity markets and transmission, FERC does not control permitting, siting, or eminent domain authority. 43 FERC also does not regulate retail electricity sales, approve the construction of generation assets, regulate activities of nuclear power plants, or assess reliability problems related to distribution facilities. 44 These issues are left to the states.

State Regulatory Authority
State regulatory bodies assume a wide variety of roles, and numerous state agencies regulate the electric industry within each state. In general, states empower a Public Service Commission ("PSC") (also called a Public Utilities Commission or Public Corporation Commission, depending on the state) to regulate fair and reasonable rates for electric service. 45  adopt and enforce regulations protecting public interests and safety related to electric service, consider economic and environmental impacts of utility operations, ensure electric system reliability, and mediate disputes between utilities and customers. 46 Outside of the states' PSCs, state departments of environmental protection are integral to the power system, especially when it comes to siting. These environmental protection departments regulate air, land, and water resources and provide permits for construction, discharges, and emissions by facilities. Approximately 16% of U.S. households are rural, spreading across 72% of the nation's land area. 49 This large swath of the country faces unique energy-cost challenges: transmission lines run for miles over varied terrain with little population to share the overhead cost. 50 Ability to share these 46.

48.
Keith Michigan's remote Upper Peninsula is representative of this problem. In this area, one of the local power companies, Upper Peninsula Power Company ("UPPCO"), services 54,000 customers over 4,460 square milesabout 12 customers per square mile, 52 an area over four times the size of Rhode Island but with only 0.051% of the population. Energy costs in UPPCO's regions are 67% higher than the Michigan average. 53 In some areas of the Upper Peninsula, energy costs are so high that grid defection 54 is economically viable. 55 Remoteness creates vulnerability. Outages can occur anywhere along the extensive transmission lines, and last longer and occur more frequently than in more populated areas. 56 Three factors contribute to the frequency and duration of outages in rural areas: (1) remote areas are often serviced radially by a single transmission supply line, (2) rural communities lack transmission backup connections and cannot build them because of geographical features or cost constraints, and (3) field crews have to travel the entire length of the supply line (which can be hundreds of miles) to find the problem. 57 Simply put, rural communities lack the networking and redundancy that ensures energy reliability in more populated areas.
The higher energy cost is further exacerbated by socioeconomic factors. 41% of households in rural areas have incomes below 200% of the federal poverty level ($49,200 for a family of four in 2017), 58 meaning that a great portion of a family's income is dedicated to energy bills. The percentage of household income spent on energy bills is called the energy burden. 59 Economists estimate that an energy burden of 6% is affordable, 60 but low-income rural residents shoulder a median energy burden of 9%-with some areas as 51.
Frank high as 15%-among the highest energy burden in the country. 61 This burden means that nearly one-third of rural households face energy insecurity and are often forced to decide whether to pay for food, medicine, or electricity. 62 High energy burdens and frequent power outages are clear signs that our current energy system is failing low-income rural residents. Accordingly, Part II describes two potential solutions to boost energy equity: the proposed North American Supergrid ("NAS") and microgrids.

II. Big Grids and Little Grids
Reducing the cost of energy generation, transmission, and distribution lowers the energy burden for consumers. Part II.A discusses a recently proposed, nationwide solution to reduce energy costs and increase the use of renewable energy, the NAS, but finds that the NAS will not reduce the energy burden for rural consumers. Part II.B considers the effect of microgrids on energy-burdened rural communities and ultimately concludes that microgrids could reduce the energy burden in rural areas, but that policy changes are needed for effective implementation. Part II.C discusses microgrid policy hurdles, and Part III delves into potential solutions modeled after Alaska's policies.

A. The Proposed North American Supergrid Transmission System
Generating cheap energy is one thing, but distributing it is another. Although wind and solar power generation have become affordable sources of energy, 63 such resources are concentrated outside of major demand areas on the coasts. For example, solar generation tends to be very strong in the Southwest and the wind consistently strong in the Great Plains. The current grid was created for local generation and distribution, and it is not designed for the type of long-distance transmission needed to move renewable energy thousands of miles. As a result, renewable energy resources remain underemployed. 64 One way to use these resources more effectively is to link demand at the coasts with generation elsewhere through the NAS. The NAS 65 is a proposed high-voltage, direct-current, and largely underground transmission network that would overlay the existing regional alternating current distribution system, extending across the lower 48 states. 66 The NAS would allow clean renewable energy to reach population centers, decrease electricity prices, and reduce blackouts. 67 It is estimated that the NAS would reduce power-sector carbon emissions by 80%-no small drop in the bucket, as the electric power sector is the US's largest source of carbon dioxide emissions 68 -and reduce power sector fresh water usage by 65%, while increasing system resiliency to natural disasters and electromagnetic disturbances. 69 Because of its length, the NAS would reduce the effects of the inherent variability of renewable generation, which can be a serious problem for the grid. As one regulatory specialist noted, "Wind is a wild child. . . . Wind does as it pleases. You don't know when the wind is going to blow. You don't know how long it's going to blow. It's unpredictable, it's variable, it's all over the place." 70 By linking the three independent interconnections, however, the NAS would combine different types of variable generation over a very large geographic area, smoothing variability across the whole system. 71 This would also help with renewable generation mismatch between renewable supply and energy demand. 72 For instance, the NAS could make solar power from westerly sources available on the Eastern Seaboard during the evening peak, when the east's own solar generation is declining as the sun sets. 73 Despite these benefits, implementing the NAS would require the United States to overcome serious obstacles. Interestingly, some of the most significant barriers of such a massive system are not technological but regulatory. 74 The NAS would require many unpopular adjustments to our current system. Issues including environmental siting concerns, eminent-domain authority for siting, project oversight, market structure, and cost allocation must be resolved for effective implementation of the NAS. 75 If the NAS were able to overcome these barriers, it would provide cheaper, cleaner energy to the most populous areas of the country. 76 While the NAS promises great improvements for populated areas, it offers little help for most rural communities. 77 Although energy generation would likely be cleaner and cheaper, the problems of transmission costs, single service line reliability issues, and low population density for costsharing would remain. In contrast, microgrids offer solutions to these problems that would reduce the energy burden on rural communities.

Overview of Microgrids
The U.S. Department of Energy defines microgrids as "a group of interconnected loads and distributed energy resources within clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid." 78 In short, microgrids are small grids. Microgrids can either act as part of a larger macrogrid, with the ability to disconnect as needed to operate autonomously in "island mode," or operate fully independent of the macrogrid as "islanded" units. 79 Microgrids are reminiscent of the US's early power system: small and localized systems of power generation and distribution, essentially the opposite of the proposed NAS. While the NAS would move renewables long distances, microgrids can generate and distribute energy locally. Municipal utilities, originally stand-alone systems, did not begin forming the macrogrid until interconnection became less expensive and more reliable than local generation and distribution. 80 With the advent of localized, renewable generation, however, microgrids may provide a better solution for rural communities facing high transmission costs and low reliability.

Usefulness for Rural Communities
Outages in rural areas tied to the larger grid occur more frequently and last longer than outages in densely populated areas for several reasons. First, many remote areas are fed radially by a single transmission supply line. 81 If that line is damaged, the community becomes stranded. Second, remote communities are often situated in locations that make access to backup transmission resources cost-prohibitive due to distance or some physical barrier, such as a mountain. 82 Third, field crews must travel to the remote location and patrol the entire supply line-which can be hundreds of miles-to find the cause of the interruption. 83 A solution to these transmission-related problems, and to the high cost of long-distance transmission, is to operate microgrids with locally produced (generated) energy.
Local energy can be created with fossil fuels, but pairing renewableenergy generation with microgrids reduces or eliminates fuel costs while also reducing greenhouse gas and particulate emissions. Moreover, rapidly advancing energy storage technology provides a solution to the intermittency issues caused by renewable generation, 84 and many rural communities are already implementing a variety of creative renewable generation strategies in an effort to reduce costs. These strategies include: (1) traditional hydro, wind, and solar generation, (2) combination systems like combined heat and solar, 85 and (3) new technologies like geothermal generation using abandoned mine water. 86 Due to modern technological advancements, renewable energy generation is no longer confined to areas of greatest productivity. Researchers are now pushing the perceived boundaries of renewable generation in places like Alaska, where consumers rely on power from wind, solar, biomass, geothermal, hydroelectric, and hydrokinetic generation. 87 Microgrids can be a useful way for rural communities to improve reliability and manage the costs of transmission and fuel, whether or not the NAS comes to fruition, because microgrids solve the problem of a single, long-distance supply line. But legal regulatory hurdles remain, limiting implementation and keeping the rural energy burden high.

Federal Policies
As far back as 2001, NERC informed Congress that the US's grid was not designed to carry large blocks of power from one region to another in the manner used today. 88 Yet it took six years before Congress enacted the Energy Independence and Security Act of 2007 ("EISA"). 89 EISA recognized a need to update the power grid system, and, though microgrids are not specifically mentioned, the statute included policy goals tied to microgrid development: It is the policy of the United States to support the modernization of the Nation's electricity transmission and distribution system to maintain a reliable and secure electricity infrastructure that can meet future demand growth and to achieve each of the following, which together characterize a Smart Grid: (1) Increased use of digital information and controls technology to improve reliability, security, and efficiency of the electric grid.
(2) Dynamic optimization of grid operations and resources, with full cyber-security.
(3) Deployment and integration of distributed resources and generation, including renewable resources. . . .   Microgrids, especially islanded microgrids, fall under state authority unless they are in some way connected to interstate commerce. Nevertheless, federal policies can still influence and assist microgrid deployment. First, for microgrids under FERC's jurisdiction, FERC could consider policies enhancing integration and communication between the larger grid and state-centered microgrids. For instance, former FERC Chairman Jon Wellinghoff has championed the creation of "independent distribution systems operators ("IDSOs")" as a way to streamline FERCs policy regarding microgrids. 92 Under the IDSO model, and similar to ISO functions for transmission, utilities would continue to own the distribution poles and wires but surrender the actual planning and operation of the system to the IDSO. The IDSO model could allow utilities to grow revenue through partnerships with distributed energy resources ("DERs"), potentially increasing the utilities' acceptance of distributed generation. 93 Second, the federal government could provide tax incentives to encourage microgrid development. For instance, extending the deduction of the Business Energy Investment Tax Credit ("ITC"), which is currently 30% but reduces to 10% after 2021, would continue an incentive for commercial, industrial, utility, and agricultural sectors to invest in renewable energy equipment. 94 The Modified Accelerated Cost-Recovery System ("MACRS"), a system allowing businesses to recover investments in equipment for renewable generation through enhanced depreciation deductions (currently at 50% bonus depreciation), expires in 2019 but could be extended. 95 Additionally, the Rural Energy for America Program ("REAP") provides small businesses with grants and loan guarantees for energy effi-

90.
Id. § 17381 (emphasis added  96 Expanding REAP eligibility to include nonprofits, like municipal or cooperative utilities, could help these entities invest in microgrid development.
Third, imposing carbon taxes, or removing subsidies from fossil fuel production, could level the price-playing field, making microgrids with renewable generation more attractive. In 2014, the International Energy Agency estimated that fossil fuel consumption subsidies totaled $493 billion, with oil product subsidies accounting for about half of that total. These fossil fuel subsidies are four times the value of the subsidies to renewable energy. 97 Fourth, the federal government could also fund additional research and development on microgrids, including research on adapting the US's current system to more localized generation and islanding capabilities for rural areas. Federal officials have already taken some steps in this direction. In 2017, the U.S. Department of Energy announced $32 million in funding to the Grid Modernization Laboratory Consortium for the purposes of advancing resilient distribution systems and developing clean DERs, such as microgrids. 98 Finally, a strong national renewable energy mandate that sets high goals for the proportion of renewables in the country's fuel mix could also provide an incentive for microgrid development. Without active state participation, however, this will only take the United States so far-especially in cases of islanded microgrids that are completely outside of FERC's jurisdiction. 99

State Policies
Most states lack a clear set of regulations and incentives for microgrid development, and most do not have a legal definition for microgrids. 100 Additionally, laws on siting, right-of-ways, ownership structures and taxes vary considerably among the states. 101 In some cases, archaic existing laws intended to protect consumers may unintentionally hinder microgrid development. For example, in 2016 the Maryland Public Service Commission [Vol. 26:145 ("PSC") rejected a proposal to build two microgrids. The PSC's reasoning was based in part on Maryland's 1999 Electric Customer Choice and Competition Act. 102 Although that statute was enacted to "provide economic benefits for all customer classes," 103 the commission found that microgrids restrained a consumer's right to exercise retail choice when the microgrids were in island mode, thus violating the consumer choice provision of the Act. 104 When drafted two decades ago, the Act did not anticipate the unique market position of microgrids. As a result, Maryland's potential for microgrid implementation is now severely limited.
Despite varying state laws, all U.S. state jurisdictions have three main policy areas that can limit microgrid deployment and create issues for rural areas hoping to take advantage of microgrids: (1) low or non-existent renewable portfolio standards ("RPSs"); 105 (2) failure of states to define, promote, incentivize, or mandate microgrids; 106 and (3) insecurity among developers unsure of volatile regulatory and incentive structures. 107 Although several states are leaders in removing certain barriers-California, for example, has a very high renewable portfolio standard-no state has been as successful as Alaska in developing microgrids. In fact, Alaska tackles all three problem areas, and its policies can be adapted to work for rural communities in the lower 48 states.

III. Prototype and Application
Part III considers Alaska as an experienced player in the microgrid regulatory space and suggests that other states can follow Alaska's example to reduce their own rural residents' energy burdens. Part III.A discusses Alaska's regulations and how the state's rugged terrain led to policies that naturally supported a microgrid-friendly regulatory environment. Part III.B explores the key aspects of Alaska's policies, which can be used by other states to improve microgrid usage and reduce the energy burden on their own rural residents.

A. Alaska as a Microgrid Leader
Alaska is home to 12% of the world's microgrids and 40% of the world's rural integrated system microgrids, making it the global leader in microgrid deployment. 108 With around 250 independent microgrids, 109 Alaska's microgrids have an 800-megawatt capacity, also the largest in the world. 110 It is a state of extremes, as one reporter put it: "[b]ig state, big energy costs, and big consumption-Alaska has it all! Small population, small microgrids, and small barriers to market access-these, too, Alaska has." 111 Although most of these microgrids are fueled by diesel, 112 Alaska is working on renewable implementation, with around half of the communities in Alaska incorporating renewables in their diesel-based generation capacity. 113 The state has an economic reason for investing in renewables: energy prices in Alaska's rural areas can run $1.00/kWh, compared to the $0.12/ kWh median in the lower 48 states, and renewables lower the bill substantially. 114 Even though Alaska is still working to add more renewables overall, there is no question that the state has been successful with microgrid deployment. Alaska's success is a product of several factors, including: clear, microgrid-friendly policies; thoughtful addition of renewables with high renewable portfolio goals; significant financial investment; and collaboration between government and private party stakeholders, universities, and researchers.

Clear Policies
Many of Alaska's rural communities are not accessible by road, only by water or air. Some are so remote that they can only have fuel delivered once or twice a year, when the ice melts enough to allow a barge to move up riv- er. 115 Given that long-distance transmission lines were (and still are) out of the question for these communities, microgrids offered the only power solution. 116 Perhaps because Alaska's microgrids and energy policy developed simultaneously, the state does not explicitly define microgrids as a separate item; rather, the inclusive language in Alaska's administrative code simply encompasses microgrids. 117 In that sense, Alaska's energy regulations were born with-and grew up with-microgrids.
These microgrids are largely operated by Alaska's sixteen electric cooperatives; only four of the sixteen are part of Alaska's single macrogrid, known as the "Railbelt." 118 The rest of the cooperatives are spread among Alaska's rural areas. Importantly, electric cooperatives must receive at least 85% of their income from their members to maintain their federal taxexempt status. 119 Thus, it can be problematic for cooperatives in deregulated states to maintain their tax-exempt status because they must compete with other power providers for customers, relying more heavily on grants and loans-which are classified as non-member income-to fill income gaps. 120 Alaska, which remains regulated and where cooperatives service isolated areas, avoids this competition. 121 Under the Alaska Public Utilities Regulatory Act, the definition of "utility" is expansive and includes a variety of electricity ownership models: 'public utility' or 'utility' includes every corporation whether public, cooperative, or otherwise, company, individual, or association of individuals, their lessees, trustees, or receivers appointed by a court, that owns, operates, manages, or controls any plant, pipeline, or system for 115.
Alaskan Microgrids Offer Energy Resilience and Independence, supra note 87 ("Some communities are so remote that they can only get fuel delivered once or twice a year when the ice melts and a barge can move up the river.") (quoting Erin Whitney, a researcher at the Alaska Center for Energy and Power). (A) furnishing, by generation, transmission, or distribution, electrical service to the public for compensation [.] 122 Alaska's regulatory commission "may exempt a utility, a class of utilities, or a utility service from all or a portion of [the Alaska Public Utilities Regulatory Act] if the commission finds that the exemption is in the public interest." 123 In addition, electric cooperatives may elect to be exempt from of portions of the Act. 124 With so many of Alaska's microgrids administered by cooperatives, this is a useful provision to reduce costs of microgrid implementation, management, and development.
Additionally, Alaska has devoted an entire chapter of its code to rural and statewide energy programs. 125 This chapter establishes a rural electrification revolving loan fund to extend new electric service into an area served by a utility under a certificate of public convenience and necessity. 126 It also provides power cost equalization to both regulated utilities and nonregulated utilities (generally cooperatives), 127 grant funding for utility improvements, 128 and grant funding for renewable energy projects. 129 Alaska may have developed a microgrid policy early on out of necessity, but these policies allow investors and developers, whether public or private, to anticipate the costs and impacts of their projects without the fear that policy ambiguity will upset their efforts. This regulatory framework provided the support needed to allow microgrids to develop.

Adding In Renewables
Most of Alaska's microgrids run on diesel fuel, but with uncertain diesel prices and the energy burden of some rural communities at a whopping 47%, Alaska is now actively developing and promoting the integration of renewables into its microgrids. 130 Alaska's declaration of state energy policy "encourage[s] economic development by promoting the development of renewable and alternative energy resources, including geothermal, wind, solar, hydroelectric, hydrokinetic, tidal, and biomass energy, for use by Alaskans." 131 122.
Id In 2008, Alaska passed House Bill 152, establishing the Renewable Energy Fund, administered through the Alaska Energy Authority and discussed more fully below. In 2017, Alaska also passed a joint resolution "[u]rging the Alaska delegation in Congress to implement a renewable energy testing program in the state; supporting the development and testing of renewable energy resources in the state; and encouraging entrepreneurs to develop renewable energy projects in the state." 132 The resolution cites high energy prices, Alaska's "hundreds of isolated, remote microgrids that provide a unique opportunity to test integration of renewable and nonrenewable generation resources," and the legislature "encourages entrepreneurs to develop renewable energy projects in the state." 133 With this background support, some Alaskan communities are now hitting high renewable generation targets. For example, Kodiak-the nation's second-largest fishing port-is at nearly 100% renewable generation.
ating $50 million a year for five years to develop renewable energy projects, with a focus on areas with the highest energy costs. 139 The Fund was extended through 2023 and has provided assistance on 287 projects, displacing 30 million gallons of diesel fuel and reducing energy prices. 140 The benefit-cost ratio of Alaska's renewable energy projects is 2.5, affording the state a great return on its investment. 141 This investment, combined with high renewable portfolio standards, provides an attractive, stable atmosphere for renewable-based microgrid development. 142 Moreover, Alaska recently secured another $6.2 million in funding from the U.S. Department of Energy for a microgrid resilience project, termed Resilient Alaskan Distribution System Improvements using Automation, Network Analysis, Control, and Energy Storage ("RADIANCE"). 143 These investments demonstrate that microgrids are clearly a priority for Alaska. As one Alaskan puts it: "It seems ironic that Alaska, known in the lower 48 for its oil pipeline, would now be promoting alternative energy. We like to say, 'If you want to make a change, put a buck on it!'" 144

Collaboration
Collaboration among the various public and private sectors is also an important part of Alaska's success with microgrids, and Alaska is involved in several key partnerships that place renewable energy and microgrids at the forefront of state policy. The Renewable Energy Alaska Project ("REAP"), for example, is "a coalition of large and small Alaska utilities, businesses, conservation and consumer groups, Alaska Native organizations, and municipal, state and federal entities with an interest in developing Alaska's vast renewable energy resources." 145 REAP works to promote Alaska as a world leader in remote, renewable microgrids, and helped craft Alaska House Bill 306 (setting renewable energy goals at 50% by 2025 founder of the Islanded Grid Resource Center, which connects islanded microgrid communities with valuable information and resources. 147 In addition, the state has invested in Launch Alaska, a non-profit, startup incubator with a focus on energy. Launch Alaska receives funding from the U.S. Department of Defense, the U.S. Air Force, and the city of Anchorage, among others. 148 The incubator expects microgrid technology to be the focus of at least half of the thirty energy-related companies it plans to foster over a two-year period. 149 Alaska is also working with the U.S. Department of Energy on the Alaska Microgrid Partnership, which has received $1.8 million in funding "to reduce diesel fuel consumption by 50% in Alaska's remote microgrids without increasing system lifecycle costs, while improving overall system reliability, security, and resilience.  153 Uncertainty about how to address these issues inhibits investment in microgrid technologies. 154 By considering Alaska's policies as a prototype, states can take advantage of the benefits microgrids offer and ultimately reduce energy burdens on their rural communities. First, states must comprehensively define microgrids, associated components, and their place in the state's energy landscape. This means not only defining microgrids themselves, but also detailing how microgrids will function within the larger system while considering factors favorable to microgrids inherent in the Alaskan system. These inherent factors include: (1) public utility regulation, including utility rate and market structures, production incentives, net metering, interconnections of microgrids with the macrogrid, permanent or temporary islanding capabilities and requirements, regulatory and technological barriers to islanding, energy storage and classification of storage, advanced utility metering and billing infrastructure, and ownership structures (including utility franchises and free-market structures with restrictions on generation and transmission/distribution assets); (2) locally available renewable energy generation resources, including wind, solar, geothermal, hydroelectric, hydrokinetic, biomass, and combined systems; (3) stakeholder incentives, including resource allocation, cost allocation with consideration of initial capital costs and financing, private financing, and alternatives to traditional financing (e.g., Green Banks 155 ); (4) land use, including rights of way, permitting requirements, cultural issues, building codes, zoning ordinances, land constraints, and eminent domain authority; (5) data sharing, grid congestion, and grid layout; (6) consumer awareness; (7) overlapping jurisdictions; (8) skilled workforce development; and (9) public-private partnerships.
States that refuse to undergo the process of defining their microgrid systems will lag behind states with clear policy. States with ambiguous regulatory environments will also continue to have trouble attracting developers, or convincing utilities, to invest in technologies and capital improvements. This is especially true in deregulated states because utilities there are unlikely to make risky investments up front, even though these investments are needed to overcome barriers to utility ownership of microgrids or to take steps that would encourage private ownership of microgrids. 156 To illustrate the complexity of the issue, consider energy storage. In some deregulated states, utilities are limited to owning and operating trans-

155.
What is a Green Bank?, GREEN BANK NETWORK, https://greenbanknetwork.org/ what-is-a-green-bank-2/ (last visited Oct. 13, 2019) ("A Green Bank is a publicly capitalized entity established specifically to facilitate private investment into domestic low carbon, climate resilient (LCR) infrastructure and other green sectors such as water and waste management."). 156.
Gillespie & Taylor, supra note 74, at iv. [Vol. 26:145 mission and distribution infrastructure while nonutility parties are limited to owning and operating generation assets. 157 But energy storage, an essential element for microgrids running on renewables, shares common features with both transmission/distribution assets and generation facilities. This means that utilities in deregulated states are prohibited from (or severely limited in) owning energy storage systems if storage is classified as generation, rather than transmission/distribution.
On the other hand, thoughtful integration of microgrids can overcome the foreseeable barriers of a deregulated system. For example, New York's PSC barred utility ownership of DERs in 2015 as part of its overhaul of the electric industry with the intention of more reliance on DERs. 158 But New York did this as part of a larger plan to develop markets for DERs, not as a side effect of market deregulation. 159 Thus, it is imperative that states set clear definitions designed with modern technology in mind to avoid ambiguity and resulting unintended consequences.
Alaska developed its energy rules to work with small cooperatives and widely islanded microgrids, making microgrids part of the utilities' purview. In many states, however, rules exist to protect incumbent utilities and their exclusive territories. As a result, microgrids in these states exist on the customer side of the meter, serving just one, or a few, directly connected customers. 160 In such situations, the states can put into place certain policies-discussed below-that will allow microgrid development to move forward.
All of Alaska's sixteen cooperatives are generation-and-distribution cooperatives, producing all or most of their own power. 161 Cooperatives are not as common in other states, which should consider integrating a cooperativetype model with their investor-owned utility environments. Regulations designed for utilities can create problems for microgrid integration from which Alaskan cooperatives are exempt. One workaround for free-market states, where utilities are often prohibited from owning any generation assets, would be to allow utilities to own microgrids with renewable generation. Alternatively, free-market states could incentivize microgrid generation development with guaranteed utility connections.
In traditionally regulated states, utilities maintain monopolies over geographic service areas. Exempting microgrids from the utility's exclusive 157 service areas could allow microgrids to be placed where they would provide the most use. Moreover, easing regulatory burdens on small, non-utility microgrids could allow rural areas to develop more microgrids. Combining microgrid development with policies that do not prohibit interconnection could allow non-traditional ownership models, such as community solar programs, to integrate into the system. Another regulatory problem is capacity limits on interconnections with existing utilities. While some rural areas may best benefit from islanded microgrids, they will likely take advantage of existing distribution infrastructure. This means that, even if the microgrid is completely islanded, its generation must connect with the current local distribution system (and sever longer transmission feeder lines if intending to be fully islanded). For this to happen, states must ease the capacity limits on distributed energy and create an easy process for interconnection and disconnection.
Unlike Alaska, most states' energy policies were not developed in conjunction with microgrids. Hence, definitions of "public utility" may hinder microgrid development, and, depending on the state's current statutory language complexity, it may be easier to just exempt microgrids from this definition while simultaneously providing a clear, separate definition of microgrids and their place in the state's energy system. 162

Renewable Portfolio Standards
States with strong RPSs encourage development of DERs, which are the source of generation for microgrids. 163 Since 2000, approximately half of the growth in U.S. renewable-energy generation can be attributed to state renewable-energy requirements. 164 Solar photovoltaics are the most common microgrid generation technology in the US, 165 but states should focus on whatever renewable clean energy is most available to them. Illinois' RPS policy, for example, requires that 75% of renewable energy under the RPS come from wind. 166 It is no coincidence that states with strong RPS policies, like New York and California, experience significant DER deployment. In contrast, Tennessee, a state with no RPS policy, has very few DERs and only one microgrid. 167 As Alaskan communities like Kodiak have shown, renewables owner to finance the up-front cost of property improvements and then repay the costs over time through a voluntary property tax assessment. 176 States have various forms of PACE financing, with some limiting use to particular geographic areas or only allowing commercial entities to take advantage of the program. Expanding the use of PACE to unserved constituents could help microgrid projects get off the ground.

Collaboration
Alaska has been largely successful with its collaborative approach, especially in its recent renewable-based microgrid efforts. Because of these efforts, much research is being done or is already accomplished on successful implementation of renewable microgrids in rural areas. States can take advantage of the available information through organizations like the Islanded Grid Resource Center. Deregulated states, in particular, can benefit by reviewing new legislation in other deregulated states like California and New York, both of which are in the process of expanding their microgrid systems in urban and rural areas. 177 California, for example, is collaborating with its Energy Commission, the California Public Utilities Commissions, and the California Independent System Operator to develop a "Roadmap" for commercializing microgrids in California. 178 States can also consider Alaska as a prototype for their own systems. Alaska has no intention of hoarding its hard-earned information. Indeed, as Erin Whitney, a researcher at the Alaska Center for Energy and Power, University of Alaska Fairbanks, states, "We would love to share our expertise with microgrids and data from microgrid systems with communities whether they are in the Arctic or not, and we hope to learn from others experience as well." 179 There is no need for states to start from scratch.

Conclusion
The current energy policy in the United States is failing the country's rural residents, who continue to experience high energy burdens. The NAS, though helpful to the U.S. in terms of carbon reduction and costs in urban