Microgrids are self-contained energy systems that can generate, store and distribute electricity locally—while also connecting to the larger grid. They often integrate renewable sources, battery storage or backup generators to create a power “island” during outages.

There are currently no community-owned or operated microgrids in Oregon. Most now are owned by utilities, governments or private businesses. There now are 692 microgrids operating in the U.S., according to data cited by law firm Schwabe, Williamson and Wyatt in an update.

The legislation, which take effect on Jan. 1, aims to streamline the state's microgrid regulatory and development process. HB 2065 reduces interconnection bottlenecks, allowing third parties to support the interconnection study process and alleviate strain on utilities. HB 2066 directs the Oregon Public Utility Commission to create a regulatory framework for both community and private microgrids and authorizes local governments to designate “microgrid zones” and enable large energy users—such as hospitals, schools and critical infrastructure to connect to microgrid systems. 

“This is the most ambitious and comprehensive legislation in the country,” said Dylan Kruse, president of Portland-based nonprofit Sustainable Northwest, which advocates for microgrid technology. “We’ve gotten calls from a dozen other states asking about this,” he added, The legislation provides “rules of the road” for regulators, municipalities, utilities and private developers, with projects able to “leverage a lot more private resources,” Kruse said. "While implementation will likely take a year or two, depending on how fast [regulators] move, the bills could provide a model for other Western states where grid reliability and power affordability are of growing concern." 

But investor-owned utilities Portland General Electric and Pacific Power opposed the bills, which received near-unanimous legislative support. The companies argued they duplicate existing processes and introduce safety risks by allowing third-party access to power infrastructure.

Growth Potential

“Microgrids are one of the sectors in which we see the most potential for growth in the coming years,” said Karina Hershberg, associate principal at Portland-based PAE Engineers. “The technology is maturing right at the time that the need is increasing.”

In rural areas of western states, where wildfires and public safety power shutoffs are becoming more frequent, microgrids are seen as a tool for local energy resilience, keeping critical infrastructure operating even when the broader grid is compromised.

As regulators, municipalities, utilities, and investors work through detalls of implementing the legislation, Kruse said he’s optimistic that by the end of next year, “hopefully people will start to submit applications” for microgrid development.

Hershberg is less certain. “There is so much change happening in the energy industry right now that it’s hard to predict any specifics even a couple months forward," she said. Cautioning that the “path forward has become unclear” for some projects due to cuts in federal renewable energy support, Hershberg stresses that “the economic opportunity, technical capability and community need has never been greater.”