PG&E Advances Deployment of Community Microgrids, Announces New Grant Agreements and Second Round of Funding Awards

PG&E commits over $73 million to community microgrids, including a new $30 million funding wave for six additional clean-energy resilience projects.

Rhea-AI Summary

PG&E (PCG) is advancing deployment of community microgrids in Northern and Central California, announcing new grant agreements for first-round projects and $30 million of second-wave awards under its Microgrid Incentive Program (MIP).

The utility now has more than $73 million in authorized community microgrid investments, including $43 million for nine initial projects announced in 2025 and the new tranche of funding. Several Tranche 1 projects have executed grant agreements to fund engineering, design and development. Three Lake County projects will study an innovative FLASHES concept that pairs tens of megawatts of local solar with pumped-hydro storage using subsurface water, targeting multi-day outage resilience and added firefighting water supply.

In Tranche 2, $30 million will support six new microgrids serving more than 2,200 customers, including critical facilities, across six counties. Awards range from $2–6 million each and use solar, batteries, biomass and biodiesel. One project, in Pescadero (San Mateo County), led by WestLight Energy, will combine about 1.5 MW of solar and a 2 MW battery system to provide at least 24 hours of standalone operation for over 200 customers.

Positive

• $30 million in second-wave MIP awards for six new microgrids
• Total authorized community microgrid investments exceed $73 million
• Tranche 2 projects will serve over 2,200 customers including critical facilities
• Individual Tranche 2 awards range between $2–6 million per project
• Pescadero microgrid to integrate about 1.5 MW solar and 2 MW storage for 24-hour islanding

Negative

• None.

News Explained

PG&E advances grant-funded microgrids into development, but the disclosed projects remain short of operating completion.

PG&E has selected six second-round projects and executed first-round grant agreements; the structural effect is authorized grant support moving into development, not a report of completed operating microgrids.

The agreements set terms for disbursing funds for engineering, design and development, while the Lake County FLASHES projects remain in early feasibility work with activities planned; the release therefore places the announcement at a development-stage milestone despite its deployment language.

At the program level, the release describes a $79.2 million allocation for PG&E within the statewide program, while individual projects can receive up to $14 million; those figures describe overall allocation and award capacity rather than an additional commitment in this announcement.

Market Context

A 4.58% 24-hour gain was recorded after PG&E’s Sept 3 virtual-power-plant announcement, a related gr...

Analysis

A 4.58% 24-hour gain was recorded after PG&E’s Sept 3 virtual-power-plant announcement, a related grid-resilience initiative; it provided relevant market context for this microgrid deployment and funding update.

Key Figures

Second-wave funding: $30 million Authorized investment: More than $73 million Second-wave projects: Six projects +5 more

Second-wave funding

$30 million

Six projects selected through the second MIP application window

Authorized investment

More than $73 million

Combined investment from 2025 projects and the second funding wave

Second-wave projects

Six projects

Selected through the second MIP application window

Customers served

More than 2,200 customers

Across the six projects receiving second-wave funding

Award range

$2-6 million each

Funding range for second-wave projects

Solar capacity

Roughly 1.5 MW

Pescadero community microgrid

Battery capacity

2 MW

Pescadero community microgrid

Standalone operation

Minimum of 24 hours

Pescadero microgrid operating independently

Historical Context

2 past events · Latest: Sep 03

2 events

1. Sep 03

   Virtual power plant launch

   24h Move

   +4.6%

   Launched a virtual power plant initiative to improve grid reliability and affordability

2. Aug 24

   V2X program expansion

   24h Move

   +2.8%

   Expanded vehicle-to-everything program with backup-power and grid-support capabilities

24h Move is the share-price change in the day after each event; other market factors may also have contributed.

Key Terms

microgrid incentive program, pumped hydroelectric storage, long-duration energy storage, reclosers, +1 more

5 terms

microgrid incentive program financial

"selection of six new projects through the second application window of its Microgrid Incentive Program"

A microgrid incentive program is a government or utility policy that offers financial or regulatory benefits—such as grants, tax credits, rebates, or preferential contracts—to encourage building and operating microgrids, which are local energy systems that can run independently of the main power grid. It matters to investors because these incentives change the economics, timing and risk of projects in the distributed-energy sector, similar to how a rebate on home solar panels makes the purchase more affordable and predictable.

pumped hydroelectric storage technical

"pair tens of megawatts of locally generated solar energy with pumped hydroelectric storage"

A large-scale energy storage system that uses two water reservoirs at different heights: electricity is used to pump water uphill when supply exceeds demand, and the stored water is released to flow downhill through turbines to generate power when needed. It matters to investors because it acts like a giant, long-duration battery for the grid—helping balance supply and demand, enable more renewable power, and create revenue from energy arbitrage, capacity and grid services, while involving substantial capital, operational life and permitting risks.

long-duration energy storage technical

"provide both long-duration energy storage and multi-day resilience during outages"

Long-duration energy storage is technology that can store large amounts of electricity for many hours to days and release it when needed, like a very large rechargeable battery that can power a neighborhood through the night or during multi-day cloudy periods. It matters to investors because it enables more reliable use of wind and solar, reduces the need for backup power plants, creates new revenue opportunities from capacity and grid services, and can change the economics of energy projects and utilities.

reclosers technical

"switches, circuit breakers or reclosers—paired with microgrid controllers"

Reclosers are automatic switch devices on electric distribution lines that temporarily cut power when a short or fault occurs and then quickly turn the line back on, much like a circuit breaker that tries restarting a stalled engine. For investors, they matter because reclosers reduce outage time, lower repair costs, and support grid reliability metrics—factors that influence utility operating expenses, capital spending and regulatory ratings tied to service performance.

front-of-the-meter technical

"design and development of a multi-customer, front-of-the-meter community microgrid"

Assets or equipment located on the utility side of an electricity meter that serve the wider power grid or multiple customers rather than a single household or business. Investors care because these projects (like large batteries, solar farms or grid-connected generators) compete in wholesale power markets, follow utility rules and can scale revenue through contracts or market sales; think of them as a shared highway serving many users instead of a private driveway.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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$30 million second wave advances local clean energy microgrids designed to keep communities powered during outages 

OAKLAND, Calif., Sept. 17, 2026 /PRNewswire/ -- Pacific Gas and Electric Company (PG&E) announced a major milestone in the deployment of community microgrids across Northern and Central California, including new grant agreements for projects moving into development and the selection of six new projects through the second application window of its Microgrid Incentive Program (MIP). This work builds on $43 million PG&E announced in 2025 for nine initial projects. 

Together, the projects represent more than $73 million in authorized community microgrid investments supporting local clean energy systems designed to help communities stay powered during outages. These projects span rural, coastal, Tribal and high wildfire risk areas across Northern and Central California. 

 "In addition to the grid investments PG&E is making, community microgrids empower communities to take an active role in building local resilience," said Dave Canny, Head of PG&E's North Coast Region. "PG&E is proud to partner with communities by providing incentives, technical support and the safe interconnection needed to bring these projects to life. The North Coast has helped lead the way in microgrid innovation through pioneering projects like the Redwood Coast Airport Microgrid and the Blue Lake Rancheria Microgrid. Today's MIP awardees — with advanced solar-plus-storage systems and innovative pumped-hydro designs — are building on that legacy, showing how communities and utilities can work together to strengthen resilience, keep critical services powered and advance clean energy solutions for the future." 

Building Local Power for Communities
A community microgrid is a grid-connected local energy system that can continue serving customers by operating independently during grid outages. 

It can help keep power on for: 

• Hospitals and health clinics 
• Fire stations and emergency services 
• Schools and local businesses 
• Other critical facilities and services 

Microgrids can use: 

• Solar power 
• Batteries 
• Other energy sources like biomass  
• Smart grid equipment—such as switches, circuit breakers or reclosers—paired with microgrid controllers that allow a community to safely separate from the grid and keep power flowing locally during an outage 

When the main grid goes down, microgrids can keep key services running for hours or even days. 

Tranche 1: Projects move forward with new grant agreements
PG&E is advancing several of the nine projects selected in the first application round, with awardees executing grant agreements indicating they are ready to proceed.  

These agreements set the terms and conditions for the disbursement of funds which will support microgrid engineering, design and development work—critical steps to bring projects from concept to construction. 

Lake County Advances Innovative FLASHES Microgrids
Three proposed projects in Lake County are advancing a first-of-its-kind approach known as Firemain Linked Auxiliary Supply/Hydraulic Energy Storage (FLASHES). 

• The proposed projects intend to pair tens of megawatts of locally generated solar energy with pumped hydroelectric storage that uses subsurface water resources. Solar power will be used to pump water to roofed tanks at higher elevations when energy is abundant. When electricity is needed, the water will be released through turbines to generate power. 
• The result is a system that could provide both long-duration energy storage and multi-day resilience during outages, as well as additional water supply for firefighting emergencies. If successful, the projects could serve as a model for how communities across California use local renewable energy and long-duration storage to improve resilience. 

"The FLASHES projects carry the potential to deliver energy and wildfire resiliency for Lake County communities, while also creating construction jobs and apprenticeships that could prove to be life-changing," said Brad Rasmussen, Chair of the Lake County Board of Supervisors. "Just as importantly, areas that would be hardened by the project, if constructed, include critical community facilities like the County Jail and Northwest Wastewater Treatment Plant. Funding pre-development work has long been a barrier to this project's progress. We are grateful that PG&E's Microgrid Incentive Program grant will enable the county to accomplish the first step to fully vet the environmental and financial feasibility of this innovative project." 

The three proposed microgrids would serve communities along the northwest shore of Clear Lake, from North Lakeport to Nice, as well as portions of the Hidden Valley Lake area. 

All three projects are moving into early development to determine feasibility, with geotechnical core boring, initial test well drilling, and other activities planned over the coming months. 

All three FLASHES projects were a result of collaboration between local governments and Trane Energy Services.  

"We are proud to partner with PG&E, Hidden Valley Lake and County of Lake to advance feasibility studies for these innovative microgrid projects," said Johnny Brown, Vice President and Regional General Manager for Trane. "FLASHES represents a new model for community resilience, bringing together dispatchable renewable energy, long-duration storage and critical water supply in a single project to strengthen grid resiliency, support wildfire emergency response and reduce carbon footprint. It reflects a shared commitment to advancing practical innovation that can help communities build a more resilient and sustainable energy future. After seven years of collaboration with county and community partners to help shape this vision, we're grateful for PG&E's support through the Microgrid Incentive Program to move this next phase forward." 

Tranche 2: Second round awards expand microgrid footprint
PG&E is also announcing the selection of six new projects from the second MIP application window. 

This second wave directs $30 million to projects that will: 

• Serve more than 2,200 customers 
• Support critical facilities, including schools, fire stations and health centers 

These projects use a mix of: 

• Solar 
• Battery storage 
• Biomass and biodiesel 

Together, they expand access to reliable, local energy solutions across PG&E's service area, including projects in Humboldt, Sonoma, San Mateo, Butte, Placer, and El Dorado counties. 

Award amounts range between $2-6 million each. 

One project from Tranche 2 is already advancing: in San Mateo County, the Pescadero project will be led by WestLight Energy, formerly Peninsula Clean Energy.  

• This system will energize most of the town of Pescadero, a remote coastal community along the San Mateo coastline. It includes more than 200 customers including key critical facilities.  
• The microgrid will integrate a roughly 1.5 megawatt (MW) solar system and a 2 MW battery energy storage system, to support a minimum of 24 hours of standalone operation.  
• In addition to PG&E's MIP funding, this project will also include funding from WestLight Energy and the County of San Mateo. 

"When a community faces a challenge that doesn't have an obvious solution, local public agencies like WestLight Energy have an opportunity to bring partners together," says Shawn Marshall, CEO of WestLight Energy. "That's exactly what happened here. This project shows what's possible when community organizations, local government, utilities and clean energy partners work toward a common goal." 

What Customers Can Expect
As these projects move forward, customers can benefit from: 

• More resilient electric service 
• Greater protection for critical community services 
• Cleaner local energy resources 
• Improved wildfire and emergency resilience 
• Stronger community energy independence 

More About MIP 
The Microgrid Incentive program is a statewide $200 million competitive grant program to fund clean-energy community microgrids in disadvantaged and vulnerable communities. 

• Authorized and approved by the California Public Utilities Commission, the new program allocates a total of $79.2 million in project funding for PG&E, $83.3 million for Southern California Edison, and $17.5 million for San Diego Gas and Electric.  
• Projects selected under the MIP can receive up to $14 million in award funding each for the design and development of a multi-customer, front-of-the-meter community microgrid. 
• Customers and communities interested in learning more or applying for grants through the third and final wave of PG&E MIP grant funding should visit www.pge.com/mip    

About PG&E
Pacific Gas and Electric Company, a subsidiary of PG&E Corporation (NYSE: PCG), is a combined natural gas and electric utility serving more than sixteen million people across 70,000 square miles in Northern and Central California. For more information, visit pge.com, pge.com/news, and pge.com/innovation.     

 

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SOURCE Pacific Gas and Electric Company

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What is the FLASHES concept being evaluated in Lake County microgrid projects?

The Lake County projects will evaluate Firemain Linked Auxiliary Supply/Hydraulic Energy Storage (FLASHES), which intends to pair tens of megawatts of locally generated solar energy with pumped hydroelectric storage using subsurface water resources. Solar power would pump water to roofed tanks at higher elevations when energy is abundant, then release it through turbines to generate electricity when needed, aiming to provide long-duration storage, multi-day outage resilience and additional water supply for firefighting.

How many customers and facilities will the second-wave MIP projects support and where are they located?

The second application window will direct $30 million to six projects that together will serve more than 2,200 customers, including schools, fire stations and health centers. These projects are located across Humboldt, Sonoma, San Mateo, Butte, Placer and El Dorado counties within PG&E’s service area.

What are the key technical details of the Pescadero microgrid project?

The Pescadero project in San Mateo County, led by WestLight Energy, is designed to energize most of the town, serving more than 200 customers including critical facilities. It will integrate a roughly 1.5 MW solar system and a 2 MW battery energy storage system, with a goal of providing a minimum of 24 hours of standalone operation. Funding will come from PG&E’s MIP, WestLight Energy and the County of San Mateo.

What is the Microgrid Incentive Program (MIP) and how much funding is allocated to PG&E?

The Microgrid Incentive Program is a statewide $200 million competitive grant initiative to fund clean-energy community microgrids in disadvantaged and vulnerable communities. It is authorized and approved by the California Public Utilities Commission. The program allocates $79.2 million in project funding for PG&E, $83.3 million for Southern California Edison and $17.5 million for San Diego Gas & Electric. Individual projects can receive up to $14 million each for design and development of multi-customer, front-of-the-meter community microgrids.

How can customers and communities apply for future PG&E MIP grant funding?

Customers and communities interested in learning more or applying for grants through the third and final wave of PG&E’s MIP funding are directed to visit www.pge.com/mip for program information and application details.