Special Notice / Hearing: None__
Vote Required: Majority
To: Honorable Board of Supervisors
From: Supervisor Ray Mueller, District 3
Subject: Request for County of San Mateo’s Funding Commitment for the Pescadero Community Microgrid Project
RECOMMENDATION:
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Adopt a resolution:
A) Authorizing the commitment of up to $3,000,000 in match funding to Peninsula Clean Energy (PCE) in Fiscal Year 2027-28 for the Pescadero Community Microgrid Project, contingent upon successful award of Pacific Gas and Electric Company’s (PG&E) Microgrid Incentive Program funding to Peninsula Clean Energy; and
B) Authorizing the County Executive, or designee(s), in consultation with the County Attorney, to negotiate and execute a grant agreement or agreements with Peninsula Clean Energy and/or Pacific Gas and Electric Company for a total amount not to exceed $3,000,000; and
C) Authorizing the County Executive, or designee(s), in consultation with the County Attorney, to take all actions necessary to implement the grant agreement(s) with Peninsula Clean Energy and/or Pacific Gas and Electric Company including to negotiate, execute, and/or deliver any and all documents, amendments, and certificates in connection with the agreement(s) deemed necessary or advisable by the County Executive, or designee(s), to effectuate the purposes of this resolution and to carry out the terms of the agreement(s) within the authorized funding limit.
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BACKGROUND:
Peninsula Clean Energy (PCE) is seeking grant funding from Pacific Gas and Electric Company’s (PG&E) Microgrid Incentive Program (MIP) to develop the Pescadero Community Microgrid Project (PCMP). The MIP provides incentives for Community Microgrids located in disadvantaged or vulnerable communities that are prone to outages. A microgrid is a small-scale power grid that can operate independently from the main grid and provide backup power for a localized area during times when the larger grid experiences an outage. The proposed project would utilize a solar and battery system to provide a clean energy backup power solution for critical facilities and residents in the town of Pescadero. Staff from the Department of Emergency Management and Department of Sustainability engaged with PCE during the project scoping phase and provided input on the overall project concept.
The MIP scoring system prioritizes smaller projects, giving higher scores to projects that request less funding from the MIP. If a project with an ambitious scope such as the PCMP hopes to secure MIP funding, it must find local partners willing to contribute to project development costs to remain competitive.
The MIP application is due Wednesday, December 17, 2025. In order to ensure a competitive application, it is critical for the County of San Mateo(“County”) to pledge a financial commitment of $3 million, in conjunction with the $10 million commitment that PCE’s Board approved on November 20, 2025. The grant application package will include approved resolutions from the PCE Board and County Board of Supervisors demonstrating financial commitment from each entity’s governing body. The competitiveness of the PCMP MIP application is directly tied to the scale of the County's commitment.
DISCUSSION:
The town of Pescadero is very vulnerable to power outages. There were over 400 power outages over a two-year period between 2021-2022; 25 of these outages lasted more than 24 hours, and the average power outage duration in Pescadero is eight hours. While the longest outage lasted two weeks, the grid in the Pescadero community is down for ~18% of the year which impacts day-to- day life for residents and operations for businesses.
The MIP provides incentives for Community Microgrids located in disadvantaged or vulnerable communities (DVCs) that are prone to outages. In PCE’s service area, the coastal area of San Mateo County meets both MIP eligibility requirements and stands out as an area that experiences repeated and extended electricity outages. Based on this criteria, PCE staff analyzed potential Community Microgrid sites in its service area and identified strong alignment between the town of Pescadero’s situation and the program requirements.
In Pescadero, the proposed Community Microgrid (solar and battery system) will cover nearly the entire town of Pescadero, making it one of the largest - if not the largest - Community Microgrid. The Pescadero Community Microgrid will cover more than five critical facilities (two schools, the fire station, Puente de la Costa Sur and various community centers), as well as over 100 residences and businesses. The community microgrid will operate in parallel with the existing PG&E power grid during normal conditions but will operate independently during grid outages. During an outage the microgrid system is expected to provide, within the microgrid boundary area, up to three days of resilience in average winter months and more than seven days during the summer.
The project development cost is estimated to be $16.5 million (see Table 1) and includes solar system procurement, battery procurement, engineering costs, project management costs, and land lease. PCE has committed to funding 61% of project development costs, which is approximately $10 million. The remaining project costs will be met by a combination of grant funding from the PG&E MIP program and financial support from the County. The higher the share of the match funding from the PCE and the County, lowers the funding request to PG&E, which increases the chances of securing the MIP funding.
Table 1: Pescadero Community Microgrid Project (PCMP) Proposed Funding Plan
|
Entity |
Percentage |
Estimated Cost* |
|
PCE |
~61% |
$10 million |
|
County of San Mateo |
~18% |
$3 million |
|
PG&E MIP |
~21% |
$3.5 million** |
*Assuming $16.5 million Project Development Cost
**MIP Incentive request is dependent on the scale of commitment from the County
Contingent on MIP funding, the PCMP is scheduled to begin with an approximately 18-month planning phase after award. The project would start incurring costs in Fiscal Year 2027-28. While PCE does not have to commit to a specific location for the solar and battery system at the time of the MIP application, PCE has engaged with the Pescadero La Honda Unified School District to discuss potential project siting at the local school. However, other siting options can be considered as well and would be further discussed if MIP funding is awarded.
If funded, the Pescadero Community Microgrid would be one of the largest renewable-energy-based community microgrids in the country and position San Mateo County as a leader in climate resilience and a champion of clean energy technology. This project supports the County’s Community Climate Action Plan (CCAP), which the Board adopted in October 2022 (Resolution No. 079264). Implementing microgrids to generate local renewable energy and improve resiliency is directly aligned with commitments in the CCAP.
The County Attorney’s Office has reviewed and approved the resolution as to form.
COMMUNITY IMPACT:
The unincorporated town of Pescadero experiences frequent power outages which disproportionately impact vulnerable residents. Common impacts include school closures, food spoilage, and interruptions to the functioning of the local Core Resource Agency (Puente de la Costa Sur).
A community microgrid would help maintain access, power, and communication for the town’s residents during a power outage by providing at least three days of energy resilience during average winter months.
FISCAL IMPACT:
The total projected project cost is $16.5 million. The County’s commitment to fund up to $3 million in Fiscal Year 2027-28 for partial project development costs would improve the competitiveness of the MIP application and help secure additional PG&E MIP funds for the project.