Monday Commentary: City Needs to Pursue Housing, Not a Microgrid

Key points:

• Davis City faces a real and immediate housing crisis.
• City Council considers microgrid requirements for new projects.
• City staff recommends deferring microgrid discussion until General Plan update.

The city of Davis is facing a real and immediate crisis: a shortage of housing. With two large Measure J projects already confronting uncertainty at the ballot box, the city should be laser-focused on how to facilitate the addition of housing and affordable housing—not distracted by speculative and costly ideas like a citywide microgrid.

This week, the Davis City Council is being asked to give direction to staff on whether peripheral projects should be conditioned to help finance or host a community microgrid. The problem with this discussion is that it is vague, premature, and adds unnecessary costs and uncertainty to projects that already face a high hurdle in gaining voter approval.

In fact, the city has been down this road before. A decade ago, Davis engaged in a rigorous debate over how best to secure its energy future. The options on the table included municipalization, microgrids, and community choice energy.

After years of study and community conversation and buy-in, Davis and Yolo County concluded that Community Choice Energy—through a joint powers agreement that ultimately became Valley Clean Energy—was the most feasible, cost-effective, and scalable path forward. It is hard to see why, in the middle of a housing crisis, the city would reopen questions that were settled nearly a decade ago.

The city is struggling to add housing, particularly affordable housing. The two major projects on the horizon—Village Farms and Willowgrove—are subject to Measure J and must win approval from Davis voters. That is already a tall order, given the city’s history of rejecting most projects that come before the electorate.

Adding another layer of uncertainty in the form of undefined microgrid requirements risks creating one more reason for projects to stall or fail.

Developers need predictability. Voters need clarity. Right now, they have neither.

In fact, the city already vetted municipalization and microgrids in the lead-up to the creation of Valley Clean Energy. That process established that a CCE was the most viable route.

Reintroducing microgrids now not only risks confusing the public but could also impose large new costs that would inevitably be passed on to the very housing projects the city says it wants to see built.

The staff report acknowledges as much.

It notes that the General Plan does not contemplate solar farms as a land use and that the Climate Action and Adaptation Plan does not specify how or where community solar or microgrid facilities would be developed.

Staff even admits that the study needed to evaluate these questions “has yet to occur.” Instead of providing clear policy, the report floats options that include deferring the issue until the General Plan is updated, requiring creation of a microgrid, or halting processing of peripheral projects altogether until the General Plan is revised.

Each option carries uncertainty, but only one—staff’s preferred approach—avoids throwing a wrench into projects that are already far along in planning and environmental review.

Adding new microgrid requirements would force revisions to environmental impact reports, delay approvals, and possibly derail projects altogether. If the goal is to meet the city’s housing needs, it makes no sense to introduce requirements that staff themselves admit are premature.

The current debate echoes the city’s energy deliberations in 2013–2016.

At that time, Davis seriously considered three models: forming a publicly owned utility (POU), building microgrids, or joining the growing movement toward community choice aggregation.

Gerry Braun and Richard McCann wrote in 2014 that “the city’s energy choices will be increasingly consequential and therefore deserve informed and thoughtful attention by city leaders and citizens.” They noted that Davis had studied municipalization, which would have required the city to purchase PG&E’s distribution system.

While that option could have given Davis full control, it came with enormous risks: “City Council members recognized that operating a POU would involve the same costs and risks faced by existing POUs as well those to be encountered prior to start up.

“Incumbent for-profit utilities wage costly, no-holds barred, political and electoral campaigns to prevent the formation of CCAs and POUs. Elected officials are often targeted.”

Community choice aggregation, by contrast, allowed cities to procure energy without taking over the physical grid.

As Braun and McCann explained, “Another option is called community choice aggregation (CCA). It involves taking responsibility for power procurement, but not power delivery, which would continue to be provided by the incumbent for-profit utility.”

They pointed out that Marin and Sonoma had already launched CCAs and were able to provide power at rates below PG&E’s residential prices.

Their bottom line: “As energy professionals and Davis residents, we are concerned that the costs and risks of doing nothing to change Davis’s approach to electricity supply may outweigh the costs and risks of taking action. We are daily reminded of the profound and transformational implications of new smart and clean technologies for business as usual.”

The city’s own consultants reached the same conclusion in 2016.

The Technical Study stated bluntly that “establishing a municipal utility would require Davis to acquire PG&E’s existing distribution system, which would be both cost-prohibitive and legally contentious.”

Instead, the study found that “the Community Choice Energy model provides many of the same benefits of local control without the prohibitive costs and risks associated with municipalization.”

On microgrids, the report was equally clear: “Microgrids may have a role for specific facilities or neighborhoods but are too limited in scale to substitute for community-wide energy procurement.”

By 2017, when Davis, Woodland, and Yolo County came together to form Valley Clean Energy, staff emphasized the same point.

As the JPA report put it, “The formation of Valley Clean Energy was driven by the desire of Davis, Woodland, and Yolo County to secure cleaner energy at stable rates while avoiding the significant costs and risks associated with creating a municipal utility.”

It added, “Microgrids and local generation remain long-term options, but were not considered viable substitutes for the Community Choice model.”

The conclusion was unmistakable: “CCE allows participating jurisdictions to meet climate goals, exercise local control, and develop programs tailored to community needs without the financial burden of owning and maintaining the electric distribution system.”

That history should matter today. Reintroducing microgrid requirements in the context of housing approvals feels like relitigating a question that has already been settled.

The real danger here is that by tying housing approvals to undefined microgrid mandates, the city could effectively kill its best chance in years to add significant new housing. Village Farms alone proposes nearly 1,900 units, with hundreds set aside as affordable. Willowgrove would add another 1,000 units.

Together, these projects represent the scale of housing Davis needs to even begin addressing its shortage. If those projects fail at the ballot box—or never make it there because of added costs and delays—the city will continue to fall further behind on housing. That has real consequences: students crammed into overcrowded rentals, families priced out of town, workers forced into long commutes, and vulnerable residents left without affordable options.

It is no exaggeration to say that the city’s future depends on getting housing built. Everything else—including ambitious but ill-defined energy initiatives—must take a back seat until that core challenge is addressed. None of this is to say that microgrids have no place in Davis’ future. T

The Climate Action and Adaptation Plan identifies microgrids and resiliency hubs as a long-term goal. They could be useful in enhancing energy security for critical facilities like hospitals, schools, or emergency shelters.

But that is a conversation for the General Plan update, where land uses, costs, governance, and equity considerations can be fully evaluated.

It should not be imposed ad hoc on the city’s largest housing proposals without clear policy guidance or environmental review.

Ultimately, the City Council faces a choice. It can stay focused on the urgent need for housing, or it can chase speculative energy projects that were already deemed less feasible nearly a decade ago.

The staff recommendation is the right one: defer the microgrid discussion until the General Plan update is complete. In the meantime, give housing projects the clarity and certainty they need to move forward. The alternative—layering on vague, expensive, and premature requirements—will only deepen the city’s housing crisis.

At a time when Davis students, families, and workers are desperate for more housing options, the city cannot afford to lose sight of its priorities.

Davis should stick to the path it wisely chose years ago with Valley Clean Energy, focus on delivering new housing, and revisit microgrids when it has the policy framework and resources to do so responsibly. For now, the message should be clear: Davis needs housing, not a microgrid.

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