Recently, I had an opportunity to talk with Paul Fenn, who has written or helped write several pioneering pieces of legislation which allow communities to aggregate their electricity purchasing power in order to choose renewable energy. This policy framework is called community choice aggregation, or CCA (of course, if I mangle any of the specifics, it will be from my own lack of understanding).
When a CCA is created, the city or town or county can contract with an energy service provider (ESP) to provide the power for all residents of the area, if the residents so choose (so far, only about 5 percent of residents haven’t signed up with various CCAs).
In the case of the San Francisco CCA, the electricity service provider (ESP) will produce 360 megawatts over three years: 103 from distributed renewables, mostly PV on buildings; 150 from a wind farm; and 107 from conservation and efficiency. That should constitute 51 percent of San Francisco’s electricity needs (up to 20 states are pursuing CCAs). The utility still provides the transmission lines, billing, and electricity backup.
In 2001, San Francisco voters also passed a proposition to allow for “solar bonds” to be issued by the city (with an assist from Adam Browning’s VoteSolar Initiative). These bonds will be used to construct the wind and solar electricity generating equipment and “smart grid” equipment which will be paid back by the revenue from the electric bills of the San Francisco residents who are part of the CCA. This mechanism gets around the biggest problem we’ve had with building wind and solar electrical generating capacity — the lack of upfront capital.
As Paul pointed out to me, the relatively cheaper upfront costs of putting up fossil fuel plants is made possible because the cost of the fuel (coal, oil, natural gas) is spread out over the life of the plant. That is, you can put up a coal plant relatively cheaply in comparison to a solar plant, but then you have to keep providing the coal.
In the case of wind and solar, on the other hand, there is no fuel, so almost all of the cost (except for maintenance) has to be spent at the beginning. In addition, fossil fuel plants don’t have to pay for the pollution, carbon emissions, death, and destruction that they cause.
By tying in a CCA with a municipality’s bond-raising capacity, San Francisco is taking advantage of the best of two worlds: the market and the government. On the one hand, the government can aggregate the buying power of thousands or millions of residences to achieve public goals; on the other hand, ESPs compete for the best plan, the ESP can buy whatever renewable energy sources (including conservation) make the most sense, and residents can use another source (the utility) if they want.
I see four public goals that can be met with a bond-supported CCA:
- Transforming the source of electricity to renewables, thereby reducing carbon emissions;
- increasing the economic independence and power of the community, by disconnecting from far-flung fossil fuel sources and utilities;
- increasing the resiliency of the community’s electrical supply by providing electricity from the buildings themselves and the local community; and
- eventually bringing the cost of supplying energy down, thus increasing standards of living.
A bond-supported CCA is similar to the efforts of the Clinton Foundation, which has put together several “buyer’s clubs” composed of cities in an attempt to bring down costs — indeed, Clinton’s efforts may have been inspired by CCAs. Berkeley’s policy of providing homeowners with the upfront money to buy solar panels (to be paid back with the savings gained) is similar, although not as comprehensive. For instance, the CCA has the potential to make the production of megawatts, or the conservation of electricity, profitable, as I will try to explain in the next post (and Berkeley is looking into joining a CCA).
Next: Yours truly attempts to understand the byzantine world of electricity policy and how CCAs make everything better. Electricity industry experts, sharpen your knives!
And for your video enjoyment, here is “Going local: The movement for community choice energy.”