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State of Community Choice Aggregation in the U.S. Utility Sector

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In doing some reading about the state of community choice aggregation (CCA) programs across the United States, I came across a very useful report from the National Renewable Energy Laboratory (NREL) that I thought would be interesting to share with this community.

This NREL report, titled 'Community Choice Aggregation: Challenges, Opportunities, and Impacts on the Renewable Markets' is among the most comprehensive and educational resources I've found recently on CCAs. Anyone who is interested in not only the impact to utilities and their customers, but also the clean power sector specifically, should definitely check out the entire report. 

Given that it's pretty intensive though, I wanted to share some of the main points that I thought were interesting, informational, and warranted some discussion...

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What is Community Choice Aggregation?

Community choice aggregation is only an option in the handful of U.S. states with deregulated markets, but in those regions it represents the option that local government entities have to purchase electricity on behalf of retail customers-- these CCA programs might be run by a city or county government or by a third party, but regardless of who procures the wholesale power, it still gets delivered via the IOU's existing transmission and distribution network. The exact structure varies depending on the CCA (most are opt-out, while others require opting in), but the key to CCA is the choice-- CCAs have the freedom to choose the mix of energy generation to supply their community's needs. This freedom is often used to enable an energy mix that is higher in renewable energy and clean power, while also giving the freedom to find the most affordable energy sources on the open market. 

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How do CCAs Affect Voluntary Green Power Purchases?

One of the key areas that NREL focused on this report was in analyzing the effect that CCAs have in states fulfilling, and notably exceeding, their voluntary green power goals, though there was an interesting trend here geographically and with different states reaching different levels. Here, I'll let the report's text speak for itself:

In 2017, about 100 of the 750 active CCAs offered a voluntary green power product. We estimate these CCAs procured about 8.9 million MWh of voluntary green power on behalf of 2.7 million customers. The voluntary green power share of total CCA sales varies geographically. Voluntary green power currently accounts for the greatest share of CCA electricity sales in New York, where a single CCA offers opt-out and opt-in voluntary green power products. Voluntary green power sales in Illinois and Massachusetts are led by numerous communities that offer opt-out voluntary green power products, often at 100% renewable energy. Voluntary green power CCA  sales in Ohio are driven by 100% opt-out voluntary green power programs, though other CCAs offer opt-in voluntary green power. In California, most CCAs offer electricity portfolios that exceed the state RPS. However, because most California CCAs do not offer opt-out 100% renewable energy products and because the California state RPS is relatively high, voluntary green power sales in California compose a small share of overall CCA sales. No CCAs in New Jersey or Rhode Island currently offer voluntary green power products.
...A CCA expansion could have both direct and indirect effects that could increase renewable energy supply. CCAs that decide to procure local renewable energy from new projects could have direct impacts on renewable energy supply. Especially in regulated or partially restructured markets, CCAs may indeed be required to procure new renewable energy capacity, and California CCAs have already demonstrated an ability to increase renewable energy supply through long-term contracts with new local generators. Furthermore, an influx of up to 56 million MWh of new voluntary green power demand could increase REC prices and send market signals that could indirectly result in new installed renewable energy capacity. Analysis of the relationship between CCAs and new renewable energy supply is an area for further research. 

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What Challenges are Facing CCAs today?

Lastly, the most important part of the CCA analysis by NREL was the dive into what challenges are facing CCAs today. They are only available in a handful of states, and within those states there's also room for growth-- so what's holding these types of programs back? These challenges breakdown into the following categories:

  • Maintaining cost savings
  • Balancing local autonomy and regional cooperation
  • Local renewable energy procurement
  • Customer awareness
  • Customer opt out
  • Policies regarding CCA suspension or dissolution
  • Challenges specific to currently regulated markets

I'd highly recommend reading the report to dive into these challenges (as well as how they might be overcome) for yourself, if the CCA approach to clean energy interests you. 

Matt Chester's picture

Thank Matt for the Post!

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Discussions

Bob Meinetz's picture
Bob Meinetz on May 17, 2019 7:17 pm GMT

Matt, a popular misunderstanding - there are no "100% renewable energy" programs available from CCAs or anywhere else. If your source for electricity is a grid where any part of it is generated by burning fossil fuel, even if it has been stored in a battery, your electricity is not 100% renewable.

Suppose a customer with a "100% renewable energy" program in Alabama burns 100 kWh of electricity on a sunny, windy day and copious amounts of renewable energy are available. At those times it's very possible the customer's consumption might be powered by 100% renewable electricity.

Now consider a hot, summer night when the wind isn't blowing. Because no renewable energy is locally available, a local coal plant is churning out electricity - and emissions - to power the customer's air conditioner. The customer's CCA buys "Renewable Energy Credits" (RECs) received by a solar farm in California when it generates 100 kWh of renewable electricity for someone else, and then claims the credits can be applied to the customer's account to cancel any harm his consumption has caused to the environment. Can they?

No. Of the total 200 kWh of electricity which has been consumed in Alabama and California, only 100 kWh - 50% - is "renewable." Generating the other 50% with coal emitted 220 lbs. of CO2. The utility could buy 2 times as many RECs (66%) or 3 times (75%), but the customer's very expensive electricity will never be "100% renewable."

The solar farm, which has sold its RECs to the customer's utility, isn't off the hook either. By selling its renewable energy credits, the farm has lost the right to characterize its electricity as renewable. Yet somehow its owners feel entitled to state and federal clean energy subsidies. Somehow, its California customer takes comfort in the belief her electricity is clean, when it's no cleaner than that of a coal plant in Alabama.

Over time, how clean the Alabama customer's energy actually is depends on his local generation and when he's using electricity. Assuming the customer's area can optimally generate 100% of peak demand with solar and wind, a reasonable capacity factor of 30%, and the customer's consumption is constant all day long, his energy would average 30 + (.5 x 70) = 65% renewable with his "100% renewable" plan. Sometimes it will be more, usually it will be less, but it will never, ever be 100% renewable.

Matt Chester's picture
Matt Chester on May 16, 2019 10:23 pm GMT

It's true that the grid is the grid and when you're connected to it you're connected to the mix of the region. When companies create PPAs for direct transmission to their facilities, that's a different story-- but because CCAs inherently use the legacy utility's T&D systems it's quite different. That said, as an accounting practice and a way to spur renewable energy generation projects where they would otherwise not be viable, CCAs are quite a valuable tool.

To your assertion that anyone writing about such 100% renewable energy programs isn't qualified, I would say that scientists and researchers at NREL who wrote the research in this article are more than qualified. They aren't obtuse and they don't think the electrons being put into CCA-connected homes are any different, but they also have tremendous understanding of the marketing and policy mechanisms at work here. 

Bob Meinetz's picture
Bob Meinetz on May 17, 2019 7:50 am GMT

See above, and read the source quoted in the article: the scientists at NREL avoid the term "100% renewable" except as a generic label for energy plans, specifically because they're incapable of qualifying it using RECs. They're not obtuse, just fudging data to justify their jobs (not sure which is worse).

BTW - PPAs don't entitle the purchaser to claim their energy is "100% renewable" any more than end-use customers with a "100% renewable" plan can. The renewable facility receives RECs which are used to greenwash dirty energy, and the DEDs it receives in return ("Dirty Energy Debits") can't simply be swept under the rug.

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