State of Community Choice Aggregation in the U.S. Utility Sector
- May 16, 2019
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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...
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.
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.
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.