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Matt Chester
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Episode #84: 'The Clean Energy Opportunity for Community Energy Providers' With Nick Chaset, CEO of East Bay Community Energy [an Energy Central Power Perspectives™ Podcast]

The landscape of the traditional legacy utility continues to be challenged by new technologies, public policies, and customer demands. Among the latest developments that are creating change in the power sector is the rise of Community Energy organizations. Community energy, such as community choice aggregators, enables customers to take an unprecedented level of control over their power services by offering them the option to engage with new providers, which opens them up to choosing the company that best aligns with their energy goals. In particular, customers who are particularly clean energy-focused are finding the opportunity to engage with community energy to be a game-changer in taking ownership of their energy and carbon footprints.

Joining the Energy Central Power Perspectives Podcast to discuss what it's like to be one of these new players in the space of Community Energy is Nick Chaset, the CEO of East Bay Community Energy in the Bay Area of California. With a service area filled with many businesses and residents who jump at the opportunity to play a role in the clean energy transition, not to mention the region's innovation-minded reputation, EBCE has an unparalleled opportunity to push the envelope of Community Energy offerings. Nick joins podcast host Jason Price and producer Matt Chester to share his insights and lessons learned from what EBCE has been able to accomplish to date.

Prefer to Read vs. Listening? Scroll Down to Read Transcript.

Thanks to the sponsor of this episode of the Energy Central Power Perspectives Podcast: West Monroe. 

Key Links

  • Did you know? The Energy Central Power Perspectives Podcast has been identified as one of the industry's 'Top 25 Energy Podcasts': blog.feedspot.com/energy_podcasts 

 

TRANSCRIPT

Jason Price: 

Hello, and welcome to this week's episode of the Energy Central Power Perspectives Podcast. This is the show that brings to the podcasts booth some of the industry's leading minds to discuss the challenges and trends that they're seeing transform the modern energy systems of today and the utility sector of tomorrow and a quick thank you to West Monroe, our sponsor of today's show. Now, let's talk energy.

Jason Price: 
I'm Jason Price, Energy Central podcast host and director with West Monroe coming to you from New York City. With me, as always, from Orlando Florida is Energy Central producer and community manager, Matt Chester. Matt we're diving into the world of community energy today. This modern model, delivering energy that is more affordable while also being cleaner is growing in certain areas of the country. End customers are seeing that perhaps these options better align with their values and that they can do so without feeling it in their wallets. This isn't the first time we've had a guest discussing the community energy side of the industry, Matt recap for us related discussions and briefly help us understand what we mean by community energy.

Matt Chester: 
That's right, Jason. So community energy, it's a unique and growing type of power provider in the United States, and it's one where customers opt to use these companies because they're better suited to meet those customers' goals than the legacy providers. Whether that's because of costs, clean energy in their grid mix, specific programs they offer, or otherwise. And you're right back in episode 69 of this podcast, we had on the CEO of MCE, which was California's first community choice aggregator, and she provided us with some insights on the unique ways that community energy organizations can bring new innovation and ideas to the energy sector. By not being beholden to investors like IOUs and by having more flexibility than municipal utilities, community energy really brings the power and the choice to the customers in a new and exciting way for the utility sector.

Jason Price: 
That's a helpful recap. And we're excited to get another perspective from the world of community choice aggregators, or CCAs, just as IOUs or municipal utilities are not monoliths and how they go about their business, the same can be said for community energy and we're eager to dig into the unique opportunities today's guest helps bring to his customers. So without further ado, our next guest is Nick Chaset, the CEO of East Bay Community Energy or EBCE. At East Bay, they serve 1.7 million customers across 15 communities with a total annual generation profile of seven hours per year. And being situated in the Bay Area of California gives East Bay Community Energy some additional opportunities that they've been able to tap into like no other community energy services provider could be for them. Showing that this model of power provider is right for innovation and optimization beyond the earlier stage offerings. And we're eager to learn more all about them straight from Nick himself. So let's not delay it any longer. Okay, Nick Chaset, welcome today's episode of Energy Central Power Perspectives Podcast.

Nick Chaset: 
Thank you very much. I really appreciate the opportunity to be here.

Jason Price: 
Nick, start us off with EBCE. Tell us about your service territory size and demographics. I'm imagining it's a diverse community you serve.

Nick Chaset: 
It absolutely is Jason. We serve 1.7 million residents and businesses across 14 cities and the unincorporated parts of Alameda County. We serve two counties as well. So cities like Oakland and Berkeley and Fremont, but also different kinds of cities are a little bit more rural, a little bit more agricultural, like the city of Livermore and the city of Tracy. We launched in 2018 as a not for profit public agency governed by local elected officials like mayors and members of city councils, who sit on our board. And we have been offering our customers a cleaner, less expensive electricity mix ever since then.

Jason Price: 
Nick, we tried to cover the basics of East Bay Community Energy in our intro, but is there anything about the elevator pitch that we missed? Perhaps you can elaborate for the audience who are unfamiliar with community energy, or CCAs, what do you own or operate along the power generation, the T&D and the delivery process?

Nick Chaset: 
Community choice energy agencies like East Bay Community Energy actually do not own the transmission or distribution wires. Our customers are joint customers with Pacific Gas and Electric in our case, but with the transmission and distribution utility in general. What we do is buy wholesale electricity from sources like wind farms and solar power plants, and transmit that energy through the infrastructure of the transmission and distribution utility to our customers. So, in that sense we provide retail electricity service. We do contract for, and in some cases potentially own, electricity generation. For the most part, CCAs East Bay included, do not today own significant generation. Largely because of our focus on delivering cleaner resources like wind and solar. But because we are a not for profit government agency, we do not have the ability to monetize the really important tax credits that drive a lot of the construction and operations of wind and solar. And so we have a strong preference and tendency to partner with independent power producers that own and operate these renewable assets.

Jason Price: 
All right, well California has some of the most aggressive, clean energy goals. So how do you envision EBCEs role in helping to meet evolving clean energy goals? California's 2045 targets for 100% clean energy and mandates to procure more non weather dependent zero emission energies by, I think, you set goals of even 2026, so that's just right around the corner.

Nick Chaset: 
At East Bay Community Energy we have set a goal of achieving 100% clean energy by 2030, that's a full 15 years ahead of the State of California's mandates. We are also very focused on bringing a more diverse mix into play. So historically in California, we have been very, very much reliant on wind and solar, and that has done very well for us, both from a reliability perspective or from a cost standpoint. But as we are reaching saturation points for wind and solar, we increasingly need to rely on energy storage to shift solar from the middle of the day into the evening, and then other resources like geothermal power. In fact, California set a requirement for all electricity providers to begin procuring new geothermal resources starting in 2026. And at East Bay, we were the first provider of any sort community choice or otherwise to contract for a new 24/7 mission geothermal resource in response to these mandates. And that's a partnership we have with VRBO Energy to deliver 40 megawatts, that is enough to power 44,000 homes with 100% renewables.

Jason Price: 
If I'm not mistaken, since you're one of the more newer CCAs, you may be even at an advantage given that you can tap into newer technologies and all that. So being a newcomer to the space has that offered you the ability to learn more from other organizations, do what's right, proven areas where others have failed? Can you talk a little about that?

Nick Chaset: 
Absolutely. So the first CCA formed just about 10 years ago and there have been really significant learnings that we at East Bay have been able to gain from their experiences procuring energy, engaging with customers to get them to participate in clean energy programs. But we have also been able to lean into our status as a new provider to really rely on the best in class new technologies and approaches. We're not burdened by legacy technology systems that incumbent utilities have. Technologies that they may have put in place 15, 20 years ago and that limit their ability to do things like utilize machine learning and artificial intelligence to develop much more accurate forecasts of how much energy we expect our customers to use.

Nick Chaset: 
At the same time while we are new, we formed in 2017 and we started serving customers in 2018, we have moved rapidly to deploy new renewables and other innovative, clean energy initiatives. We have over 750 megawatts of wind and solar contracts that we've contracted for in just four short years. On top of that, 275 megawatts of battery storage. All these resources are going to help us continue to offer our customers lower cost, cleaner energy than they would otherwise be able to get. In 2021 alone, we brought on over 170 megawatts of these projects onto the grid. A 57.5 Megawatt wind farm in one of the communities we serve.

Nick Chaset: 
I'll just take a second to highlight the fact that part of what we were formed to do is to bring local clean energy to our communities, that also creates local economic development. And so we're very proud that we're able to, within three years of launch, build a really meaningful wind farm in the city of Livermore to serve our communities. We also have partnered with innovative technology companies like BlocPower, a company that was recently named by Fast Company, one of the world's most innovative, clean energy companies, to deliver electrification to low and moderate income consumers across our service territory. So there, the idea is to install electric heat pumps and other energy efficiency in homes at a cost that is much lower than those consumers might have otherwise been able to afford.

Jason Price: 
Those are great examples. I'm also intrigued by your background. I understand that you worked for a number of years directly with the President of the California Public Utility Commission. So I have no doubt that this experience framed how you look at their regulatory landscape in the State. What did you learn during the experience that you saw open doors when it came to how you wanted to run East Bay Community Energy?

Nick Chaset: 
I worked for the California Public Utilities Commission during a period of significant change in the California energy market, right when California was starting to implement its energy storage mandates, its 100% clean energy mandates, but also was there observing changes to policies like net energy metering. And so when I was looking to East Bay Community Energy and thinking about what we could do to differentiate ourselves and deliver sustainable value to our customers. I both wanted to build a business that is able to offer our core retail, electricity product at a lower cost with more clean energy. But also felt to do so we needed to really lean into investments in distributed energy resources and transportation electrification. Leveraging the relationships we have with our customers and with our local government partners to really find ways to meaningfully rely on these customer oriented, local, clean energy resources to fill grid needs. And so that's been something we have really tried to find ways to demonstrate feasibility of not just through small pilot projects, but at meaningful scale.

Jason Price: 
All right, East Bay at the end of the day is a business, and so I'd love you to take us into a little bit more of the business mechanics, if you will, because you're introducing degree of choice to the customers that aren't necessarily common in the utility space. So let's talk a bit about, for example, customers opting into the business into the service. What is the churn rate in terms of customers staying with you and how does that compare to your peer CCAs share with us? Perhaps some lessons learned from customers who leave and how are you continuously improving the service model?

Nick Chaset: 
One of the powers of community choice in California is the fact that when a community joins a CCA, 100% of customer accounts are defaulted onto that CCA service. So, we are not faced with the challenge of going door to door and trying to acquire customers, which can be very challenging and expensive. But we do need to keep our customers because 100% of our customers have the ability to opt back to take the service from the investor owned utility. To do that we really focus on a number of facets of our value proposition. For us in particular at East Bay part of that is offering cost savings and that is a major priority. Over time we have also found many of our customers are very interested in 100% renewable energy, and so we have a growing portion of our customers that are on our renewable 100 rate. We still serve about 95% of our eligible customers. So over four years, only 5% of our customers have opted to leave our service and return to PG&E.

Nick Chaset: 
Some of our major lessons learned though, are that there is a class of customer that is a bit distrustful of a new entrant. They have been customers of, in our case PG&E, their whole lives. And so suddenly they're seeing this new name East Bay Community Energy on their bill and they question what that is, and so they will opt out. We have really invested heavily though in customer service and we are really proud of our partnership with the Sacramento Municipal Utility District that provides customer service for our customers. And what we find is in many of those cases, customers will call our call center and through a conversation with a customer service representative they're able to better understand our value and may choose not to opt out. So educating your customers, really important. Providing good resources and reliable response times from your call center, really important. We are also seeing that over time, customers are coming back to us, right when we launched in 2018 is when we saw the majority of customers opt out, but over time, as they learn more about the benefits of our service, cleaner energy, lower costs, they are electing to opt back in.

Jason Price: 
I have to ask, since you're in the Bay Area, you're near Silicon Valley, share with us what is it like being so close to an innovative center and how has that, if at all, influenced your business, the business model or the way you operate?

Nick Chaset: 
Well, when I think about the communities we serve in the East Bay, I think about the fact that we are really the clean energy innovation hub. Certainly many of the traditional technology leaders were founded and based in Mateo County, Santa Clara County, but many global leading clean energy companies were founded and continue to operate in our service territory. Companies like Nextracker, the largest manufacturer of solar tracking system, born and operates today out of the city of Fremont, a city we are proud to serve.

Nick Chaset: 
That being said, we really believe that innovation and the kind activity to innovation leaders and entrepreneurs is core to our value proposition to our customers and to our ability to achieve our goals and that's why we have pursued partnerships like the one with VRBO Energy for geothermal power, partnerships with BlocPower to deliver electrification for our low and modern income residents. Or, to deploy the largest virtual power plant yet developed with Sunrun. One of the nation's leading residential, solar installers, and a well recognized technology and clean energy innovation leader.

Jason Price: 
I don't want to make any assumptions here, but given your proximity to the innovations, do you find yourself being an early adopter in some of these and what are the pros and cons or risks that you face when you introduce these kinds of new solutions or technologies into the service?

Nick Chaset: 
That's always a consideration we have to account for when we think about partnering with new providers, and it's one of the reasons why while we make these partnerships and investments, we do so in a diversified fashion. So, I don't think we would be fully reliant on a new technology company like VRBO for all of our base load, clean energy requirements. We want to give them an opportunity to succeed and if they are successful structure our contracts to be able to grow them over time. That's also the approach we've taken with BlocPower. We have said, let's focus on a core set of customers in the beginning and as you demonstrate success, we have an agreement that is set up to allow us to scale quickly. That way we avoid putting these customers and these innovators into pilot programs that don't have a path to growth, but we also limit our exposure if they're not able to be as successful as we would hope they could be.

Jason Price: 
Yeah, I can see that. I guess you can say a little bit more flexible, a little more nimble, little more innovative than your traditional utility that you can then take some early adoption types of practices. So if that is the case, are you seeing yourself getting more involved with say virtual power plant models and demand response and EV charging, does that change the status of the CCA at all or does it present advantages? Can you maybe talk a little bit about that?

Nick Chaset: 
I think that as we start to become more involved in these new forms of energy consumption, the status of the CCA shifts a bit, absolutely. Today, 95 plus percent of our revenues and our costs relate to buying wholesale electricity and serving customers retail. Over time, as we increasingly involve ourselves in virtual power plants and empowering our customers to be prosumers or supporting the deployment of electric vehicle charging infrastructure and fleets, that mix is going to shift.

Nick Chaset: 
I certainly believe East Bay Community Energy has a future where we potentially consider ourselves having two business areas. One wholesale procurement and provision of retail, electricity, and another, where we are the trusted local clean energy services provider, supporting the adoption of electric vehicles, home and business electrification, demand response, and rooftop solar and storage, through a variety of different solutions. It could be financing options that we provide or facilitate. It could be through infrastructure that we directly contract for our own, or it could be through the facilitation of aggregations of customer load into virtual power plants.

Jason Price: 
This is all really interesting, Nick, you're really innovating and in a very in needed area. I really appreciate the insight here. We're going to give you the last word, but before we let you go we do have something called the lightning round, where we get an opportunity to meet a little bit more about you, the person versus you, the CEO of East Bay. So I'm going to give you a series of questions with one word or one phrase responses. Are you ready?

Nick Chaset: 
I am ready.

Jason Price: 
Okay, fantastic. So do you reach for the sweet or the salty snack foods?

Nick Chaset: 
Salty.

Jason Price: 
Best way to spend a Saturday night?

Nick Chaset: 
Making pizza with my kids.

Jason Price: 
Can you share with us something on your bucket list?

Nick Chaset: 
To play golf at Augusta National.

Jason Price: 
Who are your role models growing up?

Nick Chaset: 
Nomar Garciaparra.

Jason Price: 
What are you most optimistic about?

Nick Chaset: 
Taking meaningful action to address climate change and ensuring that my kids have a world that's better than the one we have today.

Jason Price: 
Nice ending there. You certainly navigated lightning wrong like an expert. So we want to give you the final word. So what lessons you hope the utility audience listening in today take away from the conversation and what are you looking forward to in EBCE's immediate plans for the future?

Nick Chaset: 
I think the key lesson that I want folks to take away from this conversation is that community choice aggregators are positioned to be the key partner to technology innovators, whether they be customers looking to adopt technology or entrepreneurs, to deliver new cleaner, more cost effective, more reliable energy solutions. And we stand ready to move quickly to deploy these technologies with our customers.

Nick Chaset: 
When I think about things in the near term, the thing I'm most excited about are our efforts to scale transportation, electrification infrastructure. Just last week, there were a number of articles in the Wall Street Journal talking about how we significantly lack the chargers to support the growing adoption of transportation electrification. I think East Bay and CCAs in general are uniquely positioned to fill those gaps quickly. And we are really excited about our first chargers that we hope to bring online towards the end of this year. And then a much bigger scale initiative that we are working to deploy over the next two to three years.

Jason Price: 
That's exciting. It's something to look forward to. So this is great. Nick Chaset, the CEO of East Bay Community Energy, thank you so much for your insight. And we look forward to you and our community members keeping in touch with you and posting their questions and comments on the Energy Central platform.

Nick Chaset: 
Thank you very much. I really appreciate it.

Jason Price: 
You can always reach Nick through the Energy Central Platform where he welcomes your questions and comments. We also want to give a shout up of thanks to the podcast sponsor that made today's episode possible, thanks to West Monroe. West Monroe works for the nation's largest electric gas and water utilities in their telecommunication grid modernization and digital and workforce transformations. West Monroe brings a multidisciplinary team that blends utility, operations and technology expertise to address modernizing aging infrastructure, advisory on transportation electrification, ADMS deployments, data and analytics, and cyber security. And once again, I'm your host Jason Price. To plug in and stay fully charged in the discussion by hopping into the community at energycentral.com. We'll see you next time at the Energy Central Power Perspectives Podcast.

 

About Energy Central Podcasts

The ‘Energy Central Power Perspectives™ Podcast’ features conversations with thought leaders in the utility sector. At least twice monthly, we connect with an Energy Central Power Industry Network community member to discuss compelling topics that impact professionals who work in the power industry. Some podcasts may be a continuation of thought-provoking posts or discussions started in the community or with an industry leader that is interested in sharing their expertise and doing a deeper dive into hot topics or issues relevant to the industry.

The ‘Energy Central Power Perspectives™ Podcast’ is the premiere podcast series from Energy Central, a Power Industry Network of Communities built specifically for professionals in the electric power industry and a place where professionals can share, learn, and connect in a collaborative environment. Supported by leading industry organizations, our mission is to help global power industry professionals work better. Since 1995, we’ve been a trusted news and information source for professionals working in the power industry, and today our managed communities are a place for lively discussions, debates, and analysis to take place. If you’re not yet a member, visit www.EnergyCentral.com to register for free and join over 200,000 of your peers working in the power industry.

The Energy Central Power Perspectives™ Podcast is hosted by Jason Price, Community Ambassador of Energy Central. Jason is a Business Development Executive at West Monroe, working in the East Coast Energy and Utilities Group. Jason is joined in the podcast booth by the producer of the podcast, Matt Chester, who is also the Community Manager of Energy Central and energy analyst/independent consultant in energy policy, markets, and technology.  

If you want to be a guest on a future episode of the Energy Central Power Perspectives™ Podcast, let us know! We’ll be pulling guests from our community members who submit engaging content that gets our community talking, and perhaps that next guest will be you! Likewise, if you see an article submitted by a fellow Energy Central community member that you’d like to see broken down in more detail in a conversation, feel free to send us a note to nominate them.  For more information, contact us at [email protected]. Podcast interviews are free for Expert Members and professionals who work for a utility.  We have package offers available for solution providers and vendors. 

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