Thursday, November 21, 2013

California Gets Second CCA - Sonoma Clean Power Blows Past Marin on Local Power

I am pleased to announce that it is official: California finally has a Community Choice Aggregation with a focus on energy localization, as applauded by an editorial of the local daily (PD Editorial: "The promise of local power contracts"). Local Power Inc. spent many years helping Sonoma county and the Sonoma County Water Agency design this program with significant funding from the California Energy Commission.
We collected a mass of PG&E data and other government data, and used the data to come up with a localization regime for Sonoma county, which reached a localized portfolio of 67% by 2015), including a significant portion of power from a local Geysers geothermal expansion.

Sonoma Clean Power officials say the three-year contract will allow them to be competitive with rates by Pacific Gas and Electric Co., according to a Santa Rosa Press Democrat article, in a 10-year deal with a subsidiary of Calpine Corp. that will "fulfill their promise to spur local green energy generation and support local jobs." The deal will account for 15 percent of the agency’s overall supply as it begins rolling out to customers next year, and will make up for a little under half of the agency’s initial renewable energy portfolio according to the Press Democrat , which quoted Sonoma Clean Power's statement that "the power venture’s political standing, if not its business future, depends on staying true to that mission. “This is a really good start. I think it gives us credibility,” said Sebastopol Mayor Michael Kyes, an agency board member who has pushed for pursuit of local power. Another Sonoma Clean Power board member, Supervisor Shirlee Zane noted, the county wants the company “to expand as we expand and create those local jobs.”

We at Local Power Inc. are very pleased that a CCA has finally gone beyond the Marin-type green supply business model, and to include a first step of localization - signing a long-term agreement with an existing local renewable power operator to expand its capacity. This is an example of a CCA telling the market what it wants rather than asking what it can have.

While Marin has improved a great deal on PG&E in terms of greener power at the same price, with a 50% renewable mix that is price competitive with PG&E's 20% renewable mix, it has limited it self to a more conventional old business model based on CCAs pursing green power in other states like Ohio and Illinois, which have tended to focus on getting greener power content, or renewable energy credits.  The first CCA in California, Marin neglected local resources and imitated a supply-centric business model of power plant owners. Marin declared victory early without physically doing anything different - "The biggest change you'll never notice" was Marin Energy Authority's marketing campaign, though approval of the agency was achieved with a promise of localization. Three years later, no significant localization has been delivered - as of today, the agency's web site's "Local Power" page refers to a single solar array at the airport.

The Sonoma CCA's motto is "Local. Renewable. Yours."  With its commitment to true localization in physical plant and customer ownership, Sonoma has provided needed leadership to other CCAs now investigating or pursuing green power strategies among 1300 municipalities and 5% of the U.S. population under CCA service, most coming online in the past few years. Sonoma Clean Power will produce local green jobs, cause local tax revenues, achieve major regional greenhouse gas reductions, enhance local resilience and permanently eliminate energy dependency upon remote grid-based resources. These are mainstream, national policy goals.

San Francisco will hopefully provide additional leadership for Sonoma on direct financing and development of new local projects. Sonoma was blessed with a no-brainer low-cost resource with a willing operator, Calpine. So some will say "that was easy" because a high-capacity, low-cost resource is so conspicuously available in Sonoma county. But the truth is,  every city and county has a number of local renewable resources - solar, wind, wave, river, and most important - energy efficiency measures.

San Francisco is still debating how to get local build-out into it portfolio, where Local Power Inc.'s analysis has indicated a combination of energy efficiency solar photovoltaics, wind, battery storage, and other technologies will achieve the full "CCA 2.0" business model - building rather than buying more of your power. Sonoma's deal with Calpine is an important step forward by purchasing power from an in-county facility, and Sonoma Clean Power has indicated it plans to issue revenue bonds, like San Francisco, to actually finance and build new local renewable resources. San Francisco's voter approved the Solar Bonds a decade ago - "solar neighborhoods" being a cornerstone of CleanPowerSF since the beginning.

Defensively, Marin Energy Authority's staff have criticized Local Power Inc. for pushing so hard for localization and local green development to be central to CCA, claiming it was smarter to "start with baby steps" and implying that localization itself is the problem. So, with Sonoma's decision to go local, we are vindicated that localization is both technically and economically feasible in any of the 1300 CCA municipalities in America today, and we are grateful for the leadership of Sonoma municipalities and county, water agency staff and Sonoma activists, in particular the Climate Action Campaign, for getting us a step further towards The Real Thing. Next - look to San Francisco!


alt-watt consulting said...

Wow, a whole lot of bashing of MCE, who provides an option for 100% renewables at not much of a great premium than PG&E. It will be interesting to see if Sonoma's CCA is bashed as much as MCE is for rate hikes due to rate payer ignorance, even when the rates didn't get hiked and increases were mostly due to the penalities PG&E is allowed to levy against CCA's based on PUC legislature.

It will be even more interesting to see what the devils are in the details of the localization strategy. MCE offered initially a pretty sweet FIT rate, but, not much has come on-line. A chief reason why is the tiered MCE FIT plan was not nearly so sweet for later tiers. Additionally, lenders didn't really consider MCE credit worthy since it's SPE designation didn't allow it to raise revenue through the county, and I don't think Sonoma's structure is substantially different.

But I would love to see Sonoma make it happen, so good luck!

asixtiesgirl said...

Hi Paul Fenn,

Now you subscribe to Campaign Slut and we'll be even.

Dotty, the face of MCE

Paul Fenn said...

Thanks Dotty. I hope we have occasion to discuss some day. I will sign up for Campaign Slut.

Anonymous said...

Good site.

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