Thursday, May 7, 2020

Planet of CCA: From "100% Renewable Cities" to Local Green New Deal

  • The global climate emergency is a crisis of policy and political will. It is not a lack of cost-effective technology. Above all else, we are blocked by fear of disrupting the economy. The United States is central to this problem, both as the world’s second largest cause of greenhouse gas emissions and as a global policy leader. Establishing an economically viable model for climate mobilization in America is of paramount importance globally.
  • In 2020, Local Power is launching a nationwide technical and educational resource for communities and municipalities with democratically-run local energy programs called Community Choice Aggregation (CCA) to ramp up their programs for climate mobilization, following a new model we call CCA 3.0. Local Power’s Local Green New Deal project has been created to drive an implementation and replication process through educational engagements of communities, technical assistance to municipal staff and elected officials, and an international clearinghouse of best practices. ​ is what climate mobilization looks like.

Municipal governments lead climate action, but lack the legal framework to scale up their impact; CCA 3.0 provides that leverage. CCA 3.0 "cools" the grid by placing storage and generation behind the meter. It empowers local governments to drive greater distributed power by enabling them to invest in their residents and businesses. Funded with municipal "Green Bonds," CCA 3.0 ensures that local money stays local, employing data to match technologies to place, using customer shares and cooperatives to turn monthly utility bills into energy equity accounts.

As we demonstrate below and in great detail in our study, all of this can be deployed immediately.

The Opportunity

CCA 3.0 energy transformation is defined here as a 50%-85% across-the-board greenhouse gas reduction for an inclusive geographic community, and completable within a five- to ten-year period from today. With 1500 municipalities and 30 million Americans under CCA service, CCA 3.0 is based on a mature and globally replicable ​model for climate mobilization. It has the ​ immediate ​ potential to answer the ​United Nations’ call for worldwide energy transformation in the next decade "to avert irreversible damage to the Earth's ecology."

The CCA 3.0 program was designed by Local Power, creator of CCA​, to work ​under existing law in states with CCA that make up half of U.S. energy demand: California, Illinois, Massachusetts, New Hampshire, New Jersey, New York, Ohio, Rhode Island and Virginia. CCA 3.0 can be replicated starting within one year for U.S. states in the process of adopting new CCA legislation, such as Wisconsin, Colorado, Maryland, Washington, and Utah. Moreover, CCA 3.0 is implementable starting within two years in the European Union and most other countries’ energy markets with enabling legislation. Half the U.S. can complete climate mobilizations within five years, states introducing CCA laws within six or seven years, and other countries that authorize CCA within seven or eight years.

The Problem

The cost of energy from integrated green energy technologies has been competitive with grid power and pipeline fuels for many years. There has been a dramatic decline in the cost of Distributed Energy Resources (DER), including solar photovoltaics, electric vehicles, microgrids, and efficient electric HVAC and hot water systems. Regulatory capture and flawed energy market designs have trapped developers of these strategic technologies in a systemic dependency on utilities for access to functionally captive energy users.

The technical feasibility of integrating DERs has also existed for many years. However, efforts by states to set up markets to encourage rapid deployment of such technologies have been stuck in startup mode for a quarter-century. Centralized megaprojects continue to dominate the renewables market today, driving up carbon-causing transmission line overdevelopment and new fossil investments to accommodate their intermittency. As a result, DERs remain relegated to niche markets. Ratepayer and taxpayer subsidies are invested in a manner that delivers little impact on carbon emissions. Based on renewable energy company door knockers and pyramid scheme marketing, or inherently limited utility contracts based on regulatory mandates and fees, marketing and customer acquisition cost represents around half of the installed cost of solar today. DERs are siloed as a luxury item limited to the few, with marginal carbon impacts.

Inadequate state-level policy decisions of recent decades have created a dysfunctional market that blocks climate mobilization. The vast majority of residents and businesses are functionally redlined by this market from energy transformation, largely limited to options of Renewable Energy Credits (RECs). RECs pay middlemen “market incentives,” but do not result in physically changing a customer’s energy supply. The result is that the combustion of fossil fuels required to provide “renewable” products and services has been reduced little if not at all. For affluent or devoted businesses and residents willing to pay more for a “premium green” REC product, state governments have created a "virtual" paradigm of renewable energy procurement. This form of REC procurement certifies transactions, pays suppliers and signals good consumer intentions,​ but does not actually cause physical carbon reductions.

DERs can fix this problem, but are prevented by incumbent-protecting markets and state regulations. Conventional solar, like RECs, remains a niche market for the few. Even with incentives and rebates, the utility tariff-based business model and physical configuration of solar virtually ensures superficial climate impacts. Inherently limited business models created by states under undue influence of incumbent utilities and financial institutions has created this problem. This is not a technological problem, nor a problem of the cost of DER technologies. DER development is limited to serving only A-list customers with strong credit ratings who own their buildings. Conventional rooftop solar is wired for export, not demand reduction. Under conventional market design, neither RECs nor DER can come close to the level of physical change that the climate emergency demands. CCA was originally created as an exit strategy from that market. CCA 3.0 creates the pathway to a new system entirely.

The Solution

Market design has always been the real solution to climate mobilization.
Community Choice Aggregation was created as an alternative to supplier-controlled markets: a younger brother idea that grew up alongside electricity and gas industry deregulation of the 1990s. CCA was developed to directly confront climate change.  Democratically stewarded by municipal governance, CCA enabled local public oversight of energy procurement for residents, businesses and governments that did not opt-out. Deregulated customer choice regimes adopted in most U.S. states have benefitted only a small minority of large industrial and commercial customers. By comparison, CCA has proven uniquely successful at extracting economic benefits for all energy users. CCAs have consistently outperformed both utilities and energy marketers in the sheer magnitude of green power they have bought and built while also reducing consumers’ energy costs.

CCA is widely regarded by Democrats and Republicans alike as the one success story to come after a quarter century of electricity and gas industry restructuring. CCAs serve one in ten Americans. Saving over thirty million Americans billions of dollars on their utility bills, CCAs have caused some of the largest greenhouse gas reductions in history. Purchasing green power well above required state levels, CCAs have also built many billions of dollars of additional new renewable energy facilities beyond state requirements. CCAs are proving out important innovations in the DER space, too, as detailed in our 2020 report, ​ CCA 3.0: Accelerated Greenhouse Gas Reduction. In this last respect, California CCAs have physically added whole new levels of renewable power that would not be there otherwise today.

The Situation

While CCAs have outperformed the market and proven a viable path to climate action without taxes or fees, they have yet to fulfill their true potential. To be truly successful, CCAs must achieve impact on a scale that is commensurate with the unprecedented magnitude of climate crisis. Their impact has evolved exponentially with the advent of a second generation CCA (“CCA 2.0”) developed by Local Power for California, focused on building large-scale regional renewable generation. However, the climate emergency calls for swifter action. In 2020, a second exponential leap is needed to give CCA programs the leverage to act as administrative umbrellas for climate mobilization across all customer types and all energy uses in a community. This focus on customer ownership will unlock widespread investment in physical, local decarbonization throughout the private sector. Existing consumer payments for power, gas, diesel and gasoline will repay this investment. Our third iteration of CCA incorporates lessons learned and best practices from 25 years of growing CCA, including three commissioned national surveys. CCA 3.0 is designed to overcome past limits to achieve the physical energy transformation of whole municipalities and groups of municipalities in a five-year schedule.

CCA 1.0 proved the feasibility of greener power at lower prices than regulated and deregulated power suppliers. CCA 2.0 proved the feasibility of building additional renewable power above
regulatory requirements, at competitive prices with brown power. Today, CCA 2.0 programs in California constitute fully sixty-seven (67) of all seventy-two (72) ​U.S. cities with 100% renewable energy in 2020, including RECs and built renewables.​ That being said, climate mobilization requires a much larger energy transformation than CCA 2.0 has achieved. CCA 2.0’s limitation is due to a lack of programmatic focus and resources on ​demand reduction.

Systematic grid/pipeline demand reduction is the essential key to scaled, accelerated and sustained carbon reduction. ​  While Local Power’s CCA 2.0 model succeeded in delivering an exponentially greater carbon impact than the Renewable Energy Certificate purchases by CCA 1.0 programs, climate mobilization-scale greenhouse gas reductions require removing electricity demand from the grid, and fossil fuels from pipelines. The “subtractionality” of energy demand for grid/pipeline energy resources, not merely “additionality” of renewables to the grid, is the next step. CCA 3.0 can meet the United Nations’ 2030 deadline, carrying a ten-fold to thirty-fold increase in carbon reduction potential compared to CCA 2.0.

The Details

U.S. municipal governments already lead climate action, but often lack the state legal framework to leverage the scale and impact of local programs. CCA 1.0 and 2.0 increased this leverage with impressive results, but a different operational and technological business model is needed.

CCA 3.0 employs a cutting-edge behind-the meter onsite interoperable renewables and flexible storage technology strategy. The result is a reduction in physical grid- and pipeline demand at the onsite and community levels. CCA 3.0 calls for a focused municipal program design and staffing plan to engage customer investment in DERs. Under CCA 3.0, CCA 2.0’s core centralized energy procurement strategy is refocused around a community redevelopment-centered operational business model. CCA 3.0 program design sets in place a series of strategic changes, enabling implementation of locally built, locally-owned, locally-used and locally-shared renewable energy systems on a parallel, CCA-wide basis.

CCA 3.0 refocuses CCA agencies and municipalities to drive development and engage customers in voluntary customer DER investment. CCA 1.0 offered discounts and purchased energy from existing renewable suppliers or purchased conventional fossil supplies with RECs as “mitigation.” CCA 2.0 offered bill neutrality and built more new renewable facilities to "add" renewables to the grid. CCA 3.0 takes the final major step in decarbonization: customer equity investment to subtract load from the grid from the bottom-up, through deployment of a renewables-plus-storage platform.

CCA programs identified in our ​ CCA 3.0 Report ​ demonstrate that a “cooling” of the grid and “lightening” of pipeline load is immediately deployable, and technically and economically feasible. Integrated DERs can replace city-wide or town-wide community's load on the power grid and gas/heating oil (heat and cooling sector), as well as gasoline/diesel pipelines (transportation sector).

CCA 3.0 is a platform for removing communitywide greenhouse gas emissions sources by avoiding grid consumption, “peaking,” and fossil fuels for heating and transportation. CCA 3.0s will build renewably powered microgrids with electric vehicles and HVAC/hot water systems as flexible storage to minimize importation of energy, while eliminating exportation of onsite power. This critical strategy removes grid barriers to DER deployment, because installed systems do not flow onto or congest the local distribution grid. Therefore DERs may be installed ubiquitously throughout a CCA’s service territory without delay or disruption by incumbent utilities.

CCA 3.0 creates a customer investment space outside the conventional market. Whereas CCA 2.0 uses conventional financing that limits eligibility to consumers with minimum credit scores and collateral, CCA 3.0 employs a municipally-administered energy sharing and cooperation platform based on public finance. The platform extends eligibility to every single resident and business owner who does not opt-out of the service: a new option to the entire community. CCA 3.0 localizes investment to the entire community. CCA 2.0 programs have depended mostly on outside tax-appetite (avoidance) financing to build absentee-owned facilities, exporting the community’s energy dollars to Wall Street. CCA 3.0 employs municipal Green Bonds​ to leverage ​voluntary customer investment ​ propositions based on a projected customer return-on-investment to every single energy consumer in the community. Inclusive of all energy use, and ubiquitously deployed independent of financial market and federal tax code fluctuations, CCA 3.0’s definition of energy transformation as a community transition, rather than merely a commodity service, is key to effective community-wide engagement and mobilization.

This is what energy transformation looks like: retrocommissioning private homes and businesses that consume 95% of all energy and eliminating physical demand for grid power and pipeline fuels. Customer engagement and ownership is enabled by active and passive protocols, including an “opt-up” system of shares that enrolls CCA customers through a voluntary check-box option, and an “opt-with” neighborhood microgrid cooperative option operated by a CCA agency, and billed by a municipality.

CCA 3.0 programs can be run by much smaller agencies than CCA 2.0 required. CCA 3.0 sets up a partnership with existing member municipalities’ local service agencies to finance projects and engage residents and businesses as owners of DER. This is done through a “universal share offering” and CCA/municipal protocol for managing customer loan/equity accounts. Municipalities in a CCA will individually vote to participate as DER loan administrators and to develop municipal DERs as shares assets. CCA rate design will incorporate protocols for customers to receive bill credits based on DER equity accrued. Municipal staffing costs will be collected from DER loan contracts, while CCA staffing recovers costs from monthly electricity/gas bill charges. Joint Powers Entities of multiple municipalities, or individual municipalities, may implement CCA 3.0.


For 25 years, Local Power has pioneered innovative programs for municipalities, passed legislation and educated the public. Creating CCA 1.0 in Massachusetts in 1994, Green Bonds in 2001 and CCA 2.0 in 2004, we co-founded California’s first CCAs, including Marin Clean Energy, CleanPowerSF and Sonoma Clean Power, causing an historic transformation of California’s energy system and leveraging billions of dollars in local renewable development in the past few years. More recently, we assisted in the creation of a statewide CCA regime in New York. Since 2015, we have developed a new system for energy transformation, releasing ​ CCA 3.0 - Accelerated Greenhouse Gas Reduction ​ in March, 2020. Paul Fenn, who leads our technical work, has been quoted and featured in hundreds of media outlets in the past two decades, including The New York Times, ​The Wall Street Journal, Truthout ​ and ​The Nation, ​Bloomberg ​and Fast Company; and is the focus of many academic studies, including books by ​Cambridge University Press and ​MIT Press. ​ We access a team of experts with diverse skills and experience based on our varied project needs, from program design, negotiation and launch to data analysis, policy, legal, engineering, governance, education, and campaigns. ​ 


Jan said...

The cities and counties can do a lot; we have major resistance to cities applying for REACH codes because of the tremendous pushback from SoCalGas. The other huge barrier is how the IOUs have created the barrier of the Transmission Access Charges that messes up the market for wholesale distributed generation. I don't understand "green energy" policy advocacy per se where these huge political barriers are still entrenched.

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