Saturday, June 1, 2024

Local Power's CCA Green Bonds Model Delivers The Largest Issuance of Green Bonds in the U.S.

CCA added to Green Bonds delivers a whole new level of CCA climate fire power. We estimate that CCA 2.0, which is defined by the combination of renewable wholesale CCA and Green Bonds, is 20-50x more powerful a climate impactful model than CCA 1.0 in Massachusetts, site of the first aggregation to use state energy efficiency funds. But the scale and per capita reach of CCA 2.0 in California is an exponential leap, delivering over $30B of investment in local and mostly in-state renewables compared to CCA in Massachusetts, where the focus has been Renewable Energy Certificates (RECs) and pilot projects. While we have received less acclaim for creating Green Bonds than we have for creating CCA, we consider it just as prideworthy and important - not just Green Bonds in general, but the specific kind of Green Bond we articulated and/or won approval for in San Francisco, Marin, Sonoma County, East Bay and dozens of other CCAs during their formation between 2000 and 2010. Most of them held back, for over a decade. Until now, and the impact is needless to say, epic.

Thanks are due to Howard Golub and bond counsel of Nixon Peabody for providing revenue bond expertise to Local Power's work on the H Bond model to augment the CCA program in 2005; also to Bradley Turner and his team at Booz Allen Hamilton, and Local Power first employee Robert Freehling's early work with Local Power, David Erickson, Chris Kiriakou, Charles Schultz and Sam Golding, who all contributed important work in various stages of its articulation to H Bond integration with California's formative CCAs.

Local Power authored the landmark CCA H Bond program with San Francisco voter approval of the bond in 2001 and San Francisco Board of Supervisor approval of the authority to issue CCA bonds in 2004, and the Community Choice Aggregation, H Bond Action Plan in 2007, the “In City Buildout Plan” including bond counsel in 2009,  and “In City Buildout Business Case” in 2013, including a full profits and loss sheet for a ten year operation, and including the use of the Green Bond or "H Bond" Authority.

The voter approved revenue bond authority in 2001 in the form of a city charter amendment (Section 9.107.8), known as the "solar bonds," authorized the City of San Francisco to finance renewable energy and energy conservation measures on homes, businesses and government buildings. The campaign for solar bonds, Proposition H, was motivated by the need for the city to take meaningful action on climate change beyond financial instruments like RECs, by building and installing renewable generation and efficiency. We proposed the same structure to Main Clean Energy in 2009 and Sonoma County in 2013. The solar bond authority was used as part of the city's renewable energy program, administered by the San Francisco Public Utilities Commission, CleanPowerSF, with bonds first issued in 2012. 

The California Community Choice Financing Authority, which helped organize a group of California CCAs in California to issue Green Bonds through their platform, is responsible for the largest issuance of Green Bonds in the United States!

Community Choice Aggregation is allowed in half of the US energy market, dominates the electricity industry in several states and serves one in ten Americans. Most of California is served by CCAs, its CCA 2.0 is being absorbed by the 1.0 programs across the rest of the country, and New York State is on the verge of another Big Leap in climate impactfulness beyond even CCA and Green Bonds, by engaging neighbors in shared systems, CCA 3.0. We anticipate that CCAs in California will ultimately go even further and beyond the supply side paradigm so many still follow, into a new territory of customer ownership, cooperation, local job creation and local economic development.

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