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.

H Bonds Finally Realized: California CCAs issue $5 Billion in Solar Bonds

In addition to founding Community Choice Aggregation, Local Power has long boasted of our founder's invention of the Solar Bond or Green Bond ("H Bond" from Proposition H, the original bond authority adopted by San Francisco Voters in 2001). However, we have long been frustrated by the how very long it has taken CCA programs in the Bay Area and California to implement H Bonds. Climate change does not forgive slowness, and neither do we. 

As we have been telling CCA leaders for over nearly two decades, the buying power of municipal aggregation must combine with municipal financing through revenue bonds to transform a CCA into something much, much more powerful. From 2008 when Marin Clean Energy chickened out, and then San Francisco Supervisors lost their courage in 2013, we were afraid CCAs would never see the light. 

But finally, this past week, Local Power's leadership finally paid off - however belatedly - with the announcement of the issuance of $5 Billion in revenue bonds by CCAs to build renewable energy in California. The "Clean Energy Project Revenue Bond" is a renamed H Bond, the original CCA revenue bond authority written by Local Power and adopted by San Francisco in 2001. Local Power drafted San Francisco's CCA law to combine CCA with revenue bonds for the first nearly twenty years ago, in 2004. Since then, only San Francisco had ever used the authority. But now the H Bond, like CCA itself, has hit prime time. Five billion dollars is very big news indeed: the level of big we have long awaited. Climate change scale: community wide scale.

California CCAs East Bay Community Energy, MCE, Silicon Valley Clean Energy, Pioneer Community Energy, and Clean Power Alliance have all issued clean energy revenue bonds, claiming to save an estimated $840 million for California electricity customers over the next 30 years. Each of the CCAs entered into a long-term power supply agreements for sources like solar, wind, geothermal, and hydropower. The municipal revenue bond or H Bond issuer – in this case, California Community Choice Financing Authority (CCCFA) – issued tax-exempt bonds to fund a prepayment of energy that is to be delivered over the contract length. The CCA energy supplier utilizes the bond funds and provides a discount to the CCA on the power purchases based on the difference between the taxable and tax-exempt rates. This approach was articulated for San Francisco in Local Power's H Bond Action Plan in 2007 and with the help of our attorney Howard Golub and the bond team at Nixon Peabody in 2009. 

Now it is a very real thing at the kind of scale climate action demands, and "CCA 2.0" - the new model for municipal aggregation in California that Local Power LLC invented 20 years ago after coauthoring the nation's original CCA law in Massachusetts - is finally complete. Congratulations, everyone. 

CCA 2.0 now not only provides the most power in California, they are using H Bonds to achieve a whole new level of decarbonization, sustainability, and energy independence.

“CCCFA’s member agencies have now issued six clean energy prepayment transactions ranging from $460 million to $1.2 billion," said CCCSF, which boasts that "this prepayment structure allows California CCAs to reduce long-term costs on clean energy projects by issuing tax-exempt clean energy revenue bonds to prepay for the renewable energy....These transactions have locked in $210 million in savings for customers with the potential to save $840 million over the next 30 years according to representatives."

The California Community Choice Financing Authority (CCCFA) was established in 2021 by Central Coast Community Energy, Clean Power Alliance, East Bay Community Energy, MCE, Pioneer Community Energy, and Silicon Valley Clean Energy.  

Local Power established CCA in California and started, or helped to start, many of the first CCAs in the state to implement CCA 2.0. Local Power LLC has now moved on to "CCA 3.0," which its founders are implementing in states like New York. The CCA 3.0 model brings new, additional leverage to grow the climate impact of CCA in profound and even more powerful ways than CCA and H Bonds. CCA 3.0 activates a new layer beyond just government and finance: people. With people properly engaged and empowered to "Own Your Power," real scaled local climate action will be within the grasp of citizens in Anytown, America. Click on the CCA 3.0 link to get a free white paper on how Local Power's new model for energy transformation might work in your community tomorrow.