Editor’s Note: EarthTechling, always looking to bring you interesting cleantech reading, is proud to repost this article courtesy of Institute for Local Self Reliance. Author credit goes to John Farrell.
I recently attended a conference on community choice aggregation in California and it’s worth sharing the concept and how it can lead to more local control of electricity generation.
Community choice aggregation is an alternative to (or complement to) electricity deregulation, allowing residential and commercial customers to choose a different electricity provider. The linchpin, and difference from traditional deregulation, is that community choice aggregation allows municipalities to aggregate their customers and bid on their behalf, obtaining lower prices by buying in bulk. It also allows for local determination of electricity supply without requiring a city to buy the distribution grid of the utility (although Boulder, CO, and some Massachusetts towns are considering that step). Under community choice aggregation, the municipality is the electricity purchaser, but the utility retains control of the grid.
Community choice aggregation can provide a community a lot of power: to choose local electricity generation over remote, to choose local ownership over absentee, and to choose clean energy over dirty. And without having to finance and buy the local grid, it can come at a much lower financial and political cost.
So far, six states have authorized municipalities to be community aggregators, but the option has only been exercised in five of the six states (see map below):
In its history, community choice aggregation has largely been used to obtain long-term contracts for electricity at lower prices than the incumbent utility provides. But it can do much more.
For example, the town of Oak Park, IL, recently signed new contracts for electricity, paying 2 cents per kilowatt-hour less than incumbent utility Commonwealth Edison (ComEd) provided, and with sufficient renewable energy credits to be 100% renewable (compared to ComEd’s 6% renewable power).
Since community choice aggregators can choose their electricity providers, they could choose to get their clean energy locally, too. Using a feed-in tariff, for example, a municipal aggregator could acquire local solar power using a standard contract with small residential and commercial property owners, much like the Gainesville municipal utility has done in becoming a solar leader (per capita). Since the projects would be local, the economic benefits would multiply: a study by the National Renewable Energy Laboratory found that locally-owned renewable energy projects have twice the jobs and 1.5 to 3.4 times the economic impact of absentee-owned projects. Unlike a traditional utility, the economic bottom line could be factored in to the electricity purchase for a municipal aggregator.
There’s more to consider, like the unique value of distributed renewable energy to the electricity system, as well as the way that feed-in tariffs can use long-term contracts to drive down the cost of clean energy. I’ll have more on community choice aggregation (CCA) and the opportunities it presents in the next few weeks.