The recent Business of Local Energy Symposium in Petaluma, California had a rare degree of fervor that isn’t typically experienced at Smart Grid industry conferences about electricity. Community Choice Aggregation (CCA) or municipal aggregation, is defined in the Smart Grid Dictionary as an energy policy that can promote distributed and/or renewables generation through community-based contracts with electricity suppliers. The community acts as an aggregator, and residents within it are automatically part of that CCA unless they opt-out, which serve to continue the customer/supplier relationship with the regional IOU (investor-owned utilities). The IOU is still responsible for delivering power to the CCA members. This policy is available in several states, including California, New Jersey, Massachusetts, Ohio, and Rhode Island.
Two neighboring counties in Northern California – Marin and Sonoma – have CCAs operating on a county-wide basis. That’s one distinction of how a CCA is different from a municipal utility, which typically operates in conjunction with a political jurisdiction that provides other governmental services such as police, fire, and the collection of taxes to support those services. There are a couple other key distinctions.
First, the CCA essentially “rents” the wires from the utility that owns and operates the distribution grid. The CCA sources its own power, and for CCAs in California, the emphasis is on finding clean renewable sources of power. The distribution utility is still responsible for customer service, billing, service restoration, and all grid operations. In other words, the CCA becomes the default, not-for-profit provider of the sources of electricity.
Second, the CCA is hyperlocal. Common success factors identified by Sonoma Clean Power and Marin Clean Energy – the two CCAs most discussed at the conference (although other states were also included) put an emphasis on local. The power is local whenever possible. The financing to get the CCA off the ground is provided by local community banks. The jobs to develop and maintain local power remain in the community. Even the energy efficiency programs can be tailored to specific zipcodes or neighborhoods, achieving levels of granularity that often elude larger IOU-sponsored programs.
CCAs have traditionally been viewed with trepidation or outright hostility by IOUs. Certainly, the erosion of the customer base has a downside to utility revenues. However, CCAs have some intriguing possibilities – with the assistance of innovations in technology, policy, and finance – for utilities. States are the laboratories for democracy and utility business model revolutions. California is requiring their IOUs to develop Distribution Resources Plan (DRP) proposals that incorporate distributed energy resources (DER) into their plans and grid operations. New York is boldly exploring complete revisions to the existing regulated utility business model. CCAs are interesting models to consider to determine the locational value of DER assets like generation and energy storage, and develop formulas for the monetization of DER assets within distribution grids.
In the future, CCAs could function as autonomous nodes of distribution grids. The CCA acts as the manager of its own node on the distribution grid, and the utility negotiates with the CCA to meet defined performance targets. This arrangement addresses a significant challenge of embedding distributed intelligence and control in distribution grids. By leveraging the local control provided by a CCA, specifically the support of its political and community leadership, the distribution grid operator could gain more predictability about consumer behaviors and asset activity than less organized geographic territories.
CCAs could also morph into autonomous microgrids or include autonomous microgrids within their boundaries. Microgrids that contain combined heat and power (CHP) assets, energy storage, and distributed generation in the form of renewables, electric vehicles (EVs), and demand response (DR) could contribute kilowatts and negawatts to the distribution grid.
CCAs could also be leveraged by distribution grid operators for more intensive energy efficiency (EE) activities that address grid problem areas. Since CCAs have the advantage of local control, they may deliver better results than existing EE programs. New regulatory policies that reward negawatt production on the part of CCAs might encourage more activities here, including recognition (carbon credits) for reductions in CO2 emissions. After all, the cleanest watt is the watt that is never consumed.
These possibilities would require policies that allowed for entities other than existing utilities to have some level of control for selected portions of the distribution grid. CCAs, as managers of DER assets, would also benefit from revised standards that enable bi-directional electricity flows while still maintaining safe grid operations. New technologies and services are also needed. A couple of speakers noted that turnkey arrangements would definitely make it easier for more communities to consider adoption of CCA models. And finally, the finance community has to be educated on the benefits of CCAs.
CCAs are one interesting way to add more clean renewables or green power to the grid and accelerate as well as supplement existing renewable portfolio standards in every state. Let’s see which state step up to make that happen.