The Problem with the Traditional Energy Model
For decades, utility companies have had the upper hand over energy consumers. Investor-owned utility companies manage everything from buying and distributing power, to repairing lines and billing customers. Individuals have little choice in price shopping energy providers. Consequently, consumers are forced to accept whatever the utility company decides to implement. With a responsibility to stockholders, investor-owned utility companies are incentivized to maximize profits with minimal environmental considerations or local benefits. They buy energy for the lowest price possible and, in turn, mark up the energy costs to maximize their bottom line. In this traditional energy model, utility companies have been able to operate as effective monopolies, with the ability to demand exorbitant prices for energy, meanwhile holding formidable political power over all the government agencies and regulatory officials that are supposed to be keeping them in check. We keep paying more and getting less. It is a broken system.
The Solution: Community Choice Aggregation
The rise of Community Choice Aggregation (CCA) Programs promises to put an end to this paradigm. These public energy programs act as a buyers’ club that includes residents, businesses, and municipal accounts. Local municipal governments establish and operate a CCA as an enterprise fund within a specified jurisdiction. Drawing from the fund, the CCA program buys electricity on behalf of its citizens for a lower fixed rate and cleaner energy supply.
The CCA model removes the utility company as the middle man, effectively giving consumers more power than they had in the traditional utility framework. The community is able to buy power directly from energy producers, while local investor-owned utilities continue to provide consolidated billing, transmission, and distribution of electric power. That is the magic of Community Choice Aggregation.
Community Choice Aggregation In Practice
In deregulated energy states, governments pass state legislation granting municipal leaders the ability to pass local laws allowing for the aggregation of the residential and small commercial energy consumers in their community. By aggregating, or combining various consumers’ energy usage within a community, economies of scale are created. With an increased number of consumers within the aggregate, leverage is generated to negotiate electric rates and options for energy supply.
These programs grant municipal governments not only the influence to negotiate more affordable electric rates, but also the desired alternative sources of electricity. Consequently, communities have elected to design CCA programs to grow local jobs by encouraging the growth of local renewable energy production. Most programs are motivated by an inclination to go green faster than the state policy dictates. Often, the policy of the state and larger government entities react to necessary change more slowly than municipal legislative mandates. For example, current Connecticut state law requires utilities to reach 29% renewables by 2020 and 48% by 2030, but presently active CCAs already exceed those targets. The CCA programs in Lowell, Massachusetts, and Westchester, New York, offer a 100% renewable energy option, as do municipalities in California, Ohio, and Illinois.
Community Choice Aggregation in Connecticut
Recently clean energy advocates have rekindled their focus on the policies surrounding the establishment of CCAs in Connecticut. The largest barrier has been legislative inaction. Connecticut cannot move forward with community choice aggregation deals until a framework for these programs is established by state law.
Community choice aggregation hasn’t been on the radar of the state’s General Assembly until very recently. A coalition of legislators put forth a proposed bill in January 2019 to the Energy and Technology Committee that would create a program to allow municipalities to purchase power on behalf of their residents. In the meantime, citizens will have their fingers crossed for the expedition of the bill as community choice programs are essential vehicles to accelerate the growth of renewables in localized communities.
Broader Impacts of CCA Programs
Numerous factors are at play when local communities develop an aggregated renewable energy model, including costs to consumers as well as the sustainability of the energy infrastructure. Global investment in renewable energy capacity has accelerated in the past decade, with wind and solar emerging as leaders among cost-effective power sources. While hydropower attracted the most investment in renewable energy prior to 2008, wind turbines took the lead in 2009, and solar panels became the dominant investment choice by 2016. In 2017, more money was invested in solar than in all other low-carbon technologies combined.
Solar power continues to pull ahead of comparable renewables in recent years, a change that has been attributed to plummeting costs. Solar installation costs have declined by more than 70% over the recent decade, leading the industry to expand into new markets and rapidly deploy thousands of systems nationwide. Through 2018, there are more than 67 gigawatts (GW) of solar installed in the U.S., enough to power more than 12.7 million homes. Over the last decade, the solar market in the United States has grown at an average rate of 50% each year. There are more than 2 million individual solar installations in the U.S., ranging from small home rooftop systems to large utility-scale systems that add hundreds of megawatts of clean electricity to the power grid.
CCAs are crucial instruments for encouraging the development of smaller-scale community-based solar power. These projects are usually between a couple of hundred kilowatts and 1 to 2 megawatts. Even the IOUs investing in solar are typically doing so to the tune of multi-megawatt, utility-scale farms, which are often installed by large, out-of-state companies. Smaller CCA solar jobs can be sited within the community and installed by local solar companies instead of national solar heavyweights. Through these projects, CCAs can be responsible for adding local jobs and introducing new innovations to resident communities.
The Path Forward
Community Choice Aggregation programs are disrupting the antiquated method for procuring power for communities formally reliant on coal-based electricity. The soaring popularity of solar energy developments coupled with declining installation costs highlights the importance of raising awareness of the community choice aggregation model. Adopting the CCA model yields a multitude of benefits, including making affordable renewable energy available to consumers, stimulating communities toward economic growth, and keeping jobs closer to home. CCA models will continue to sprout up around the U.S., furthering our nation’s reliance on renewable energy.
For further information regarding solar development programs and CCA legislation in Connecticut and neighboring states, contact SHR Energy Management. Invest in your community’s future and become a voice in your local community choice energy aggregation discussions. There is power in numbers.
SHR Energy Management has delivered comprehensive solar energy solutions for over a decade. SHR was one of the earliest developers of solar installations in the Northeast U.S. under the leadership of Founder and Chief Executive Noel Lafayette. With a comprehensive understanding of every stage of solar development, Noel demonstrates a deep knowledge of solar industry complexities, including regulatory matters, financial incentives, and renewable energy credit markets. SHR is capable of handling commercial, municipal, and utility projects ranging in size from 200kw to 25MW with access to over $500 million in capital funds. SHR is experienced in developing a wide variety of energy cost-saving projects, along with access to financing sources, knowledge of state/local regulations and incentives. This combination of the elements allows SHR Energy Management to move quickly with unmatched flexibility and transparency in our approach. For more information, contact us today.