Thought Leadership

Increase Your Reach – How CCAs Can Leverage State Investments in Renewable Energy Programs

 

By Brian Jones

June 5, 2020

Community Choice Aggregation (CCA) is emerging as a powerful alternative to the investor-owned utility (IOU) model that has traditionally served the majority of California’s utility customers. A CCA is typically established and overseen by a coalition of local governments, referred to as a Joint Powers Authority, with the objective of providing customers with more affordable electricity. Many also have ambitious commitments to procuring zero-carbon electricity rooted in their DNA. Their names often say it all: Marin Clean Energy, Sonoma Clean Power, Silicon Valley Clean Energy, etc.

While CCAs pride themselves in providing their customers with clean, affordable energy, many also reinvest revenue to offer beneficial programs to their customers. These programs typically promote highly efficient, clean energy technologies – like electric vehicles and heat pump water heaters – or provide bill reductions and credits for customers to shift their electricity usage to times of day when inexpensive solar energy is abundant.

The benefits for CCAs in these offerings are two-fold. First, helping their customers adopt cleaner, more efficient technologies contributes to GHG emissions reduction goals and can lower customer utility bills. Second, electrifying end uses previously powered by direct combustion of fossil fuels and promoting more grid-friendly electricity use can synergistically increase the amount of electricity the CCA must procure, while also allowing for the purchase of more inexpensive off-peak renewable energy and less costly on-peak electricity.

CCA program budgets are limited however, and so CCAs would do well to take advantage of existing and forthcoming investments California is making in clean energy programs. In many cases, relatively small investments by a CCA can help leverage significant amounts of funding from these programs. Here we discuss a few of these opportunities.

Solar Photovoltaics (PV)

California’s evolving efforts to transform the market for rooftop solar photovoltaic (PV) systems include ensuring the state’s lower-income and disadvantaged communities have access to the benefits of clean, low-cost solar energy. The Solar on Multifamily Affordable Housing (SOMAH) Program was recently authorized by the California Public Utilities Commission to continue through 2030 and is fully funded up to $1 billion through cap and trade proceeds.

The SOMAH Program provides incentives for solar PV systems on multifamily affordable housing, with incentive levels designed to cover the entire cost of the portion of the solar PV system that benefits tenant accounts. The program stipulates that a majority of the benefits of the system go to tenants, and early applications have seen approximately 90% of the energy credits that will be generated by these systems allocated to tenant accounts.

The SOMAH Program Administration (PA) team is currently in talks with both IOUs and CCAs about how they can ensure that affordable housing providers in their territories are able to benefit from the program. Through existing relationships with their customers, as well as their close ties to local authorities, CCAs are well positioned to connect affordable housing providers with the robust education, outreach and technical assistance on offer by the SOMAH PA team. The result is that CCAs can promote additional clean energy sources, while also ensuring energy affordability for lower-income customers, many of whom may struggle with high utility bills.

Energy Storage

With renewable energy now meeting as much as 60% of California’s electricity demand at certain times of the day, the conversation has largely turned to how to manage the “evening peak” – a time when energy use remains high but production from solar plummets as the sun heads for the horizon.

Energy storage is a promising solution, and one in which California is making a significant investment. As the name implies, energy storage allows a customer to store energy at a certain time of day, for example when a rooftop solar system is producing or renewable energy is abundant on the grid, and then discharge at times when electricity is more expensive and/or more carbon intensive. The result is lower customer bills, better integration of renewable energy and less need to bring additional natural gas “peaker” plants online to meet the evening peak. 

The Self Generation Incentive Program (SGIP) was recently extended through 2025 with an additional $716 million dedicated to incentives for energy storage technologies, and a specific focus on customers in wildfire areas that may be subject to Public Safety Power Shutoff (PSPS) events. Eligible technologies include lithium-ion batteries, as well as thermal energy storage that preferentially heats water or makes ice during times of abundant renewable energy to later offset water heating, air conditioning or refrigeration loads.

As with the SOMAH Program, CCAs are well positioned to leverage their relationships with customers and local authorities to funnel eligible properties towards the SGIP program, work with SGIP Program Administrators to carry out targeted education and outreach efforts and help potential applicants understand program requirements. One CCA, Sonoma Clean Power, is further removing barriers to adopting energy storage by offering to provide up-front rebates to contractors or homeowners installing energy storage systems that can provide backup power during PSPS events.

Electric Vehicles

With emissions from California’s electricity supply rapidly decreasing, transportation now accounts for over 40% of California’s GHG emissions. Along with encouraging carpooling and use of public transportation over single occupancy vehicles, electrifying transportation is a key piece of achieving a zero-carbon economy by 2045.

While rebates that reduce the purchase price of an EV, such as those provided by the Clean Vehicle Rebate Project, are crucial, the inability to charge an electric vehicle at home is another significant barrier. Widespread EV adoption thus also depends on adequate public charging. This presents a chicken-and-egg dilemma: without significant demand for EV charging, the business case for installing chargers can be difficult to justify, but without dependable public charging, EV adoption may struggle to reach the tipping point at which public charging becomes profitable.

The California Energy Commission is addressing this the gap in public charging by dedicating up to $200 million to the California Electric Vehicle Infrastructure Project (CALeVIP).

A number of CCAs and municipal utilities have stepped up to offer partner funding and amplify the impact of CALeVIP funds. While decisions on CALeVIP funding are primarily driven by technical analysis of need, the presence of partner funding can help influence where, and in what amount, CALeVIP funding will be deployed.

Emerging opportunities

In addition to the aforementioned programs, California recently committed to invest $200 million in clean heating technology through the BUILD and TECH programs. While still under development, these two programs will likely focus heavily on promoting highly efficient electric heat pumps for both space and water heating – two needs that are currently met in large part by natural gas. It’s an early foray into taking truly meaningful steps towards transitioning California’s buildings away from natural gas entirely.

While the BUILD and TECH programs will likely focus on midstream and upstream supply chain actors, like water heater and HVAC manufacturers and distributors, CCAs have the opportunity to craft local programs that address other significant barriers to adoption, such as the cost of electrical upgrades, and the need for a trained installer base. CCAs have been among the most vocal proponents of heat pump technology, with many offering programs like Silicon Valley Clean Energy’s FutureFit Heat Pump Water Heater Program.

California has clearly staked its claim as a leader in the clean energy revolution and the aforementioned programs represent significant opportunities for CCAs to leverage these investments and bring benefits directly to their customers.

Brian Jones

Brian is the Director of Incentive Programs for Distributed Energy Resources. He oversees CSE’s portfolio of DER incentive programs, aimed at driving market transformation for DERs and improving access to clean, affordable energy for traditionally underserved communities.

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