Community choice aggregators (CCA) have become a formidable player in California’s electricity markets, Take on the role of supplying electricity to millions of customers from utilities owned by state investors, announcing big-time clean energy contracts, and pushing regulators to add flexibility to state regulations that accelerate the development of CCAs.
A Monday announcement again underscores that expansion: Eight CCAs have teamed up with a joint powers authority, an entity connecting public agencies to serve a common goal. In this case, the goal is to purchase large amounts of clean energy; California has many CCAs Renewable targets are more aggressive On a larger scale than the state.
Taken together, the new conglomerate, California Community Power, offers nearly half the number of 2.6 million electric customer accounts served by Northern California utility Pacific Gas & Electric. This size “overnight turns him into one of the largest buyers of electricity in the country”, Colin Smith, a senior solar analyst with energy consultant Wood Mackenzie.
The structure is designed to allow different aggregators to work together on different energy purchases, as they will be able to handle separately.
“When you think about the clean energy transition and the types of investments in the future, it is a seat for us as a very large entity in the future,” said Girish Balachandran, CEO of Silicon Valley Clean Energy.
Silicon Valley Clean Energy joins East Bay Community Energy, Redwood Coast Energy Authority, Marin Clean Energy, Peninsula Clean Energy, San Jose Clean Energy, Sonoma Clean Power, and Central Coast Community Energy – covering the Swaha of Northern and Central California – CCA member new agency. CleanPowerSF, CCA of San Francisco, is currently pursuing membership by the group.
The group is tied to the growing buying power of CCA in California with voters when it comes to renovation and storage. The CCA can be small on its own, and small people may have trouble obtaining financial support for their power projects. But a joint group of such organizations – With multiple investment-grade credit ratings – Can mean bigger deals and more confidence from developers.
In October, a group of eight CCAs, including seven involved in California Community Power, leaped ahead of the state’s investor-owned utilities. Announcement of a request for proposals For long-term storage, which state regulators have said is necessary to meet California’s clean energy goals. The Joint Rights Authority is now moving that process on behalf of its seven members and is currently evaluating the projects.
“By partnering together, we are able to leverage economies of scale, increasing the power of negotiation [and] Innovation and increased risk-sharing opportunities, ”said Jan Pepper, CEO of Peninsula Clean Energy.
Officers of joint powers have been used in the past to combine the purchasing power of small electricity providers in the state. Northern California’s balancing authority includes municipal utilities such as the Sacramento Municipal Utility District and Modesto Irrigation District, and the Southern California Public Power Authority has members including Riverside Public Utilities and the Los Angeles Department of Water and Power.
Credit rating and economies of scale
While the new structure is designed to give greater benefits to CCA participants in purchasing decisions, each organization will also maintain autonomy. Pepper said that in particular, the groups will continue to pursue different renewal targets and also continue their credit ratings.
Peninsula Clean Energy, Central Coast Community Energy, Marin Clean Energy, and Silicon Valley Clean Energy have already achieved credit ratings. The Joint Rights Authority may pursue such ratings in the future, although Balachandran and Pepper said the group has no current plans to do so.
Credit ratings have historically served as a barrier to CCAs, as financiers and developers may be wary of deals with unstoppable counterparts. However, the increasing number of aggregators who have achieved those ratings has helped address those concerns.
“There has been a long-standing problem with both developers and financiers… they are not entirely sure if they want to do business with CCA. These are very young organizations, ”said Smith of Woodmac. “Getting a credit rating helps a lot.”
Seth Hilton, a partner in the Stoel Rives Energy Development Practice, said the larger aggregation at a joint rights authority “addresses some concerns that have been raised about the CCA in the past.”
“It looks like a very broad effort that can address those concerns and actually streamline some purchases,” Hilton said.
California Public Utilities Commission is Already Recognized CCAs Much of the state’s expected source of carbon-free procurement over the next decade as they are responsible for the bulk of the state’s electricity customers.
California Community Power is not the first attempt by the CCA to work together to secure those deals. Peninsula Clean Energy, East Bay Community Energy, and Silicon Valley Clean Energy Worked For example, in 2019 a municipal storage urge with municipal utility Silicon Valley Power.
The formation of California Community Power is likely to add credibility to those institutions according to Smith. California’s current investor-owned utilities are somewhat unclear. PG&E said it would “continue to work with CCAs” as it did before the announcement.
“It’s important to remember that if a customer becomes a CCA customer, they are still PG and E customers,” spokeswoman Ari Warren said in an email. “We continue to deliver power to CCA customers through our transmission and distribution systems, and provide meter reading, billing, customer service, and maintenance services.”
But the growth of aggregators has rearranged the traditional role of investor-owned utilities as the sole provider of power for customers in their regions. If CCAs continue to proliferate, it is possible that California-owned utilities may see themselves as “de facto polls and wire companies”, accused of delivering power rather than generating electricity on a large scale, Smith said.