What is Community Choice Energy and Why Should You Care?

Power to the people.

Community choice energy programs in California and other states are helping our country shift away from fossil fuels to clean renewable energy.

Are you thinking something like “That sounds great but what the heck is community choice energy?” If you are, you have plenty of company so do not worry about it.

I only learned about community choice energy because I chanced upon the SLO Climate Coalition when I was looking for a group promoting clean renewable energy where I live in San Luis Obispo County, CA. When I met them in October 2018, they and their predecessor group SLO Clean Energy had been working for years to bring community choice energy to the cities and unincorporated areas in our county.

Because of their efforts and the efforts of many other people this initiative is succeeding. On January 9, 2020, San Luis Obispo and Morro Bay became the first cities in San Luis Obispo County to begin receiving electricity through a community choice energy program provided by Monterey Bay Community Power. Other cities will be joining next year and hopefully, the County will get on board, too.

Community Choice Energy Flip the Switch Event in San Luis Obispo City Hall
San Luis Obispo City Council (Mayor Heidi Harmon in red), City staff, and members of the SLO Climate Coalition at the “flip the switch” event at San Luis Obispo City Hall on January 9, 2020 – photo credit San Luis Obispo Chamber of Commerce. Click here to read the article.

Through my work with the SLO Climate Coalition, I have had the opportunity to learn about community choice energy and became interested in researching the topic on my own.

This post is intended to serve as an introduction to community choice energy and will hopefully spark your interest in advocating for a program where you live and/or opting to stay in it if your community already has one.

First, let’s talk about electricity generation and greenhouse gas emissions.

Electricity Generation and Greenhouse Gas Emissions

Global warming is being caused by excess greenhouse gases like carbon dioxide (CO2) and methane (CH4) building up in Earth’s atmosphere overwhelming the planet’s ability to deal with it. Most scientists agree that humans need to stop burning fossil fuels such as coal, petroleum, and natural gas or the climate crisis will continue to worsen endangering our very existence.

This short video was prepared by the World Meteorological Organization in advance of the United Nations COP25 climate conference held in Madrid, Spain during December 2019.

How do greenhouse gas emissions from electricity generation fit in the overall picture?

The process of generating electricity is the largest stationary source of CO2 emissions in the United States. In 2018, this represented 33% of all CO2 emissions sources across the country. 1

U.S. Electric Power Generation and Emissions 1990-2018 Graph
Fuels Used in Electric Power Generation (TBtu) and Total Electric Power Sector CO2 Emissions – source U.S. Environmental Protection Agency.

In a 2019 report, the U.S. National Renewable Energy Laboratory concluded that community choice energy providers could reshape U.S. electricity markets and increase customer demand for renewable energy. 2

Community Choice Energy 101

The U.S. federal government has some involvement in regulating electricity markets but states are largely responsible for what happens within their own borders.

States have the authority to pass legislation authorizing community choice energy programs. As of this writing, nine states have passed such legislation including California, Illinois, Massachusetts, New Hampshire, New Jersey, New York, Ohio, Rhode Island, and Virginia.

Community choice energy legislation allows communities to choose who they purchase electricity from instead of being required to buy it from investor-owned utilities (IOUs) that are beholden to their shareholders.

How does it Work?

A city, county, or some combination of cities and counties may form an organization called a community choice aggregator (CCA). A CCA is a local or regional not-for-profit public agency that assumes the responsibility for procuring electricity on behalf of all customers in its jurisdiction.

The reason they are called aggregators is that they pool (aggregate) the electricity demand for their customer base and then procure electricity to meet that demand from one or more sources of their choosing. The electrons purchased are fed into the electric grid so as a customer you are not necessarily receiving your electricity from the source selected by your CCA.

At this time, CCAs only purchase electricity. They form partnerships with IOUs who continue to provide transmission, distribution, meter reading, billing, maintenance, and outage response services.

Where I live, the City of San Luis Obispo and the City of Morro Bay opted to join Monterey Bay Community Power an existing CCA that was already serving several counties on the California Central Coast.

Our house is in the unincorporated part of San Luis Obispo County so PG&E is still our electricity provider. However, we have a rooftop solar panel system on our home so we generate most of our own power. During the day we send our excess electricity to the grid and at night we draw electricity from it.

Benefits

For me, it is a tossup as to which is the best benefit of community choice energy.

Local control of electricity procurement decisions enables CCAs to offer their customers choices. Most CCAs procure a mix of electricity from both renewable and nonrenewable sources and allow their customers to choose a mix that meets their budget and desire to support renewable energy (or not).

Unlike IOUs, CCAs do not have investors looking to profit from their investments. This enables CCA’s to offer competitive rates that are often lower than the IOUs. In addition, revenue surpluses are used to fund community programs versus lining the pockets of shareholders. These programs can range from funding rooftop solar panels for low-income families, to adding electric vehicle charging stations around town, to awarding grants to local nonprofits.

Many CCAs are focused on procuring electricity from carbon-free renewable sources like hydroelectric, wind and solar which spurs investment in these technologies and helps transition the U.S. off fossil fuel-powered electricity.

CCAs are already embracing the Green New Deal creating jobs and investing locally and working on helping their communities become more just and resilient.

Drawbacks

Avid community choice energy advocates sometimes gloss over potential drawbacks but I think it is important to cover them, too.

Adding more buying entities to an already complex system does not necessarily promote cooperation and could take attention away from the critical work that needs to be done modernizing, securing, and making our electric grid more resilient.

IOUs have a lot of money and expertise available to keep on top of electricity-related legislation and to lobby government agency representatives and elected officials. CCAs may or may not have the funds and staff necessary to keep up and to effectively influence legislation. Recently, there has been a rash of mostly worrisome community choice energy-related legislation making its way through the California legislature.

Most CCAs are new and do not have a long-term financial standing with creditors possibly making them more vulnerable to changing electricity market conditions or unexpected problems.

For instance, of the seven states with active CCAs, California is the only state with a regulated electricity market. California CCAs are required to pay “exit” fees to compensate IOUs for their sunken investment costs and long-term contracts. The determination of these fees called the power charge indifference adjustment (PCIA) is a contentious and recurring process with little transparency. If these fees continue to escalate as they have been, it could endanger the financial viability of existing CCAs and preclude others from even forming.

Summary

Community choice energy is beginning to disrupt the electricity industry. I believe this a good thing.

U.S. Map Showing Community Choice Energy States

We need a massive and systematic change in the way we power our lives and businesses in the United States. Perhaps community choice energy can provide a lever to break the status quo and accelerate our transition to clean renewable energy.

Disruption can be frightening, too. I worry that while communities focus on local choice and control that the big picture may not receive the attention it needs and that further fragmentation of the electricity market may have unintended consequences.

However, as far as I am concerned, the need to change far outweighs the problems and roadblocks we are sure to encounter along the way.

By learning about and advocating for community choice energy where we live, you and I can be part of a clean renewable energy future for everyone.

Featured Image at Top

Four people are holding icons representing a solar panel, sun, wind turbine, light bulb, water drop, and battery – photo credit iStock/Rawpixel.

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References

  1. DRAFT Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2018, Chapter 3: Energy – U.S. Environmental Protection Agency, 02/12/20
  2. Community Choice Aggregation: Challenges, Opportunities, and Impacts on Renewable Energy Markets – by Eric O’Shaughnessy, Jenny Heeter, Julien Gattaciecca, Jenny Sauer, Kelly Trumbull, and Emily Chen – U.S. National Renewable Energy Laboratory, 02/2020

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5 Reasons to Buy Rooftop Solar Panels in 2019

Don’t wait for another year.

Have you been putting off installing rooftop solar panels on your home? If so, 2019 is a good year to take action and actually do it. Why this year? Read on.

The American media seems to take pleasure in portraying us as a bunch of money-grubbing consumers who are only out for ourselves, but I am not buying it. We do not have to listen to them.

I believe that we can use our purchasing power to benefit the greater good and ourselves.

Sometimes it might be a small purchase like buying socks at a locally owned store instead online and having them shipped to you via an airplane. Or opting to buy organic spinach grown by a local farmer instead of spinach that comes in a sealed plastic bag from somewhere out of state.

A rooftop solar system is a big purchase that meets the above criteria.

In this post, we will talk about how purchasing rooftop solar panels for your home is a long-term investment that will pay for itself and more, add renewable energy capacity to your community, and support local jobs.

March 8, 2019, marked the beginning of the seventh year that our rooftop solar system has been silently generating clean renewable energy from the sun. Our system is tied to the electric grid so we share electricity back and forth with PG&E the investor-owned utility currently providing service to our county.

Let’s deal with the financial stuff first.

Save Money on Electricity

The net cost of our 22-panel 5.34 kW rooftop solar system was $14,767 including tax credits that we will discuss later. Solar prices have been decreasing so now our system would cost less.

Purchasing rooftop solar panels requires a significant investment upfront. Beware of sticker shock that may cause you to waver and lose sight of the long-term benefits.

I propose a little exercise to help you think about a large amount of money in a different way and this one never pays for itself or provides free electricity.

Many people, perhaps including you, have a habit of buying a cafe latte, specialty juice drink, or another treat each day during the workweek.

Let’s say you do that 48 out of 52 weeks a year. To make it simple we will use $5.00 as the cost of the treat. Below is an example of how much money you will spend over a ten-year period on just that one item.

Rows of Green Dollar Signs

5 items a week x 48 weeks a year = 240
items per year x 10 years = 2,400 items x $5.00 each = $12,000.

You may think this is a silly example, but it does demonstrate how you, I, and everyone else can easily spend a large amount of money without really thinking about it.

Payback Period

Your tangible electricity savings will begin at the end of your payback period, which is however long it takes your electricity savings to equal the total net cost of your rooftop solar system.

Last May, I decided to attempt to calculate the payback period for our solar panel system.

I had the data. However, I soon discovered the complexity of the task. It would mean calculating electricity costs on an hourly basis 24/7/365 for 5 years. This was beyond the time I could allow to figuring it out.

Not willing to do nothing, I came up with a method to estimate our payback period, which turned out to be about 7 years. Even though it is likely that there are flaws in my approach, I think that I am well within the ballpark.

At this time next year, our rooftop solar system will have paid for itself and from then on electricity will be virtually free for the next two or three decades, except for PG&E fees. Solar panels decrease in efficiency over time, but after the 25-year warranty period ends, they will not suddenly stop working.

If you are interested in how I calculated our payback period, you can read about it in the post Rooftop Solar Panels are Worth It and this is Why.

Increase Your Home’s Value

In recent years, especially here in California, several things have occurred making it even more financially attractive to purchase rooftop solar panels for your home.

  1. In January 2017, the California Regional Multiple Listing Service recognized that a rooftop solar system is a positive selling point for many home buyers so they added standardized fields that enable realtors to enter energy production for their listings.
  2. The California legislature upped the ante on renewable energy in 2018 by enacting a law requiring solar panels on all new homes.
  3. I do not have a crystal ball, but I doubt you will disagree with me when I suggest that electricity prices will only continue to increase. Where I live the average price of a kWh of electricity has steadily increased by 22.4% in the past 6 years, which is substantially higher than the national inflation rate.

When you decide to sell your home, savvy prospective home buyers are likely to appreciate that they can instantly save on their electricity bills without doing a thing.

You can learn more about this topic by reading the post You Can Increase Your Home’s Value with Owned Solar Panels.

Receive a Solar Investment Tax Credit

Mostly free electricity in the future and adding to your home’s value are two sound financial reasons to purchase a rooftop solar system. A compelling reason to do it in 2019 it that this is last year can receive the full 30% federal tax credit.

Solar-Electric Property
  • 30% for systems placed in service by 12/31/2019
  • 26% for systems placed in service after 12/31/2019 and before 01/01/2021
  • 22% for systems placed in service after 12/31/2020 and before 01/01/2022
  • There is no maximum credit for systems placed in service after 2008.
  • Systems must be placed in service on or after January 1, 2006, and on or before December 31, 2021.
  • The home served by the system does not have to be the taxpayer’s principal residence.
The 30% tax credit we received for our initial rooftop solar installation resulted in a refund from the federal government. This photo shows 3 of the 6 additional solar panels we bought with the money.

Visit the DSIRE website to learn more about federal tax credits and state incentive programs.

I hope you can see that owning a rooftop solar system makes financial sense. Now, let’s look at how going solar contributes to the greater good.

Build Renewable Energy Capacity in Your Community

Extracting, transporting, refining, storing, and burning fossil fuels (coal, oil, and natural gas) is a dirty and dangerous business that is jeopardizing the health and well-being of people everywhere, especially the people who live near fossil fuel extraction sites, rail lines, refineries, pipelines, and power plants.

Major Sources of U.S. Electricity Generation 1949-2018 Line Graph
Electricity generation from renewable energy is increasing and coal is decreasing. Unfortunately, natural gas is on the rise. Image credit – U.S. Energy Information Administration.

Each one of us can choose to help our country get off fossil fuels by taking a variety of actions from running our dishwashers after peak electricity demand time to installing solar panels on our roofs.

Using the existing real estate available on top of our homes and other buildings to generate clean renewable energy just makes sense to me. The roof is already there so why not use it. If I were an investor-owned utility executive, I would be renting every rooftop I could get my hands on and installing solar panels.

Keep Your Money in Your Community

I am a fan of locally owned businesses, including solar companies, for a number of reasons. First and most importantly, I know that my money is supporting jobs in my own community versus lining the pockets of far distant shareholders who have never heard of my town or me.

Local companies are embedded in the communities they serve providing jobs, spending money, and contributing to causes important to their employees and the community.

We selected A.M. Sun Solar for our home rooftop solar project. I think they embody what is wonderful about locally owned companies. Here are a few examples.

A.M. Sun Solar Team in 2017
This is the A.M. Sun Solar team shown outside of their office in Paso Robles, CA in 2017. Photo courtesy of A.M. Sun Solar.

The people at A.M. Sun Solar treat me like a person, not a number.

Years after our installation, Glen, Cory, and now Brian, are always willing to answer questions or provide information for a post I am writing.

The company gives back to the community by donating time and money to local organizations like Jack’s Helping Hand and the Paso Robles Children’s Museum.

Of course, just like any other company that you give your business to a locally owned company needs to provide quality products and services at a reasonable price. I chronicled this aspect of our relationship with A.M. Sun Solar in the posts Go Solar with Home Rooftop Photovoltaics – We Did and Rooftop Solar Costs Less than You Think.

Be Part of the Solution

Okay, so now I have shown you the money and presented you with an opportunity to help build the renewable energy capacity of your community while supporting local jobs. What could be better?

If you call a local solar company tomorrow, you could have solar panels on your roof before the arrival of the hot summer weather. This time next year you could be claiming the 30% tax credit on your federal income tax return.

Better yet, you will be taking a significant step to live more lightly on Earth.

Our Rooftop Solar Environmental Benefits March 2013-March 2019
This image shows the energy production and carbon offset for our rooftop solar panel system from March 2013 to March 2019.

Featured Image at Top: 12 of the 16 solar panels that were installed on our roof during our initial installation in 2013.

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