California Entering Decade of Disruption, as Power System Shifts Dramatically
New report from UCLA Luskin Center for Innovation and Next 10 details how Community Choice Aggregators are driving change but with negligible grid impact
August 2, 2018
Communities across California are forming Community Choice Aggregators (CCAs) at a rapid rate since 2010, with over half of them starting within the last two years. County and city governments administer CCAs as local alternatives to investor-owned utilities (IOUs).
The Growth of Community Choice Aggregation: Impacts to California’s Grid, a new report produced by Next 10 and written by JR DeShazo, Julien Gattaciecca, and Kelly Trumbull of UCLA’s Luskin Center for Innovation, finds that if current growth trends continue, CCAs may serve a majority of California’s power consumers within the next 10 years, transforming California’s retail electricity sector.
According to the report, the rise of CCAs has both direct and indirect positive effects on overall renewable energy consumed in California, helping contribute to the state meeting its 2030 RPS targets approximately ten years in advance.
Even with such an important impact on the penetration of renewable energies, CCAs’ effects on the grid have been negligible so far. This is in part because when a CCA starts, it handles the needs of existing electric customers, and often gets power from existing power plants.
In the long term, though, CCAs’ impact on the grid depends on their energy procurement strategies and their local investments.
“The public and local nature of CCAs positions them to implement local energy programs that will help to reduce or shift energy consumption, benefiting the grid as well as their customers,” Dr. DeShazo said. The report finds that some CCAs have been especially innovative in responding to customers’ preferences by offering programs that focus on efficiency, rooftop solar, electric vehicles, and demand response.
Among the report’s other findings:
- CCAs are offering customers a default electricity product with renewable energy content ranging from 37 percent to 100 percent, with an average of 52 percent.
- IOUs’ default electricity product have a renewable content between 32 percent and 44 percent. They estimate a renewable content that will exceed 50 percent by 2020.
- CCAs rely more on short-term and out-of-state renewable energy contracts, compared to IOUs, due in part to the fact that they are relatively new entities. It’s unclear if this pattern will persist as CCAs continue to mature.
- CCAs compensate their rooftop solar customers for energy generated in excess of their consumption at rates up to three times higher than IOUs.
- Some CCAs have demonstrated more success at engaging hard-to-reach customer groups in energy efficiency, compared to their IOU counterparts. For example, MCE’s multi-family energy efficiency program is more cost-effective than the comparable PG&E’s program.
This briefing paper is one of five in a series produced by Next 10 about California’s energy grid and trends affecting it. The first two reports — on grid regionalization and a primer on California’s electricity system — were released earlier this month. Two others on distributed energy generation and electric vehicles are released today along with the CCA report. All five briefs can be found at www.next10.org.
About UCLA Luskin Center for Innovation
The Luskin Center for Innovation (LCI, innovation.luskin.ucla.edu) conducts and translates world-class research into real-world policy and planning innovations. Based in the UCLA Luskin School of Public Affairs, LCI bridges academic scholars with civic partners to support informed decision-making around climate action, clean energy, sustainable transportation and more for the health of people and the planet.
About Next 10
Next 10 (next10.org) is an independent, nonpartisan organization that educates, engages and empowers Californians to improve the state’s future. With a focus on the intersection of the economy, the environment, and quality of life, Next 10 employs research from leading experts on complex state issues and creates a portfolio of nonpartisan educational materials to foster a deeper understanding of the critical issues affecting our state.