New Utility Model is Impacting How Millions of Americans Get Electricity
UCLA and National Renewable Energy Laboratory release first nationwide study on community choice aggregation and its current and potential impacts on renewable energy
A new alternative model to traditional utilities is gaining popularity across the country. Currently, eight states allow cities and counties to purchase electricity on behalf of their communities ─ a procurement model called community choice aggregation (CCA).
A new report authored by the National Renewable Energy Laboratory (NREL) and the UCLA Luskin Center for Innovation assesses CCA growth and its impact on renewable energy, in the first nationwide CCA study released by federal and academic researchers.
Through a CCA, local governments put the interests of their residents and businesses at the forefront of their electricity procurement decisions. There are 750 CCAs across the country, most of which formed with the goal of reducing electricity costs for ratepayers.
Many also chose to reflect their customers’ preferences for clean energy and offer renewable energy in excess of state requirements. “In 2017, CCAs across the U.S. cumulatively procured over three times more renewable energy than required by their respective state policies,” states Kelly Trumbull, researcher at the UCLA Luskin Center for Innovation.
If current trends continue, these numbers are expected to increase as additional states consider enabling CCAs. Based on historical data and trends, the report estimates that CCA expansion has the potential to increase the sale of renewable power as high as 62 million megawatt hours on top of state renewable portfolio requirements.
“In other words, CCA expansion could increase their renewable energy impact by seven-fold,” states Julien Gattaciecca, co-author of the report and project manager at the UCLA Luskin Center for Innovation. “This could have a transformational impact on the renewable energy market in the country, if CCAs’ procurement leads to the construction of additional renewable energy generators.”
However, several challenges to CCA expansion exist. While cost competitiveness remains crucial to CCAs, the report describes the necessity to balance local autonomy and regional cooperation. The report also identifies how CCA expansion poses uncertainty to electricity markets, for example around energy and capacity procurement, or around the potential dissolution or suspension of CCAs and how this would impact customers. The authors initiate a nationwide conversation about the opportunities and challenges that CCAs represent for energy markets, which historically have not experienced the type of disruptive competition this new model may represent.
NREL invited Julien Gattaciecca and Kelly Trumbull of the UCLA Luskin Center for Innovation to join the study given their previous research on CCAs in California. This includes an introductory report on CCAs, an analysis of alternative CCA structures, and an analysis of CCAs’ impact on the electrical grid.
