Dive Brief:

• California's community choice aggregators (CCAs) have sped up the state's progress toward its clean energy goals by opting to purchase more carbon-free electricity than they're required to, a model that could be replicated in other states that are considering allowing the development of CCAs, according to a new report from the UCLA Luskin Center for Innovation.
• The report found that between 2011 and 2019, CCAs in California purchased 23.5 million MWh of renewable energy in excess of state requirements, more than twice what they were required to buy, lead author Kelly Trumbull, project manager with the Luskin Center, said during a webinar Wednesday.
• But California's transitioning energy landscape, which is growing to accommodate more providers of electricity as well as sources of power, is also creating challenges for state regulators, according to Edward Randolph, the California Public Utilities Commission's deputy executive director for energy and climate policy. "All of these parts need to work together, in a coordinated way that's very different than it used to be," he said.

Dive Insight:

California is home to 23 CCAs, which represent 182 cities and counties and are available to more than 30% of the state's population. Community choice aggregation has grown rapidly in the state — in 2010, less than 1% of its population could be served by a CCA — and has come to play a critical role in its broader transition toward a cleaner grid. 

When a CCA launches in an investor-owned utility's territory in California, all of the customers of that area are automatically enrolled into it. Operational decisions are then made by locally elected officials, usually at the city and county level, Trumbull explained. 

CCAs also have the ability to choose the default electricity product that customers receive as part of their service. Fourteen cities and counties have opted for a 100% renewable energy product as the default for all their customers, while another 38 have a 100% carbon-free default.

An indirect impact of the growth of community choice aggregation has been its effect on pushing utilities to also exceed their clean energy targets, according to Trumbull. That's because prior to the emergence of CCAs, utilities had purchased long-term renewable energy contracts on behalf of their customers, some of whom have since departed to join a CCA instead. As a result, the utilities have the same amount of renewable energy but fewer customers, automatically increasing their per customer share of renewables.

"We estimate that IOUs have over-complied by 22.5 million MWh from 2011 to 2019, indirectly attributable to the emergence of CCAs," Trumbull said. 

In 2020, CCAs added a record amount of clean energy to their portfolios, Beth Vaughan, executive director of the California Community Choice Association said. To date, California CCAs have signed long-term — meaning 10 to 15 years — power purchase agreements for more than 6,000 MW, with new build-out of solar, wind, biogas, energy storage and geothermal energy, she added. 

'They're largely new entrants to this market'

But the growth of CCAs is also posing a challenge for state regulators — and vice versa. Regulatory policies can impact the way in which CCAs are able to make decisions around resources and programs, the report notes. For instance, California's renewable portfolio standard — which requires a certain percentage of contracts to span more than 10 years — could block CCAs from accessing falling costs. And changes to the state's resource adequacy program have also reduced CCAs' ability to make decisions on procurement.

"We're also facing certain risks and one, quite frankly, is trying to constantly deal with the changes in the regulatory scheme," that makes it difficult to plan for the long term, Tom Habashi, CEO of Central Coast Community Energy, said.

From the regulators' perspective, the challenge comes from shifting from a business model that consisted of a few vertically integrated utilities — who could plan around their customer base 10 to 15 years into the future — to one that includes CCAs and electric service providers. Soon, more customers in the state will be served by an entity that's not a utility, the CPUC's Randolph said.

This is a challenge for CCAs as well, he added.

"They're largely new entrants to this market. They have to go out and sign long-term contracts for these resources to meet the obligations out there. I think a lot of them early on struggled to get the diverse resource mix," Randolph said.

At the same time, CCAs are growing more sophisticated, he acknowledged.

"[They're] understanding what their long-term needs are, what their obligation to the grid is, and are getting [a] more and more diverse resource mix out there to support it — and that's very good news and makes my job much easier," Randolph said.