Across the country, communities are collectivizing the way they buy energy. Instead of residents reaching individual agreements with utilities, they’re now ganging together into buying groups where customers purchase power together. Though it sounds a little geeky, this shift is important. As more states allow it, collective buying could lead to greater choice over where energy comes from, more local power generation, and more renewable energy, period.
Six states already allow “community choice aggregation” (CCA) as this mechanism is called: California, Illinois, Massachusetts, New Jersey, Ohio, and Rhode Island. And now a seventh–New York–is coming onboard. From April, residents of Westchester County will be able to choose CCA energy contracts that promise 100% renewables. So far, 11 municipalities have signed on.
“The contract flips on its head the way that energy consumers get into deals with suppliers where they accept the terms and conditions that are supplied to them,” says Glenn Weinberg, a researcher with Sustainable Westchester (SW), the group that oversees the pilot CCA program.
“We have engagement from 14 or 15 municipal attorneys in our communities that reviewed, redlined, and revised our contract,” he says. “We took little input from suppliers in that process. We protected the consumers themselves, and then we turned around and asked the utilities to accept our contract whole hog. The suppliers asked for changes–but the vast majority we rejected.”
Under the program, customers don’t change their end-supplier, which will remain either Con Edison or the New York State Electricity & Gas company. These providers will continue doing billing and grid management. But residents do change the power relationship they have with utilities, Weinberg says. The CCA lets customers dictate terms and ask suppliers to source particular types of power, such as wind or solar.
New York’s CCA pilot, which initially runs for 12 months, is sanctioned by the state government, which is pursuing a wide-ranging (and closely watched) reform of the energy market. The Reforming the Energy Vision (REV) program (excellent explanation here) re-regulates relationships in the NY energy grid, incentivizing utilities to focus on efficiency and performance, as opposed to selling as much energy as possible (and building the biggest grid they can). NY REV is also funding lots of interesting experiments throughout New York state.
REV looks to right-size the electricity system, so it’s not bigger than we need, and to bring in more distributed generation, including solar. New York wants to get 50% of its power from renewables by 2030. Again, “right-sizing” sounds boring, but it’s actually important. The current grid is set up to cope with days of peak demand: normally summer weekdays where demand spikes because everyone is using their ACs. That means utilities have to build redundant capacity: power plants that run only when there’s a peak. The whole system is actually used only 55% of the time: a huge waste of money.
SW thinks its CCA can help. On high-demand days this summer, it plans to encourage people out of their homes so they use less energy. Then, if overall demand goes down, its utility supplier will pay back the difference between what they would have paid for raising supply and what they actually paid. In other words, the CCA will enable a collective “demand response” and, ultimately, a rebate for customers.
“If we can predict when we’ll have peak demand, we can incentivize people to shut down their homes or businesses and go to the movie, an ice cream shop, or go to happy hour. And they might get a coupon to do so,” Weinberg says. (SW is hoping to reach coupon deals with local businesses.)
For Con Ed customers in Westchester, the 100% renewable energy contracts are expected initially to cost $2 a month more than the current fossil fuel-nuclear-renewable contracts. But, over the year, SW says the former contract will be 4% or 5% cheaper.
Weinberg expects clean energy contracts to fall in price as communities themselves start building clean power sites. New York allows communities to build solar sites up to five megawatts. And Westchester’s contract encourages utilities to substitute energy produced in distant places for local production once it’s available. SW will start looking at solar sites this summer.
The CCA model would seem to hold lots of potential for communities, backed by enabling legislation, and girded by local microgrids, which can further improve resilience. That’s another idea SW is interested in as time goes on.