San Diego Study Finds Cheaper, Greener Energy from Utility Leapfrog

Utility companies are facing a tough environment with the advent of renewable energy, and things are about to get much tougher. A new study commissioned by the city of San Diego, California indicates that the city may have an opportunity to provide electricity consumers with lower rates, ramp up its use of renewable energy and meet its self-imposed greenhouse gas goals by forming a Community Choice Aggregation system.

A final decision on launching Community Choice in San Diego is a long way off, but the new study may force the local utility SDG&E to up its renewable energy game.

Community Choice Aggregation in California

California is among a handful of states that have established Community Choice Aggregation systems.

Community Choice Aggregation basically enables local governments to control the power sources of their utility company.

Under CCA, the company still owns its infrastructure, billing systems and other operations, but local communities can determine where the electricity is coming from.

In particular, local communities can create new job opportunities and foster new economic activity by order their utility to purchase renewable energy from solar arrays within their jurisdiction, or from other locally available renewable sources.

California has eight CCA systems in place so far. Researchers have compiled that data into a solid argument (with some caveats) for more communities to adopt CCA, and San Diego could give the movement another powerful shove forward. It would be the largest jurisdiction in the state with CCA, by a significant margin.

The San Diego CCA Study

In 2015 San Diego approved a Climate Action Plan that calls for ending the city's reliance on fossil fuels for power generation by 2035, and now the pressure is on to accomplish that goal without raising electricity rates.

San Diego's utility SDG&E currently provides power that is mainly sourced from natural gas. That makes matters more challenging because the shale gas boom has kept gas prices low.

Although natural gas emits less greenhouse gas pollution at the burn point than coal, it carries a significant degree of other environmental baggage. Green-branded cities like San Diego can strengthen their sustainability position by eliminating natural gas from their power supply chain.

The San Diego study was released last week under the title, "Feasibility Study for a Community Choice Aggregate," by the consultant group Wildan Financial Services. It is specifically aimed at assessing opportunities for the city to wean itself from natural gas.

Ry Rivard of the Voice of San Diego sums up one scenario described in the study, which would get the San Diego CCA to 50 percent renewables:

Because of separate state mandates, 50 percent of SDG&E’s power needs to be renewable by 2030. The city said it can hit that 50 percent target faster and cheaper: The city’s rates would be 2 percent higher than SDG&E’s in the first year of its government-run program but then less and less expensive until 2026, when the city’s rates could be 11 percent lower.

The city also has the potential to hit 80 percent renewables by 2026, though its initial rates would be more expensive than SDG&E for a longer period of time.

According to Rivard, that would put the city in a good position to achieve 100 percent renewables by its 2035 target:

If the city can competitively get to 80 percent renewable energy by 2026, it still has nearly a decade to figure out how to get to 100 percent, a gap that by then may be easier to close thanks to falling renewable energy prices and rapidly advancing technologies.

A Good Bet On Renewables

San Diego officials are taking the new study under consideration, though with caution. Numbers and models can change, and the advent of distributed solar-plus-storage creates new complexities for CCAs, just as it has been disrupting utilities in the private sector.

One thing that does seem relatively secure, though, is a further significant drop in the cost of solar power.

Despite the pro-coal rhetoric of President Trump, the Department of Energy is still committing new funds to help drive down the cost of solar and other renewables, partly by funding cutting edge research on solar technology and partly by taking steps to lower the cost of installation and other "soft" costs.

Much of the heavy lifting has been undertaken by an Obama-era initiative called SunShot solar, which aims to push the cost of unsubsidized solar power into parity with fossil fuels. Energy Secretary Rick Perry is known for public gaffes, and as a cabinet member he has dutifully supported the Trump Administration. However, his agency is still going full steam ahead with programs that foster the mission of SunShot and renewables in general.

The Energy Department's newly re-designed website makes it clear that the agency is determined to promote solar power over fossil fuels:

The U.S. Department of Energy SunShot Initiative is a national effort to drive down the cost of solar electricity and support solar adoption. SunShot aims to make solar energy a low-cost electricity source for all Americans through research and development efforts in collaboration with public and private partners.

As for Community Choice Aggregation, one factor that tips the balance in its favor is local job creation. SDG&E already appears to be taking steps to turn public opinion against CCA in San Diego, but unless the company begins to get serious about finding local sources of renewable energy, that's going to be a tough sell.

Image (screenshot): via sandiego.gov.