NREL is a national laboratory of the U.S. Department of Energy, Oce of Energy Eciency
and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC.
Innovations in Voluntary
Renewable Energy
Procurement: Methods
for Expanding Access
and Lowering Cost for
Communities, Governments,
and Businesses
2
Acknowledgments
This work was funded by the U.S. Department of Energy’s (DOE’s) Oce of Energy Eciency and Renewable Energy (EERE),
prepared under task number SAO9.3110. The authors wish to thank Steven Lindenberg, Linda Silverman, and the EERE technology
programs for their support of this work. For their thoughtful review of the document, the authors thank Blaine Collison of the U.S.
Environmental Protection Agency; Lisa Daniels of Windustry; and Lynn Billman, Jason Coughlin, Robin Newmark, and Bethany Speer
of NREL. The authors thank Mary Lukkonen of NREL for her editorial support and Anthony Castellano of NREL for his design work.
Notice
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Available for a processing fee to U.S. Department of Energy and its contractors, in paper, from:
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Jenny Heeter, Joyce McLaren
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3
Table of Contents
1 Introduction 5
2 Community Choice Aggregation 9
2.1 Experience with CCA 9
2.2 Design and Implementation Considerations 11
2.3 Benets of CCA 12
2.4 Challenges of CCA 13
3 Community Wind and Solar Programs 14
3.1 Experience with Community Wind and Solar Programs 14
3.2 Design and Implementation Considerations 16
3.3 Benets of Community Wind and Solar Programs 16
3.4 Challenges of Community Wind and Solar Programs 17
4 Green Power Challenges and Local Collaborative Electricity Procurement 18
4.1 Experience with Green Power Community Challenges and Local Collaborative Electricity
Procurement 18
4.2 Design and Implementation Considerations 20
4.3 Benets and Challenges of Green Power Challenges and Local Collaborative
Electricity Procurement 20
5 Bulk Purchasing of Distributed Energy Systems 21
5.1 Experience with Bulk Purchasing of Distributed Energy Systems 21
5.2 Design and Implementation Considerations 23
5.3 Benets of Bulk Purchasing Programs 24
5.4 Challenges of Bulk Purchasing Programs 24
6 Reverse Auctions for Voluntary Purchases 25
6.1 Experience with Reverse Auctions 25
6.2 Design and Implementation Considerations 26
6.3 Benets of Reverse Auctions 26
6.4 Challenges of Reverse Auctions 27
7 Summary and Conclusions 28
8 Endnotes 31
9 Resources and References 32
10 Appendix 35
4
List of Figures
Figure 1. Decision trees for selecting an innovative purchasing method 6
Figure 2. Investor-owned utility, Community Choice Aggregation, and municipal electric-sector models 9
Figure 3. Capacity and number of community solar programs 15
List of Tables
Table 1. Five Methods to Encourage Voluntary Procurement of Renewable Energy Generation or Systems 5
Table 2. States with CCA-Enabling Legislation 9
Table 3. Overview of CCA Programs Oering Renewable Energy 10
Table 4. Green Power Community Purchase Requirements 18
Table 5. Top EPA Green Power Communities 19
Table 6. Overview of Innovative Renewable Energy Procurement Mechanisms 30
Table A-1. Overview of Community Solar Programs 35
Photo from iStock 6868818
Photo from iStock 19136801
5
The options described in this guide oer a variety of benets,
including lower cost, simplied transactions, expanded access
to green energy, and increased impact (see Text Box 1). Each
chapter describes one option, provides examples of its use, lays
out design and implementation considerations, and discusses
benets and challenges.
This guide explores ve innovative options for voluntarily procuring renewable energy generation or systems.
The options and their descriptions are shown in Table 1. These methods can be replicated by a variety of
stakeholders—including local governments, not-for-prot organizations, businesses, and utilities. The three
decision trees in Figure 1 indicate which method may best suit a particular stakeholder’s needs.
1. INTRODUCTION
Method Description Examples
Community Choice Aggregation (CCA)
Section 2 (page 9)
CCA programs allow communities to collectively
choose the source of their electricity generation
while maintaining transmission and distribution
service from the existing provider. CCA programs
may or may not select renewable energy supply;
this paper focuses on such programs that do
provide renewable energy.
Marin Clean Energy (CA)
Oak Park Community Choice Aggregation (IL)
Community wind and solar programs
Section 3 (page 14)
Community programs allow participants to
invest in renewable energy projects; these
programs include community solar and
wind programs. Programs typically fund new
local solar or wind capacity; each participant
purchases a portion of the capacity.
Community solar: Sacramento Municipal Utility
District’s SolarShares Program (CA)
Community wind: Huerfano River Wind Project
(CO)
Green power challenges and local collaborative
electricity procurement
Section 4 (page 18)
Green power challenges are media campaigns
sponsored by local governments, utilities,
third-party marketers, and/or environmental
organizations to encourage increased levels
of voluntary green power purchasing in a
community. Local collaborative electricity
procurement aggregates the demand of a few
organizations in deregulated electricity markets
to procure renewable electricity.
Green power challenge: Lake Oswego (OR)
Local collaborative electricity procurement:
Groundswell’s Community Power Project (D.C.)
Bulk purchasing of on-site systems
Section 5 (page 21)
Bulk purchasing programs aggregate demand
from a group of individuals or companies
interested in installing on-site systems,
attracting reduced prices from vendors, and
simplifying the purchasing process.
Solarize Portland (OR)
One Block O the Grid (National)
Reverse auctions for renewable energy
Section 6 (page 25)
Reverse auctions are mechanisms for one or
more buyers to request a renewable energy
product and have many sellers bid to provide
the product; the bidder that can provide the
product for the lowest price wins the auction.
World Energy Solutions (National)
Table 1. Five Methods to Encourage Voluntary Procurement of Renewable Energy Generation or Systems
New purchasing methods have been created
by utilities, local governments, businesses,
and others to expand access, lower the
cost, and simplify the process of procuring
voluntary renewables.
1
6
Voluntary purchasing of renewable energy—through
utility green pricing programs, competitive suppliers,
unbundled renewable energy certicate (REC) markets,
and installation of on-site systems—is on the rise.
Individual, corporate, and institutional purchasing
of renewable energy has expanded rapidly in recent
years, increasing from 11.9 million MWh in 2006 to
35.6 millionMWh in 2010 (Heeter and Bird 2011). On-
site solar photovoltaic installations have also been
increasing: In 2011, the capacity of distributed grid-
connected PV doubled compared to 2010, reaching
1.3GWdc (Sherwood 2012).
Methods for voluntarily procuring renewable energy are
detailed in the Guide to Purchasing Green Power,
1
which
describes how entities can procure renewable energy
from utilities or electricity suppliers and in the form of
unbundled RECs.
A number of new models have emerged through which
participants have been able to leverage their purchasing
power or work together to lower costs and increase
access to renewable energy. This guide focuses on
experience with ve innovative options currently being
used to procure renewable electricity or on-site systems.
These next-generation methods do not provide an
exhaustive list. Utilities, local governments, businesses,
and others are developing new models that respond to
market drivers.
Figure 1. Decision trees for selecting an innovative
purchasing method
Buy or promote
renewable electricity
or RECs
Develop a project or
on-site generation
Small scale/
Residential
Promote green
purchasing
within a
community
Large scale
Buy for a
specic
organization
Bulk purchasing of
on-site systems
Section 5
Community Choice
Aggregation
Section 2
Green power challenge/
collaborative electricity
procurement
Section 4
Non-Governmental Organizations
and Local Governments
Reverse auction
Section 6
Community
solar/wind
Section 3
1
Photo from iStock 14461782
7
Promote voluntary
renewable electricity or
REC purchasing
Develop a project or
on-site generation
Small scale/
Residential
Large scale
Bulk purchasing of
on-site systems
Section 5
Green power
challenge/
collaborative
electricity
procurement
Section 4
Community
solar/wind
Section 3
Utilities
Buy renewable
electricity or RECs
Develop a project or
on-site generation
Small scaleLarge scale
Bulk purchasing of
on-site systems
Section 5
Green power
challenge/
collaborative
electricity
procurement
Section 4
Reverse auction
Section 6
Community
solar/wind
Section 3
Businesses
1
8
Text Box 1: Benefits of Innovative
Mechanisms
Decrease costs of obtaining renewable energy. Bulk
purchasing of on-site systems and reverse auctions
in particular are models built on the assumption of
providing lower cost, but Community Choice Aggregation
(CCA) programs and community solar programs may also
provide renewable energy at lower cost.
Expand access to renewable energy. Innovative
mechanisms work to increase access to renewable
energy by making it easy to participate or by addressing
common barriers. CCA programs with opt-out
1
structures
ensure that a portion of a customer’s electricity comes
from renewable energy, unless that customer opts out.
Community solar programs provide options to renters
and to homeowners with shaded roofs.
Facilitate the process of buying renewables. Bulk
purchasing programs relieve individuals of complex
decisions that must be made when installing an on-site
system. Community solar and wind programs enable
participants to invest in a renewable energy project
with one phone call or an online sign up. Green power
challenges can also make it easier for participants by
providing greater exposure to renewable options and, in
some cases, providing alternative methods of signing up
(e.g., at a farmers’ market).
Make a larger impact. For communities looking to
transition to renewable energy, many of the mechanisms
discussed can provide solutions. Cincinnati recently
developed a CCA program; Ofce of Environmental
Quality Director Larry Falkin explained that CCA is one of
the biggest opportunities to reduce Cincinnati’s carbon
footprint (Simes 2012). Green power challenges and
reverse auctions also have the opportunity for a large
impact.
1
Opt-out programs are those where customers are automatically
enrolled and must take action if they do not want to participate.
1
Photo by Dennis Schroeder, NREL/PIX 20373
9
Source: LEAN Energy U.S. (2012)
CCA programs can choose any type of electricity supply.
2
In the
1990s, communities in Ohio chose alternative suppliers that
did not provide renewable energy. However, incorporating
renewable energy has been of interest to many communities
pursuing CCA in recent years. Other drivers for communities
to participate in CCA programs are reduced electricity cost
and increasing the percentage of electricity derived from local
sources. For the most part, a CCA will purchase electricity from
existing renewable energy projects; however, it can be designed
to stimulate new development. Cape Light Compact helped
establish the Cape & Vineyard Cooperative, which is developing
18.2 MW of new solar at up to 10 local sites. Marin Clean Energy
has 31 MW of new, local solar development under contract
(LEAN Energy U.S. 2012).
Importantly, implementing a CCA program requires authority
from the state. Some states passed CCA-enabling legislation as
part of electric restructuring in the late 1990s and early 2000s.
Illinois was the state to most recently pass legislation enabling
CCAs, in 2009 (see Table 2). We highlight recent experience with
this model in this guide due to the resurgence of interest in the
mechanism and because of its potential to enable communities
to leverage their purchasing power to procure renewable energy.
2.1 Experience with CCA
Table 3 provides an overview of CCA programs oering or
planning to oer renewable energy options as of March 2012.
Illinois is currently a hotbed of CCA development, though
additional communities in California and Massachusetts are
also pursuing programs.
CCA allows communities to determine their electricity generation sources by aggregating the community
load and purchasing electricity from an alternate electricity supplier while still receiving transmission and
distribution service from their existing provider. CCAs are sometimes described as a hybrid between services
oered exclusively by investor-owned utilities (IOUs) and municipal utilities (see Figure 2).
CCAs allow for local control of the power source, like in the traditional municipal model, without having to
manage transmission lines or provide customer service.
2. COMMUNITY CHOICE AGGREGATION
IOU PURCHASES POWER
TRADITIONAL INVESTOR-
OWNED UTILITY MODEL
HYBRID COMMUNITY CHOICE
AGGREGATION MODEL
TRADITIONAL MUNICIPAL
UTILITY MODEL
CCA PURCHASES POWER
MUNICIPAL PURCHASES
POWER
IOU MAINTAINS
TRANSMISSION LINES
IOU MAINTAINS
TRANSMISSION LINES
MUNICIPAL MAINTAINS
TRANSMISSION LINES
IOU PROVIDES
CUSTOMER SERVICE
IOU PROVIDES
CUSTOMER SERVICE
MUNICIPAL PROVIDES
CUSTOMER SERVICE
State
Year CCA-enabling
legislation passed
Massachusetts 1997 (HB 5117)
Ohio 1999 (SB 3)
Rhode Island 2002 (H 7786)
California 2002 (AB 117)
New Jersey 2003 (P.L. 2003, CH 24)
Illinois 2009 (HB 362)
Table 2. States with CCA-Enabling Legislation
Figure 2. Investor-owned utility, Community Choice Aggregation, and municipal electric-sector models
2
10
In 2002, Cape Light Compact in Massachusetts was the rst
CCA in the nation to oer a green option. It is currently oered
at a price premium of $0.009/kWh for 50% green power and
$0.016/kWh for 100% green power. The program requires
customers to opt-in (i.e., customers must take action to sign
up), and it had approximately 1,113 green power accounts as of
March 2012 for total annual sales of 7,318 MWh of green power.
Three additional Massachusetts communities have submitted
CCA implementation plans. One of those, the Hampshire
Council of Governments, is planning to oer a renewable
energy component.
California is soon to have two CCA programs. Marin Clean
Energy (MCE) began operating in 2010, oering the Light Green
option (50% renewable) and the Deep Green option (100%
renewable). MCE had approximately 8,000 accounts as of May
2011 and is expected to reach 100,000 accounts by the time
the program is fully rolled out in July 2013. Further details are
provided in Text Box 2.
CleanPowerSF is preparing to launch in 2012, providing a
100% green power option. The San Francisco Public Utilities
Commission voted in December 2011 to move forward with the
program, but the board of supervisors will also need to approve
the plan. CleanPowerSF estimated that residential customers
would pay an additional $7.00 to $54.50 per month for 100%
green power, depending on electricity usage.
Additional communities in California are exploring CCA
options. Sonoma County is moving forward with a CCA
program, and the East Bay communities of Berkeley and
Richmond, in conjunction with the East Bay Municipal Utility
District, which is a water agency with 350,000 accounts, are
exploring CCA options (Matson 2012).
While all of those communities may not adopt CCAs or select
renewable energy, there is large potential in Illinois for CCA-
enabled renewable energy purchasing. Potential programs in
Location
Program
Name
Percent of
Renewable
Energy
Content in
CCA Product
Type of
Renewables
Start Date Premium
Number of
Electricity
Customer
Accounts
Estimated
Annual
Sales of
Renewable
Energy
(MWh)
Marin County,
CA
Marin Clean
Energy
50% or 100%
green power
Wind, solar,
biomass
2010
100% is $0.01/
kWh extra
>8,000
291,000 MWh
(2013)
San Francisco,
CA
CleanPowerSF
Negotiating
for 100% green
power
Under negotia-
tion
Expected in
2012
Finalizing
terms, condi-
tions, and rates
Estimated at
75,000*
Not available
Cape Cod, MA
Cape Light
Compact
50% or 100%
green power
Run-of-river
hydro, landll
gas, wind, solar
2002
$0.009/kWh–
$0.016/kWh
premium
1,113** 7,318 MWh**
Cincinnati, OH
Cincinnati
aggregation
program
100% green
power
Partially from
local solar
projects
2012
Average
residential
annual savings
of $133
52,400 eligible Not available
Oak Park, IL
Oak Park
electricity
aggregation
program
100% green
power
Wind 2012
25% discount
to standard
supply
~20,000 171,000 MWh
Table 3. Overview of CCA Programs Oering Renewable Energy
In “opt-out” programs, all eligible
customers are enrolled automatically and
it is up to the customer to contact the CCA
program if they wish to be removed.
* Sabatini (2011a) **Soares (2012)
2
11
Illinois have not faced opposition from incumbent suppliers as
communities in California have, perhaps because the Illinois
electricity market is already deregulated.
Oak Park, Illinois, began its CCA in 2012, providing a 100%
wind product sourced from within the state at a price
discount of 25% to standard supply. Prices for distribution
and transmission remain the same. With approximately
20,000 accounts, the CCA has total annual renewable sales of
171,000MWh.
Evanston and Peoria, Illinois, have selected renewable energy
suppliers, though program designs are being nalized.
Evanston has contracted to provide a 100% renewable energy
product at a rate about 38% lower than the city’s current
electric rate.
The future price dierence between CCAs and existing supply
in Illinois remains to be seen. Existing supply contracts were
entered into when power prices were higher, but these are set
to expire in June 2013 (Lydersen 2012).
In Ohio, Cincinnati has launched its CCA program for residents
and small businesses. The city selected a supplier and is
currently negotiating the contract.
2.2 Design and Implementation
Considerations
CCA programs are designed by local governments (often with
assistance from consultants) within any connes of CCA-
enabling legislation.
3
Programs dier in terms of the type of
renewable oer, price premium, eligible customer classes, opt-
out provisions, and the type of renewables selected.
Opt-out provisions. CCAs can be designed either as “opt-in”
or “opt-out” programs. With opt-out programs, all eligible
customers are enrolled automatically, and it is up to the
customer to contact the CCA program if they wish to be
removed. State CCA laws may specify conditions for whether
programs are opt-in or opt-out. For example, in Illinois,
programs can be designed either way, but opt-out programs
require approval through a referendum in a general election.
Opt-out rates (the percent of eligible customers that decide
to remain with the incumbent supplier) are typically less than
20%. In Marin County, which was heavily targeted with anti-
CCA messaging, the opt-out rate was around 20%. In Oak Park,
the opt-out rate has been around 3% to 4%; an additional 5%
to 6% of residents are not eligible to participate for a variety of
reasons. The opt-in rate in Cape Light Compact has been 1,113
customers out of approximately 150,000 customers—or less
than 1%.
Text Box 2: Marin Clean Energy
Using legislation passed by California in 2002 (AB 117) as a
guide, residents of Marin County, California, administered
a survey in 2007 in order to gauge local public interest in
increasing the community’s use of renewable energy. The
response to that survey was overwhelmingly positive:
• 90% of residents said that reducing greenhouse gases
was important to them, and 74% said they would
support the local government becoming a provider of
greener energy.
• 69% of residents said they would pay up to 5% more,
while 58% said they would pay up to 10% more for an
increase in renewable energy (MCE 2012).
The Marin Energy Authority (MEA) was established as
a public agency in December 2008 with the target of
“signicant greenhouse gas emissions reductions” (MEA
2011). In May 2010, the MEA launched MCE.
Based on the market insight provided by the 2007
public survey, MCE developed two levels of green power
procurement: Light Green, which provides 50% renewable
energy at prices competitive with traditional energy
generation, and Deep Green, which provides 100%
renewable energy at a price increase of $0.01/kWh. MCE
has retained Shell Energy North America as their renewable
energy provider, and Pacic Gas & Electric will remain the
transmission and distribution provider.
Details within AB 117 provided a key piece to the MCE
program success: Customers are automatically enrolled in
the CCA unless they explicitly opt out of the program during
the initial 60-day period following the commencement of
service. MCE achieved roughly an 80% rate of participation
in the program’s initial phase of implementation. In May
2011, the number of MCE accounts totaled over 8,000.
MCE expects similar rates of participation going forward
into Phases II and III, due to be complete in August 2012
and July 2013, respectively. MCE expects to reach a total of
roughly 100,000 accounts by the end of Phase III. MCE’s
ultimate goal is to meet the demand of these customer
accounts by acquiring 100% of their energy supply from
renewable energy sources (MEA 2011).
Through a combination of demand-side efciency
incentives, a two-tiered subscription system catering to
cost-sensitive and environmentally progressive customers
alike, a “do nothing” program opt-in strategy, high levels of
public support, and favorable net-metering conditions, the
MEA expects to achieve a 33% renewable energy supply by
2015. The achievement of that goal would equal California’s
renewable portfolio standard (RPS) 5 years ahead of
schedule.
2
12
Type of oer. CCA programs can be designed to oer dierent
percentages of renewable energy. While all existing programs
oer a 100% renewable energy product, some programs
include other percentage oers. The MEA and Cape Light
Compact both oer 50% and 100% renewable energy products.
Oak Park only oers the 100% renewable product because the
rate for 100% renewables was comparable to the existing utility
rate for traditional power.
Price premium. The price premium indicates how much a CCA
product costs relative to standard supply. Premiums in current
programs vary from zero (Oak Park) to $0.01–$0.02/kWh (Cape
Light Compact). As discussed later, some CCA programs are
able to oer products at lower cost than standard supply.
Eligible customer classes. Due to dierences in state
regulation, not all customer classes (residential, commercial,
and industrial) are eligible to participate in all CCA programs.
In Illinois, industrial and large commercial classes can choose
their supplier, without the existence of a CCA. Therefore, Oak
Park’s CCA is only open to residential and small commercial
customers.
Type of renewables. CCA programs can determine the type of
energy they wish to supply. Communities may want to support
local resources or may favor one technology type (e.g., wind)
over another. Oak Park is using 100% wind from Illinois under
a 2-year contract with Integrys Energy Services. Marin County
uses wind, solar, and biomass, and Cape Light Compact uses
run-of-river hydro, landll gas, wind, and solar. In Oak Park,
the city is considering a longer-term (5-year) contract with a
wind developer to help support the construction of new wind
projects.
2.3 Benets of CCA
CCA can provide lower-cost renewable energy products,
make a large environmental impact, provide an easy way for
consumers to support renewable energy, and access lower-
cost, tax-exempt debt by using the borrowing capacity of the
local government.
Reduced-cost renewable energy. Through aggregation,
communities can solicit renewable energy supply at a
potentially lower cost than individuals could solicit on their
own. A main driver of CCA adoption nationally has been the
reduced electricity rates resulting from competition between
suppliers.
The City of Oak Park obtained rates for 100% renewable energy
that were at a discount to standard electricity rates. In Illinois,
communities receive renewable power for an average of 25%
less than standard power. In Massachusetts, there is a small
premium for 100% renewable energy, with the default supply
being 6% cheaper on average. MEA oers competitive rates for
partially renewable products, while there is a small premium for
100% products (Marshall 2012).
Large environmental impact at the community level.
Many communities are striving to meet already established
carbon reduction and/or renewable energy targets. Given
that electricity consumption makes up a large part of a city’s
carbon footprint, developing a renewable oer can produce
substantial carbon savings. According to Dawn Weisz of MEA,
“When we were reviewing the GHG reductions that would
come from various measures we realized that all were very
small compared to a CCA, which would take over choosing
power sources. With one fell swoop you could eliminate all
GHG from power sources” (Braly 2011). In Cincinnati, Oce
of Environmental Quality Director Larry Falkin explained that
approximately 85% of the city’s energy currently comes from
coal, and that a CCA “is probably the biggest opportunity
we’ll have over the next several years to dramatically reduce
Cincinnati’s carbon footprint” (Simes 2012).
Easy for consumers to procure renewable energy. In opt-
out CCA programs, no action is required on behalf of the
consumer in order to choose renewable energy. This results in
larger usage of green power; opt-out CCA programs can have
participation rates of more than 80%. Traditional utility green
pricing programs (which are opt-in programs) have average
participation rates of only around 2%, with the top programs
reaching 5.3%–21.5%.
Access to low-cost, tax-exempt debt. CCAs may contract for
supply or develop and own supply-side resources. MCE has
contracted with Shell Energy for supply but is also developing
local renewable energy projects as part of their supply mix. In
order to obtain electricity supply, public entities can use low-
cost, tax-exempt debt (Speer 2011), while IOUs have a higher
cost of capital in order to cover debt, equity, and income taxes.
In 2008, MCE estimated its cost of capital conservatively to be
in the range of 5.5% to 7.0%, while noting that the incumbent
supplier, Pacic Gas & Electric (PG&E), had a cost of capital
between 12% and 13% (MCE 2008).
A CCA “is probably the biggest
opportunity we’ll have over the next
several years to dramatically reduce
Cincinnati’s carbon footprint.”
— LARRY FALKIN, CINCINNATI OFFICE OF
ENVIRONMENT QUALITY, DIRECTOR
2
13
2.4 Challenges of CCA
CCAs require enabling legislation, can potentially have
signicant start-up costs, may face resistance from the
incumbent electricity supplier, and require education and
outreach.
Enacting CCA-enabling legislation. In order for a community
to establish a CCA, the state must have established a CCA
mechanism through legislation. CCAs change the nature of
the existing supplier—in regulated states, it challenges the
monopoly granted to incumbent utilities, and in deregulated
states, CCA changes the role of retail suppliers.
Start-up costs can be signicant. Start-up activities include
surveying consumers for potential interest, developing an
implementation plan, educating consumers about new
options, and soliciting oers for supply. Start-up costs for a
CCA program can be signicant, particularly for communities
that are pioneering the eort in their state. In San Francisco,
planning eorts for the CleanPowerSF program cost almost
$3million. Start-up costs, including a $15 million escrow
account in case the CCA was terminated before contract
expiration, were expected to cost $19.5 million (Sabatini
2011b). In Oak Park, the city worked with the Galvin
Electricity Institute to develop a program. City sta prepared
educational campaigns and relied on environmental groups
to campaign for the CCA initiative passage. Costs for future
CCA development should be lower than those paid by the
pioneering communities.
Possible resistance from incumbent electricity supplier. In
California, MCE faced strong opposition from the incumbent
electricity supplier, PG&E. In May 2010, the California Public
Utilities Commission (CPUC) notied PG&E to cease the use
of unapproved opt-out mechanisms that were in violation of
taris and rules (CPUC 2010a). In a separate docket, the CPUC
rened marketing rules for CCA, ordering that utilities would be
subject to penalties for marketing or advertising that is untrue
or misleading (CPUC 2010b). In Oak Park, however, there was
no opposition from the incumbent electricity supplier, likely
due to the fact that retail electricity is already deregulated in
Illinois.
Need for education and outreach. In Oak Park, the biggest
challenge was getting people to think about where their
electricity comes from. In the run-up to the city’s referendum
for approval to pursue a CCA, the city was limited to citizen
education—it could not campaign for or against the
referendum. Oak Park organized forums, created an energy
committee, and partnered with environmental groups to
educate local residents.
2
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14
3.1 Experience with Community Wind and
Solar Programs
Cooperative ownership schemes, in which individuals in
a community own a portion of the project and receive
the associated economic benets, have been a successful
development model for wind energy projects in Europe for
decades. Similar models for both wind and solar are now
growing in popularity across the United States.
Community wind and solar programs (also known as “solar
gardens”) allow customers to invest in a wind project or a
solar system and receive some of the benets of the project’s
production in return, such as tax incentives, utility bill credits,
and production incentive payments. A local utility, business,
school, non-prot organization, or group of citizens may initiate
a community renewables program.
Although community wind and solar programs often oer the
project shares to residents and businesses that are close to the
project site, the community model can be modied in several
ways. The share oer can be initially made to those in the
immediate vicinity of the project and then opened to a broader
population later if all the shares are not sold. Alternatively,
the “community” to which the share oer is made may not be
dened by geography. For example, shares may be oered to
all members of a specic environmental organization or other
interest group, regardless of the members’ locations.
Community renewables project ownership can be structured in
a variety of ways.
• The 18 investors in the 80-kW Holy Cross Energy
photovoltaic project in El Jebel, Colorado, purchased
shares at an upfront cost of $3.15/W. In return, they receive
$0.11/kWh, according to the system’s production and the
number of shares purchased. The credit appears directly on
their monthly electricity bill (Green Power Network 2011a).
Text Box 3: Crowdfunding Renewable
Energy
Crowdfunding renewable projects differs slightly from
community solar or wind projects in that crowdfunding
participants provide upfront capital (as a loan) to support
the development of the project rather than purchasing
shares of the project. Crowdfunded programs allow anyone,
regardless of utility territory, to invest in the development
of a renewable project. Crowdfunding is used to nance
many types of projects, not just renewable energy. Kiva and
Kickstarter, for example, are two platforms through which
individuals can support a wide variety of projects.
Solar Mosaic (www.solarmosaic.com) is a crowdfunding
program based in California, specically for solar
development. It gives anyone (regardless of utility
territory) the opportunity to invest in the development of
a solar facility, which is typically hosted by a non-prot
organization. To date, Solar Mosaic has nanced ve solar
facilities totaling 73 kW by aggregating investments of over
400 people, for a total of more than $350,000. Solar Mosaic
offers a full return of each individual’s principal over 10
years. In April 2011, Solar Mosaic led with the Securities
and Exchange Commission (SEC) and several states to offer
“Solar Power Notes” that would offer a return on investment
(Revkin 2012). Details are not yet available on how the
return on investment would function. The JOBS Act, signed
in April 2012 by President Obama, grants crowdfunded
projects raising up to $1 million annually an exemption
from SEC securities regulation, allowing them to provide
a return on investment, provided that they le initial and
periodic disclosures to the SEC.
Community renewables programs provide opportunities for individuals to participate and benet from
larger-scale renewable energy projects located in their vicinity. To date the focus of community renewables
has been on wind and solar projects, although the models could be used to develop other types of
renewable energy technologies as well. Several ownership models have evolved for community wind
projects, some of which are detailed below. While many denitions of community solar programs exist,
this guide focuses on community solar programs organized or hosted by a utility company. The emerging
crowdfunding model is discussed in Text Box 3.
3. COMMUNITY WIND AND SOLAR PROGRAMS
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15
• New Centennial Power, LLC, a company formed and
jointly owned by community members, is developing
the 9-MW Huerfano River Wind Project near Walsenburg,
Colorado. Joint owners receive an annual rate of return
on their investment, based on the company’s prots (New
Centennial Power 2012).
• The “Minnesota Flip” structure helps community wind
projects take full advantage of the national investment
tax credit. A limited liability company (LLC) is formed to
own and operate the wind project. The LLC is owned in
partnership by local investors and a large equity investor
that has greater tax appetite. For the initial years of
the project, the equity investor owns the majority of
the project, receives investment tax credits, and makes
management payments to the local investors. After the
project has received all the tax credits it can produce, or
the equity investor has received its pre-agreed internal
rate of return, the ownership ips such that local investors
own the majority of the project and receive the majority
of net revenue distributions over the rest of the project’s
remaining lifetime. The Minnesota Flip structure is a
broadly replicable and increasingly popular ownership
model (The Minnesota Project 2009; Windustry 2012).
Community wind was initially spurred by the passage of
Minnesota’s Community Based Energy Development, or
“C-BED”, legislation in 2005. Other states, including Illinois,
Iowa, Massachusetts, Nebraska, Oregon, Washington, and
Wisconsin, have followed Minnesota’s lead and adopted their
own C-BED legislation.
Some key elements of the Minnesota legislation ensure that
the benets of the project are spread broadly through the
community to local individuals. Each C-BED project must
obtain a local resolution of support. Owners of the projects
must be local, and ownership rules limit the percentage that
any individual may have in the project. The power purchase
agreements of C-BED projects must provide levelized cash ow
to the project owners. In addition, public utilities are required
to consider C-BED projects when they make new energy
acquisitions and to set a special tari for C-BED projects, based
on net present value. Utilities are also encouraged to assess
interconnection issues for C-BED projects.
Community solar programs appeared in the United States
around the same time as community wind but were somewhat
slower to take o, perhaps due to higher technology costs. In
2011 there was substantial growth in community solar projects,
however, with 10 new programs developed that year alone
(see Figure 3). Overall, the number of programs has increased
from 3 in 2008 to nearly 30 projected by the end of 2012. The
appendix provides a list of community solar programs and
relevant program details.
Number of programs added annually
Cumulative capacity (kw)
12,000
10,000
8,000
6,000
4,000
2,000
0
12
10
8
6
4
2
0
2006 2007 2008 2009 2010 2011 2012
(as of 8/15)
Number of new programs
Cumulative capacity (kW)
Figure 3. Capacity and number of community solar programs
Community wind and solar programs allow
customers to invest in a wind project or a
solar system and receive some of the benets
of the project’s production in return.
Source: NREL (2012)
Note: Only the residential portion of Salt River Project’s community solar facility
is included above. An additional 7.8MW are designated for purchase by schools.
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16
In 2011, Salt River Project, a utility in Arizona, established the
largest community solar program on a capacity basis with
the launch of its community solar program. Salt River Project
oers blocks in a 20-MW solar facility, of which 7.8 MW are
designated for purchase by schools and 2.0 MW are designated
for residential purchase (Green Power Network 2011b).
Some community solar programs have expanded over
time, indicating the popularity of the model. For example,
Ellensburg, Washington, began with a 27-kW system in 2006
and expanded the program to 111 kW. In Colorado, the Clean
Energy Collective, working with Holy Cross Energy, expanded
its program from 80 kW in 2010 with a new 858-kW system
installed in2011.
3.2 Design and Implementation
Considerations
In developing community-funded programs, the following are
important design and implementation issues:
Program size. Community solar and wind programs can be
developed regardless of the size of the system. Some programs
are just a few kilowatts (Bainbridge Island’s 5-kW program),
while others are on the megawatt scale (Salt River Project’s
9,840-kW program).
Upfront cost. Community solar programs typically allow
customers to purchase a panel or unit upfront (sometimes
referred to as a “share” or “slice”), though some programs
allow customers to purchase smaller increments. Upfront
costs for panels typically range from $3–$6/W for a minimum
purchase of one panel (around 200 W). A few programs allow
customers to purchase smaller increments. Trico Electric, a
utility in Arizona, allows customers to purchase quarter panels
at $230. Delta-Montrose Electric Association (Colorado) allows
customers to purchase blocks of 2.67 W for $10 each. Tucson
Electric Power (Arizona) bases the premium on 150-kWh blocks
at $3 per block.
Bill credits. Community solar participants generally receive a
bill credit per kilowatt-hour based on the electricity production
of their share. Rebates per kilowatt-hour typically range from
$0.07/kWh to $0.11/kWh. For example, Seattle City Light oers
$0.07/kWh generated. In addition, some customers may receive
upfront rebates (payments based on the kilowatt purchased)
or incentive payments from the state (in Washington, up
to $1.08/kWh can be obtained). Colorado Springs Utilities
oers a one-time upfront rebate of $1.08/W, up to 30% of the
participant’s investment.
Community inclusion. For community wind projects in
particular, broad community participation in the planning,
implementation, and economic benets of the project can
play a role in public acceptance and the ultimate success of the
project. For instance, community members can be included
in relevant siting decisions; local businesses can be used in
construction and maintenance activities; and local schools may
benet from educational opportunities oered by the project.
In the United Kingdom, a wind turbine in the town of Swaham
was constructed with a viewing platform under the nacelle,
and for a small fee tourists can climb a stairwell up the turbine’s
tower to get a bird’s eye view of the region (EcoTech Centre
2012).
Renewable energy certicate treatment. RECs represent the
environmental attributes of 1 MWh of electricity generation.
RECs can be sold separately from electricity generation.
Without ownership of RECs, environmental claims cannot
be made. For example, if a commercial customer were to
participate in a community solar program where the RECs
stayed with the local utility, the commercial customer could
not advertise that it was solar powered. Community solar
programs generally, but not always, allocate the RECs to the
utility. Similar to many utility solar incentive programs, which
provide residential and commercial customers with an upfront
rebate to install solar, community renewables projects often
ensure that RECs stay with the utility, allowing it to meet any
RPS or other environmental target. In theory, the allocation of
the REC to the utility should result in a lower purchase cost to
the participant, although each case may vary. Participants not
receiving RECs may have other reasons for joining community
programs, such as supporting local development.
3.3 Benets of Community Wind and
Solar Programs
Community wind and solar programs oer many benets,
including: expanded access to renewables, ease of
participation, cost eciencies, local connections, and local
economic benets. The program design is highly exible and
encourages innovative solutions to local challenges.
Expands access. Community programs allow renters and
homeowners with poor solar resource or shading to receive the
nancial benets of renewable energy.
Community members can be included in
relevant siting decisions; local businesses
can be used in construction and maintenance
activities; and local schools may benet from
educational opportunities offered community
renewables projects.
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17
Easy to sign up. Residents
can be overwhelmed by the
process of installing solar
on their home. Community
programs allow customers
to “go solar,” or participate in
a wind energy project, with
one phone call, although
project organizers may
spend years developing the
project.
Cost eciencies of a larger
project or procurement.
Depending on the size of the community solar project, there
could be cost savings from building one large project rather
than many small distributed systems, which should be reected
in the cost to purchase from a community program.
Increase connections and reduce tensions. Wind (and solar)
projects that include local ownership and involvement are
more likely to be publicly accepted. Community renewables
programs help make local connections between the variety of
stakeholders involved. Positive models encourage community
discussion and involvement in the earliest stages of the
project. These projects can be a source of community-building
and pride within a locality, in addition to the economic and
environmental benets they provide.
Increased economic development impacts. Research has
shown that community projects provide more jobs and
increased economic impact over traditional energy projects. A
U.S. Government Accountability Oce study found that local
ownership of wind systems generates an average of 2.3 times
more jobs and 3.1 times more local dollar impact compared to
other projects. Overall, such studies indicate that community-
based wind projects provide around 1.5 to 3.4 times the
economic benet to communities during the operation of the
project than projects owned by absentee companies (Lantz
and Tegen 2009).
Flexibility. Community renewables programs may be initiated
by utilities, existing groups, and/or a few local citizens. The
programs may dene “community” in a variety of ways and do
not have to be dependent on a participant’s physical location.
Community solar membership is often tied to the sponsoring
utility’s service territory, but if participants move they typically
can keep their membership (if they move within the utility
service territory) or sell the membership (if they move outside
of the utility service territory). A variety of mechanisms for
return on investments can be used.
Encourage innovative ideas. Community projects often spawn
creative solutions to challenges. Community renewables
projects have been used to test innovative nancing models
and as a way for equipment manufacturers to enter new markets
with which they have limited experience (Bolinger 2011).
3.4 Challenges of Community Wind and
Solar Programs
Community programs certainly face challenges. Policy
favors large-scale investors/developers, programs have long
development times, there is a need to fund initial project
development costs, and there are restrictions on oering a
return on investment.
Policy favors large-scale investors/developers. Existing
policy structures often create barriers to the development
of community-owned projects. The federal production tax
credit, for instance, is designed to make use of the tax appetite
of large-scale investors, thus government entities and small
investors often cannot take advantage of tax credits. It can
also be dicult for community-owned projects to obtain
loans through traditional avenues. Public entities may also not
be able to make use of options like Clean Renewable Energy
Bonds.
Long development times. Community renewables project
leaders need to be persistent. They should be prepared for
many hurdles and for long development times. David Brosch
of University Park Community Solar noted, “It took us over two
years to develop our project structure and only two months to
nd our members” (DOE 2011, p. 34). Some community wind
projects have experienced development times of 5 years or
more (Bolinger 2011; The Minnesota Project 2009).
Need to fund initial project development costs. Those
planning community renewables projects often focus their
eorts on raising funds for construction and permanent
nancing costs; however, many such projects will incur
signicant costs before even getting to the construction
nancing stage. Raising the seed capital needed to cover the
initial costs of developing community renewables projects can
be a signicant hurdle for some community projects (Bolinger
2011).
Restrictions on oering a return on investment. Community
renewables programs should be aware of potential securities
regulation. In order to avoid any appearance of selling
securities, the DOE’s A Guide to Community Solar recommends
avoiding “references to ‘shares’ or ‘stock,’ since those terms
are the classic ones used to describe securities issued by a
corporation and might create an expectation of prots and
other rights customarily associated with stock or shares” (DOE
2011, p. 33).
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3
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18
Local collaborative electricity procurement aggregates the
demand of a few organizations in deregulated electricity
markets to procure renewable electricity on a voluntary basis.
This mechanism is similar to CCA but only involves a limited
number of organizations, which must be located in states with
retail choice. Because retail choice states allow customers to
switch electricity suppliers, customers can band together to
negotiate a better price or product. This type of procurement
has happened in the Washington, D.C., area through the
assistance of a non-prot organization, Groundswell.
Groundswell does not supply electricity but rather coordinates
large customer procurement in retail choice states.
Though not developed as “challenges” or campaigns, other
initiatives have sought to highlight the ability to purchase
renewable energy in a given state. The ChoosePAWind initiative
provides links to retail electricity suppliers and REC marketers
sourcing supply from Pennsylvania wind facilities. The initiative
also highlights the economic benet of purchasing from local
renewable facilities. A similar service focused on New York,
Green Power NYC, provides links to competitive suppliers
sourcing renewable energy from New York State facilities. The
eort is sponsored by the Natural Resources Defense Council
and the Alliance for Clean Energy New York.
4.1 Experience with Green Power
Community Challenges and Local
Collaborative Electricity Procurement
Green power challenges proliferated in the late 2000s as a
way to boost involvement in utility green pricing programs.
More recently, local collaborative electricity procurement
has emerged as a way for organizations to buy renewable
electricity at lower cost.
Green Power Challenges
Challenges were particularly active in Oregon, where Portland
General Electric (PGE) worked with numerous communities to
develop and implement challenges. In 2006, PGE worked with
the City of Salem, Oregon, which ran a challenge for 6 months
with the goal of attracting upwards of 500 customers. Since
then, PGE has also worked with the City of Beaverton, the City
of Gresham, and the City of Lake Oswego (see Text Box 4).
Each of these cities, along with 28 others, are also part of U.S.
EPA’s Green Power Communities program, which provides
public recognition to communities for meeting or exceeding
minimum renewable energy purchase requirements. Purchase
requirements vary depending on the community’s annual
electricity usage (Table 4).
Community Annual
Electricity Usage
Minimum Green Power
Community Purchase
Requirements
>100,000 MWh 3%
10,001–100,000 MWh 5%
1,001–10,000 MWh 10%
≤1,000 MWh 20%
Table 4. Green Power Community Purchase Requirements
Source: U.S. EPA (2012a)
Communities can encourage members to purchase voluntary green power by developing a green
power challenge. In many cases, communities partner with local utilities, third-party marketers, and/or
environmental organizations to raise awareness of green power purchasing options. With buy-in from a
large stakeholder group, community challenges can increase participation in utility green pricing programs
by providing multiple communication avenues. Short-term green power challenges set goals for having
a certain fraction of their residents and businesses purchase green power within a specied time, usually
around 6 months.
4. GREEN POWER CHALLENGES AND LOCAL COLLABORATIVE
ELECTRICITY PROCUREMENT
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19
Since the program launched, the purchasing by the top
community has increased from 163 million kWh in September
2010 (Santa Clara, California) to 752 million kWh in June
2012 (Washington, D.C.). Table 5 provides a list of the top
ve EPA Green Power Communities in terms of annual green
power usage and the green power percent of total electricity
use. Green power sales in these communities are heavily
dominated by large purchases by non-residential participants.
Communities can play a large role in the voluntary green
power market; EPA’s Green Power Communities are currently
collectively buying more than 4.2 million MWh of green power
annually, which represents 12% of all voluntary sales in 2010.
Local Collaborative Electricity Procurement
Model
The local collaborative purchasing model aggregates
purchasing power from existing community organizations in
retail choice states to solicit competitive bids for renewable
electricity generation. Instead of purchasing shares of a
renewable facility or providing upfront capital, this model seeks
to procure renewable electricity from one alternative supplier.
By aggregating the electricity demand of multiple participants,
cost savings can be achieved. Groundswell, a Washington,
D.C.-based non-prot organization, operates the Community
Power Project, which works with neighborhood organizations
and faith institutions. For example, First Trinity Lutheran
Church partnered with other Washington, D.C., churches to
buy wind power and saved $6,000 annually. Groundswell
estimates that since 2011 the Community Power Project has
procured $5million in renewable electricity, with participants
saving up to 20% annually on energy bills (Groundswell 2012).
Groundswell has organized 109 organizations to procure
56,000 MWh of renewable energy, the majority of which (98%)
was Green-e Energy Certied wind (Witherbee 2012). Although
the Community Power Project operates in retail choice market
and procures bundled renewable electricity (energy and RECs),
this model could be used for unbundled REC purchases as well.
Rank Community
Annual Green
Power Usage
(MWh)
1 Washington, D.C. 752,505
2 Portland, OR 708,667
3 Hillsboro, OR 678,600
4 Philadelphia, PA 593,309
5 Aurora, IL 250,975
Rank Community
Green Power
Percent of Total
Electricity Use
1 Oak Park, IL 91.9%
2 Brookeville, MD 45.7%
3 Hillsboro, OR 33.7%
4 Swarthmore, PA 27.9%
5 Corvallis, OR 21.2%
Table 5. Top EPA Green Power Communities (as of June 19, 2012)
Text Box 4. Green Power Challenge in Lake
Oswego, Oregon
In 2009, Lake Oswego, Oregon, the sixth-largest city in the
Portland area with a population of 36,000, launched a 2-month
Green Power Challenge. Lake Oswego had been looking at
sustainability issues for the past 10 years, and in 2007 adopted a
sustainability plan that, among other things, examined energy
use. PGE approached the city’s newly formed Sustainability
Advisory Board with a Green Power Challenge proposal, and the
board recommended that the city council support the proposal.
Working with PGE, Lake Oswego set a goal of 300 new
participants. The mayor of Lake Oswego began the Green
Power Challenge by issuing a proclamation. The city promoted
the challenge through its monthly newsletter, press releases,
and website. Working with PGE, they conducted door-to-door
outreach and tabled at the local farmers’ market.
Ultimately, Lake Oswego exceeded its goal, enrolling 336 new
residential and 20 new business customers in PGE’s renewable
programs. The community beneted by receiving national
recognition. EPA staff made a presentation to the city council,
street signs promoting Lake Oswego as a Green Power Community
were installed, and the city received favorable local press
coverage.
As of February 2010, more than 1,600 residences and businesses
enrolled in one of PGE’s programs and the community was
collectively purchasing 9% of its power as green power, or almost
35 million kWh of renewable power.
Source: U.S. EPA (2012b)
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20
4.2 Design and Implementation
Considerations
Green power challenges and local collaborative electricity
procurement programs need to set appropriate, realistic
targets, decide how to distribute costs among partner
organizations, and consider administrative issues.
Setting appropriate, realistic targets. With green power
challenges, communities can work with their local utility
to establish a target of either number of participants or
percentage renewable energy purchased. Utilities can help
partners understand existing participation and sales rates.
Final targets for a percentage of sales from renewable energy
are already established for communities seeking to join the
EPA Green Power Communities program; working with the
local utility company can help partners develop a plan to reach
these targets.
Distributing costs among partner organizations.
Organizations should determine in advance who will pay for
the various components of the program.
Considering administrative issues. Consider what information
is needed in order for a consumer to sign up for a green
product and work with the utility to streamline the enrollment
process. For example, if consumers need to provide their
electric account number, this may prohibit them from signing
up at community events like farmers’ markets and concerts.
4.3 Benets and Challenges of Green
Power Challenges and Local Collaborative
Electricity Procurement
Community green power challenges can contribute to the
branding of a community, provide education and outreach to
community members, and provide an easy way for community
members to support green power.
Raise awareness and expand access to renewable options. A
large barrier to participation in utility green power programs is
lack of awareness. According to the Natural Marketing Institute,
approximately one in six adults are aware of renewable
power options (NMI 2011), yet more than half of consumers
have the option to purchase renewable energy through
their utility (Bird and Sumner 2010). Of course, all consumers
have the ability to buy RECs separately from their electricity.
Community challenges can help overcome the awareness
barrier by targeting community residents during short, intense
campaigns using multiple methods of communication.
Education eorts by non-prots seeking to aggregate demand
can also help organizations better understand renewable
energy options.
Easy to sign up. By providing dierent ways of enrolling (e.g., at
a farmers’ market), green power challenges can make it easier
for consumers to sign up.
May encourage friendly competition among suppliers.
In regulated electricity markets, utilities oer green pricing
programs, while in deregulated or restructured states,
competitive marketers oer renewable options. In all states,
renewable energy can be supplied by RECs independently
from electricity. By running a campaign that includes a
utility or competitive marketer in addition to a REC supplier,
communities may encourage friendly competition. Boulder’s
Wind Power Challenge campaign worked with the local utility,
Xcel Energy, and REC suppliers Clean and Green, Community
Energy, and Renewable Choice Energy. Xcel Energy’s green
pricing program is in competition with REC suppliers for
customers. Local collaborative electricity procurement also
focuses on getting the lowest-cost product from suppliers.
Contribute to branding of a community. Green power
challenges generate publicity for the local government and
any other co-sponsors, such as large institutional purchasers
and the local electric utility. In Oregon, communities looking to
attract high-tech businesses were interested in promoting their
community’s green image (Hinckley 2010).
Lower cost. By aggregating demand and soliciting renewable
electricity bids for multiple organizations, local collaborative
electricity purchasing through Groundswell achieved up
to 20% annual savings on energy bills for participants
(Groundswell 2012).
Green power challenges are fairly straightforward to
implement. The primary implementation activities may include
scheduling the challenge with the city council, determining the
timing, and getting space at the local farmers’ market. Because
many organizations might be involved with a green power
challenge, it is important to clarify funding needs upfront
and determine which organizations will cover which costs.
Local collaborative electricity procurement requires a lead
organization to educate potential partners and develop the
actual procurement.
Green power challenges and local
collaborative electricity procurement
programs need to set appropriate, realistic
targets, decide how to distribute costs
among partner organizations, and consider
administrative issues.
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21
A bulk purchasing program requires a clear leader to organize
the process. The leader may be a local government agency,
interest group, cooperative, private enterprise, or a partnership
between these. The organizer plays a variety of important roles
throughout the process, including:
• Dening the potential participant base
• Seeking out participants
• Providing information and education on renewable energy
options
• Assessing the possible sites and types of demand and
conducting resource assessments
• Issuing a request for proposals (RFP) to potential vendors
• Selecting the winning vendor(s)
• Overseeing the signing of standard contracts between
participants and vendors
• Assisting with coordination during the installation phase.
5.1 Experience with Bulk Purchasing of
Distributed Energy Systems
The group purchasing model began in the United States with
the Solarize Portland initiative, which functions as partnerships
between the city and neighborhood associations. The model
has since grown to include a wide variety of programs that are
organized by not-for-prots, private enterprises, public utility
commissions, and governmental agencies at various levels.
Examples of several of these models are provided below.
City Government Model
Portland, Oregon
Neighborhood associations in the City of Portland can obtain
technical and programmatic assistance from the city to oer
group solar purchasing programs to their residents. The city
assists the associations in program design, provides outreach
and educational materials, and aids in the selection of solar
contractors. It also helps coordinate and deliver educational
workshops about the volume purchasing concepts and the
benets of solar energy. The Energy Trust of Oregon, Solar
Oregon, and local solar contractors also played key roles in the
program’s success. Since its beginning in 2009, the program has
resulted in over 600 solar installations and cost savings of up to
35% (U.S. Department of Energy 2011a). Additional programs
have been developed in Pendleton, Beaverton, and Salem,
Oregon.
Los Angeles, California
Other cities across the nation have followed Portland’s lead.
In 2009, a group of citizens in Los Angeles County, California,
came together to form the Open Neighborhoods community
solar program. Solar panels were installed on 32 homes in the
rst round. Another round of installations was organized in
2011, which brought the cost of solar close to that of electricity
from the grid. The price of around $4.40/W was reported to
be the lowest cost for residential solar systems in California.
The Open Neighborhoods program encourages broader
participation by making donations to schools and non-prots
Bulk purchasing programs are an increasingly common mechanism to encourage solar installations, in
particular, but could also be used for other distributed energy technologies (U.S. Department of Energy
2011a). These programs identify a group of individuals or companies interested in installing solar systems
and aggregate their demand. By buying the systems in bulk, group purchasing attracts reduced prices
from vendors. The programs also save buyers the time and eort that would be required to navigate the
purchasing process individually.
5. BULK PURCHASING OF DISTRIBUTED ENERGY SYSTEMS
5
Photo by Dennis Schroeder, NREL/PIX 21499
22
when community members participate in the group-buy
program (Farrell 2011).
Santa Barbara, California
The Community Environmental Council of Santa Barbara,
California, initiated a pilot group purchasing program in
2011, installing 49 systems in 3 months. The program began
its second phase in August 2012, oering both solar system
purchasing and lease options to satisfy a variety of nancing
needs. The council selected two solar contractors to provide
the systems, obtaining a bulk price for program participants.
A one-time fee of $0.15 per installed watt is paid by the
contractors to fund the council’s continued eorts.
Madison, Wisconsin
The City of Madison, Wisconsin, helped facilitate the rst
residential group solar purchasing eort in Wisconsin. The
22 participants in the rst round of the MadiSUN program
obtained solar systems for an average of $5,320/kW, a discount
of 20% (MadiSUN 2012). Marsheld, Wisconsin, has also started
a group-buy program, Solarize Marsheld, funded by a DOE
SunShot grant (Midwest Renewable Energy Association 2011).
Private Enterprise Model
One Block O the Grid
One Block O the Grid (1BOG) is a for-prot enterprise that
acts as an intermediary between potential customers and
solar installers. The company identies potential solar system
customers, provides information on solar options, and nds
and vets installers on behalf of the customers, obtaining bulk
pricing for the systems. The service of amassing the demand
within a region is valuable to system providers as well, who
pay a fee to 1BOG for each watt they install for customers
through 1BOG. The fee is built into the price of the installed
solar systems but is more than oset by the price savings
obtained from buying in volume. 1BOG’s success began when
they assisted the San Francisco Department of the Environment
in conducting aggregated solar purchases at the request of
several neighborhoods in the city (U.S. Department of Energy
2011b).
Utility Model
Orlando Utilities Commission
In 2011, the Orlando Utilities Commission (OUC), a municipal
utility company, carried out the pilot Commercial Customer
Solar Aggregation program to assist its large commercial
customers with installation of solar technologies. OUC
identied nine large commercial customers interested in
installing solar systems. OUC issued an RFP for this aggregate
demand, which totaled an estimated 1,237 kW of solar electric
and 77 kW of solar thermal capacity. Developers were allowed
to bid on solar thermal, solar electric, or both. The chosen
developer will construct, own, and nance the solar projects
through a power purchase agreement (PPA), with OUC acting
as the billing agent. OUC purchases the RECs and excess
electricity generated at the facilities under a long-term xed-
price PPA of at least 25 years (OUC 2011).
Collaborative Partnership
City of San Jose, Bay Area Climate
Collaborative, and San Jose Credit Union
The City of San Jose, the Bay Area Climate Collaborative,
5
and the San Jose Credit Union partnered to form a solar
group-buy program called SunShares, supported by a federal
Solar America Cities grant. The program oers employees
and retirees of the over 360 Silicon Valley Leadership Group
member companies the opportunity to purchase solar thermal
and photovolatic systems at discounted rates and take
advantage of nancing options as low as 3.99%. The program
is administered with assistance from GroupEnergy, a company
specializing in collaborative purchasing programs (BACC 2012).
Silicon Valley Collaborative Renewable Energy
Procurement Project
Another collaborative, the Silicon Valley Collaborative
Renewable Energy Procurement Project, was formed through
a partnership between the City of Santa Clara, Joint Venture:
Silicon Valley Network, and the Public Sector Climate
Task Force.
6
The program facilitates public agencies in the
installation of renewable energy systems. Nine public agencies
are participating in the rst phase to develop 70 sites on 43
locations, for a total capacity of 14.4 MW. As such, the eort
represents the largest multi-agency procurement of renewable
energy in the United States at this time. The agencies sign a
Memorandum of Understanding in the initial stages to express
their intent to carry through the entire development process.
Types of sites identied for development include oce
rooftops, carports, water storage tanks, ground-mounted
systems, bus depots, senior centers, parking garages, and
health centers. Site assessments were contracted prior to
Successful bulk purchasing programs
explore creative nancing options to
enhance customer participation and
encourage competition between many
vendors through effective outreach.
5
23
the release of the RFP, both to ensure site feasibility and to
provide bidders with accurate site information on which to
base their bids. These technical and economic assessments
were undertaken by Optony, Inc. for all of the sites, on behalf
of the participating agencies. This relieved the agencies of the
need to conduct individual analyses, for which they may not
have resources or expertise. While this process reduced the
number of sites considerably, it ensured that only sites that met
technical and economic feasibility were included in the bidding
process.
Because the systems were of a broad range of sizes, the
project team grouped the installations into strategic bundles
of 6–15 locations each, based on system size and across
dierent owners. The team allowed developers to bid on one
or more bundles. This encouraged participation by bidders
who specialize in a subset of system sizes or who would be
deterred if the entire contract were oered to a single bidder. A
point system in the selection process gave preference to local
vendors.
Participating agencies buy the power generated by the systems
from the developer but have the option to purchase the system
at several stages in the contract period. This arrangement
means that agencies that cannot aord the high upfront cost of
going solar can still participate.
According to the Solar Labor Force Impact Model,
approximately 200 jobs will be created by the program, with
one-third of those being permanent positions in elds such as
contract management and system maintenance (U.S. EPA 2010;
Joint Venture: Silicon Valley Network 2011).
As a result of the success of the program, the EPA is
implementing a similar eort called the Clean Energy
Collaborative Procurement Initiative, which targets federal,
military, and higher education facilities in the Washington, D.C.,
metro area (U.S. EPA 2011).
5.2 Design and Implementation
Considerations
General
General design and implementation considerations include:
• Consider local resource availability and likely participant
base
• Leverage an existing group or organization to serve as
the program leader; look for strategic partnerships and
make use of available expertise in outreach, nancing, site
assessment, and contracting
• Identify the state and federal incentives; keep an eye on
them and meet the deadlines
• Use independent experts to assess and rene your
program plan and to carry out site assessments
• Explore creative nancing options to enhance participation
• Identify program goals and metrics of success early in the
process.
Communication and Participant Outreach
Communication and participant outreach considerations
include:
• Use a variety of communication methods with program
participants; avoid a one-size-ts-all method
• Provide contact options that suit a variety of
communication styles
• Maintain participant satisfaction with as much personal
communication as feasible
• Hold informational meetings to encourage broad
participation and to answer participant questions
throughout the process
• Create an online forum to inform interested communities,
connect participants, and solicit program feedback.
Bidding Process
Program success depends on both buyers and sellers
beneting from participation. In order to accomplish this,
programs could:
• Provide information to vendors on the benets of
aggregated demand
• Encourage competition between many vendors through
eective outreach
• Bundle sites by installation type, host facility, size, and
other attributes
• Allow vendors to bid on one or more of the bundles.
Vendor Selection
The strength of a vendor can impact the success of a program.
In selecting a vendor, programs could:
• Consider a variety of factors when selecting winning
bidders, such as cost, system design, quality assurance, and
ability to provide long-term maintenance and support
5
24
• Select one or more reputable vendors with a track record
of high-quality installations and be very clear about the
terms of the contract.
5.3 Benets of Bulk Purchasing Programs
Bulk purchasing programs provide a variety of benets, ranging
from lower costs to broader adoption of solar energy.
Lower costs. Aggregating demand unlocks volume discounts
from local solar installers.
Reduced transaction costs. Administrative costs are spread
amongst a large group of customers.
Reduced risk perception/ease of decision making. As a
member of a group, participants have reduced risk perception.
The leadership of the organizing group relieves individuals of
complex decision-making processes.
Company reputation/employee satisfaction. Companies
and agencies can oer group-buy programs as part of their
employee or membership benet packages. The unique oer
can increase employee satisfaction, attract new members, and
enhance the company’s overall reputation for sustainability.
Encourage broader use of solar energy. Because group-
buy campaigns can be made available to employees,
neighborhoods, and other broad bases of individuals, they
encourage people who would not have otherwise considered
or investigated the option to install solar energy. Peer pressure
to participate may work to increase solar deployment.
Public education. Through workshops and participant
outreach, group-purchasing campaigns enhance overall public
education about solar energy.
Solar providers. Vendors of solar systems receive substantial
new business with reduced sales expenditures.
Competitive contract terms. Developers are more likely to
agree to competitive contract terms (e.g., buyout options,
performance guarantees, and termination options) when
making bulk deals.
Flexibility of design. Group-buy programs can be designed
to suit a wide variety of goals and needs. They can incorporate
direct purchases, leases, or unique nancing and ownership
models. They can target a variety of participant types, system
sizes, and technologies.
Quality assurance. Thorough vendor-selection processes
ensure system quality, which improves buyer satisfaction as
well as the overall reputation of solar energy.
5.4 Challenges of Bulk Purchasing
Programs
Bulk purchasing programs require a champion and provide less
exibility than an individually designed procurement process.
Requires a champion. One or more organizations must be
willing to take the lead and have the resources to carry out the
program.
Less exibility. Individual buyers may have less exibility to
select vendors, customize systems, or specify contract terms.
Scheduling challenges. Participating installers may be pressed
to complete many installations in a short time frame. The
individual participant is subject to program schedules and
deadlines. If individuals are required to wait too long for the
installation of their system, they may be tempted to withdraw
from the program and accept bids from vendors that are not a
part of the program.
Photo by Dennis Schroeder, NREL/PIX 20689
5
25
A few elements are essential to the functioning of a reverse
auction:
• The product to be supplied must be a standardized
product of known quality
• There must be multiple sellers of the same product
• There must be a range of prices at which the product can
be produced and sold.
Energy production is a natural t for a reverse auction because
it meets all three of the above criteria. The standardized
product to be supplied is electricity. There are many energy
developers who can compete to provide this product, and the
price at which power can be provided is variable.
Reverse auctions provide a exible method to purchase
renewable energy generation in deregulated electricity
markets. In addition, reverse auctions can be used to purchase
RECs or to contract for the construction of a renewable
energy system in all electricity markets. Private companies,
government agencies, and non-prot groups can all use a
reverse auction.
7
These buyers can either organize and hold
their own reverse auctions or use an independent auction
manager to coordinate auctions on their behalf. Using an
auction manager avoids the need for buyers to go through
the learning process needed to organize a successful auction.
World Energy Solutions is one company that oers reverse
auction services for clients in deregulated electricity markets.
Well-designed auctions create an open, market-driven process
that draws in a variety of potential product suppliers. Pre-
auction planning and analysis helps buyers and sellers make
informed decisions on auction day. Thorough pre-auction
documents ensure that all bidders are clear about the product
and terms of provision on which they will bid. Once the auction
opens, all bidders see the prices their competitors are willing
to contract for. In the moments prior to auction closure, the
opportunity to make a nal blind bid encourages bidders to
submit their lowest possible nal oer. The transparency of the
process ensures equality and enhances participant trust while
creating a highly competitive environment that drives down
prices.
Reverse auctions can be used for entities that aggregate their
demand to increase their purchasing power. Reverse auctions
in which buyers are requesting bids to provide large quantities
of electricity draw more bidders and typically result in lower
prices per kilowatt-hour than smaller auctions. World Energy
Solutions runs auctions for clients with demand levels of
4+ million kWh/year (roughly the demand of 350 American
households) (Joyce 2010). Aggregating demand can allow
buyers to take advantage of this leveraging eect. Aggregating
the demand of several buyers within the same power service
area allows those with smaller demands to participate in the
reverse auction process. Even aggregating accounts that are
already large may provide further price benets. Combining
the purchase of traditional electricity with that of green energy,
such that total demand is supplied through a single auction, is
another form of aggregation.
6.1 Experience with Reverse Auctions
The Healthcare Clean Energy Exchange (HCEE) provides
an example of how buyers with limited demand can be
aggregated to allow for broader participation in reverse
auctions. The HCEE is a reverse auction service oered to its
members by Practice Greenhealth, a non-prot organization
for healthcare facilities. Through HCEE, member facilities can
participate in custom-tailored, online reverse auctions to
procure renewable energy or the development of hospital-
sited renewable energy systems. The exchange makes use
of the World Energy platform described above. In 2009,
Mercy Hospital and Medical Center participated in their
rst reverse auction with the goal of reducing their annual
electricity expenditures, which totaled about $2.5 million. The
facility procured 10% green electricity and saved more than
$190,000/year compared to their previous utility contracts
(Pizzi 2009). Multiple hospitals in the same distribution
area may also choose to aggregate their renewable energy
demand in order to reach the capacity minimums required for
auction participation and further drive down prices (Practice
Greenhealth 2012).
A reverse auction is an auction in which the roles of the buyer and seller are switched. In a traditional
auction, a seller puts a product up for sale, which is bid on by many potential buyers. The buyer willing to
pay the highest price wins the auction. In a reverse auction, a buyer requests a product, and many sellers bid
to provide that product. The bidder that can provide the product at the lowest price wins the auction.
6. REVERSE AUCTIONS FOR VOLUNTARY PURCHASES
6
26
The General Services Administration (GSA) provides another
example of how a reverse auction can be used to procure
power for multiple loads with notable price benets. The GSA is
an independent agency of the U.S. government that supports
federal agencies by managing assets, such as oce buildings
and transportation eets, and leveraging the government’s
buying power through bulk acquisition of products and
services. Since 2001, GSA has used the World Energy Solutions
services to procure electricity for government facilities across
the country. More recently, GSA has used in-house expertise to
hold reverse auctions themselves (Shah 2011).
Through a reverse auction, GSA has obtained electricity for
federal agencies at signicantly lower prices than existing
contracts. Through a round of auctions organized by World
Energy in 2008, GSA purchased 100% wind power for the
Statue of Liberty and Ellis Island at prices under the current
standard oer contract rate. Through a round of auctions in
January 2012, new contracts were signed to provide electricity
to New York federal facilities for 35% lower cost than previous
utility contracts (World Energy 2012).
6.2 Design and Implementation
Considerations
A reverse auction can be used to procure renewable energy in
deregulated (competitive) electricity markets and can be used
to procure RECs in all electricity markets.
Clearly written and thorough pre-auction announcements
are an important feature of a successful reverse auction
process. These documents specify the amount of electricity
to be purchased, any technology or location restrictions, and
all contract terms that would be oered to a winning bidder.
These documents ensure that bidders understand exactly what
they will be bidding on.
A reverse auction can be used to inuence the market in a
number of ways, including:
• Encouraging the development of new renewable energy
facilities by specifying that the generation to be purchased
must come from a new facility
• Encouraging local development by specifying that the
generation to be purchased must come from within a
particular region
• Encouraging a particular technology (e.g., solar) by
specifying that the generation to be purchased (or a
portion thereof) must come from a certain technology.
Ongoing verication and auditing requirements ensure that the
renewable power being procured through the reverse auction
is not also being used to satisfy a state RPS or other renewable
energy targets.
In a reverse auction, each bidder aims to bid lower than all
other bidders. Bidders will only bid as low as necessary to
beat the most recent bid. If the auction time runs out before a
bidder reaches their lowest possible oer, the buyer could pay
more than necessary for the product requested. Thus, a pure
reverse auction may not result in the lowest possible price for
the buyer. This drawback can at least partially be addressed
by switching the reverse auction to a blind auction for the nal
seconds of bidding. All bidders place their best and nal oer
at the end of the auction, without seeing their competitors’
nal bids. This increased uncertainty during the nal seconds
of the process encourages bidders to place their best oer on
thetable.
Today’s reverse auction platforms are high-speed, time
sensitive, and dependent on the Internet. If a bidder has
technological diculties at the time of the auction, their
bids will not be available for consideration. The technology
requirements may also inhibit some buyers from holding their
own reverse auctions and necessitate going through an auction
coordinator at additional cost. Some auction platforms require
bidders to register for a fee, which could discourage potential
providers.
6.3 Benets of Reverse Auctions
Reverse auctions are not entirely a new concept in the
electricity supply realm. Many of the same elements are present
in the traditional methods for acquiring electricity supply
contracts, such as RFPs or requests for bids. Several benets,
however, set the reverse auction process apart from traditional
methods of acquiring electricity service contracts. The benets
of using a reverse auction include:
Increased transparency. Favoritism between bidders is
impossible during the auction process, and all bidders have
an equal opportunity to win. There is also price transparency
with all parties able to see the lowest bid. The impartiality
and transparency of the auction process increases condence
amongst bidders and encourages broad participation.
Well-designed auctions create an open,
market-driven process that draws in a
variety of potential product suppliers.
6
27
Increased competition. Today’s online reverse auctions are
fast-paced. The details of the product being requested and
the contract terms that will be oered are announced well
in advance so that bidders can prepare. The actual bidding
process typically lasts for only a few minutes. While the auction
is open, bidders receive instant feedback on the prices their
competitors are oering. They know that if they do not respond
with a lower bid quickly, they will lose the contract. This
environment taps the competitive nature of bidders and drives
down prices.
Price discovery and consumer education for buyers. Reverse
auctions allow buyers to quickly test the current market and
easily compare prices between products before making a
purchase decision. Buyers become more educated consumers
as they learn about their electricity usage, product options, and
prices as a result of participating in the auction process.
Reduced administrative burden. Participating in reverse
auctions is faster and less burdensome for bidders than
responding to RFPs. Buyers avoid lengthy proposal review
processes.
Fast award and contract times. Contract terms and other
details are set by buyers and announced to bidders ahead of
auction day. Contract negotiations are limited and contracts
can be signed quickly. Often, contracts between buyers and the
winning bidder can be signed on the same day as the auction.
6.4 Challenges of Reverse Auctions
Due to the cost and logistics of implementing a reverse
auction, this mechanism is generally available only to
customers with high electricity demand or customers who are
able to aggregate their demand with others, which limits its
applicability.
Reverse auctions must be carefully designed in order to ensure
fairness amongst bidders and in order to encourage the lowest
possible price for customers. Thus, reverse auctions are often
coordinated by third parties for a fee.
Using a reverse auction process, Mercy
Hospital and Medical Center procured
10% green electricity and saved more
than $190,000 per year, compared to its
previous utility contracts.
6
Photo from iStock 20787546
28
Community choice aggregation programs, though
not available in every state, allow communities to select
an alternative energy supplier while continuing to
receive transmission and distribution service from their
existing supplier. While not all CCAs select renewable
resources, programs such as MCE in California, Cape Light
Compact in Massachusetts, and Oak Park in Illinois all
oer renewable options. San Francisco is preparing to
launch a renewable oer in 2012, and 242 communities
in Illinois have voted to move forward with a CCA, though
whether they will oer renewable energy is yet to be
determined. CCAs can provide a lower-cost electricity
product, large environmental impact, an easy way for
consumers to support renewables, and access to lower-
cost, tax-exempt debt. CCAs can be challenging to
implement because they require state legislation, can
have signicant start-up costs, face possible resistance
from the incumbent electricity supplier, and because
residents may be unaccustomed to thinking about their
electricity use.
Community programs allow customers to invest
collaboratively in renewable energy. In community solar
programs, all participants purchase a share of a solar
system and receive the nancial benets of the energy
produced by their share. While few programs existed as
late as 2008, by 2012, nearly 30 programs were identied.
Community wind programs are emerging in the United
States and are more common in Europe. Community
programs expand access to renewable energy, provide an
easy way to sign up, take advantage of cost eciencies
from larger projects or procurements, may oer a unique,
local product, and may be more exible, allowing
participants to keep their investment, even if they move.
However, programs can be challenging to establish,
due to tax, nance, and legal concerns; developing the
program structure can be more challenging than nding
subscribers.
Green power challenges and local collaborative
electricity purchasing programs expand access to utility
green pricing and competitive supplier programs. Local
governments often partner with local utilities, third-
party marketers, and/or environmental organizations to
increase awareness of green pricing options through a
green power challenge. EPA’s Green Power Communities
are collectively buying more than 3.3 million MWh of
green power annually, representing 9% of all voluntary
sales in 2010. Groundswell’s Community Power Project is
a local collaborative electricity purchasing program that
has facilitated procurement of 56,000 MWh of renewable
energy for 109 organizations in the Washington, D.C.,
area. Green power challenges and local collaborative
electricity purchasing programs raise awareness and
expand access to renewable options, provide alternative
ways to sign up for renewable energy, may encourage
friendly competition among suppliers, and can
contribute to branding of a community. Challenges and
procurement programs are fairly easy and straightforward
to implement. One barrier may be organizing the timing
of the challenge and clarifying funding responsibilities
between organizations. Local collaborative electricity
procurement programs require a lead organization
to educate potential partners and develop the actual
procurement.
Group on-site purchasing programs identify a group
of individuals or companies that are interested in
installing solar systems and aggregate their demand for
the equipment and installation services. This can result
in attractive bulk pricing from vendors. In addition,
the programs save buyers the time and eort that
would be required to navigate the purchasing process
individually, which may encourage more customers to
install renewable energy systems. The program may
also include a nancing aspect, which can further ease
the process for customers and help expand the market.
Increasingly, communities, businesses, non-prots, and utilities are partnering to provide a wider variety of
options for procuring renewable energy. CCA programs, community wind and solar programs, green power
community challenges, local collaborative electricity purchasing, bulk purchasing of on-site renewables,
and reverse auctions provide unique methods, often resulting in cost savings and expanded access for
consumers. The mechanisms are summarized below, as well as in Table 6.
7. SUMMARY AND CONCLUSIONS
7
29
7
A group purchasing program requires a clear leader to
organize the process. Successful programs have been
organized and oered by a variety of leader organizations
representing the private and public sectors, including
the cities of Portland and San Jose, a citizen group in Los
Angeles, a nation-wide enterprise called One Block O
the Grid, and the Orlando Utilities Commission.
Reverse auctions provide a exible method for
organizations and companies in restructured electricity
environments to contract for electricity provision,
including electricity from renewable energy sources.
Customers in any electricity market can purchase RECs
or contract for the construction of a renewable energy
system using the reverse auction mechanism. Although
many customers make use of paid auction organizers
(e.g., World Energy Solutions), buyers with signicant
demand may choose to organize their own auctions, as
the GSA has recently done. The transparency of the online
bidding process often draws in a variety of potential
bidders. The competitive environment created by reverse
auctions has yielded signicantly reduced prices for
renewable energy, compared to traditional contracting
processes. Careful pre-auction analysis and planning pays
o in the increased condence of buyers and bidders, as
well as rapid post-auction contract signing.
30
7
Innovative Mechanism
Sector Developing
the Method
Procuring Sector Benets of Approach Challenges to Approach
Community Choice
Aggregation
Local governments Utility consumers
-Potential lower cost
-Large impact
-Easy for consumers
-Access to lower-cost,
tax-exempt debt
-Need enabling legislation
-Start-up costs can be
signicant
-Possible resistance from
incumbent electricity supplier
-Need for education and
outreach
Community wind and
solar programs
Typically municipal or
cooperative utilities
and/or third-party
project developers
Utility consumers, local
residents, residents
from anywhere
-Expanded access
-Easy to sign up
-Cost eciencies of larger
project or procurement
-May oer a unique, local
product
-Can move subscription
within service territory
-Tax and nancial issues
-Concerns over potential
securities regulation
Green power challenges
and local collaborative
electricity procurement
Partnership
between utility, local
government, and/
or large institutional
purchasers
Utility consumers
-Contributes to branding
of community
-Provide education and
outreach to community
members
-Easy to sign up
-May encourage supplier
competition
-May lower cost
-Setting appropriate, realistic
targets
-Distributing costs among
partner organizations
-Administrative issues
Bulk purchasing of
distributed energy
systems
Government agencies,
businesses, non-prot
organizations
Local residents,
government agencies,
schools, businesses
-Lower-cost solar
-Reduced administrative
eort for buyers
-Improved company
reputation for sponsors
-Flexibility of
program design and
implementation
-Quality assurance
-Requires a champion to
coordinate
-Potentially reduced exibility
for individuals in project
design or contract terms
Reverse auctions
Businesses,
governments,
non-governmental
organizations
Businesses,
government
agencies, non-prot
organizations
-Increased price transpar-
ency and competition
-Price discovery and buyer
education
-Reduced administrative
burden
-Fast award and contract
times
-Pure reverse auction may
not allow sucient time to
generate lowest bid
-Relies on auction software
technology
Table 6. Overview of Innovative Renewable Energy Procurement Mechanisms
31
8. ENDNOTES
1
The guide was produced by a collaborative eort between the U.S.
EPA, the U.S. Department of Energy, the World Resources Institute,
and the Center for Resource Solutions. http://www1.eere.energy.gov/
femp/pdfs/purchase_green_power.pdf.
2
Though not discussed in this paper, CCAs exist in Rhode Island and
Ohio, but they do not oer substantial renewable energy products.
The Northeast Ohio Public Energy Council (NOPEC) aggregates natural
gas and electricity consumer load, and the Rhode Island Energy
Aggregation Program (RIEAP) aggregates load of local governments in
the state. RIEAP renewable percentages have ranged from 5% to 10%
(LEAN Energy U.S. 2012).
3
For example, in Illinois, opt-out programs can be implemented
but must be approved through a referendum question at a general
election.
4
For more on securities issues, see Coughlin et al 2012.
5
The Bay Area Climate Collaborative is a public-private initiative
developed by the Silicon Valley Leadership Group to encourage a
clean-energy economy. See http://www.baclimate.org.
6
The Public Sector Climate Task Force is made up of sustainability
ocers from across the region.
7
While the focus here is the use of reverse auctions in voluntary
renewable energy markets, the mechanism is also being used in
compliance markets. For example, the State of Connecticut’s Public
Utilities Regulatory Authority approved the ZREC (zero-emissions)
and LREC (low-emission) renewable energy program. Through the
program, state utility companies will hold a series of reverse auctions
that will result in long-term contracts to purchase the RECs associated
with electricity generated by customers of the state’s distribution
companies. The program was mandated by the state Energy Act of
2011. See http://www.ct.gov/pura/cwp/view.asp?A=4144&Q=502078
and http://energy.aol.com/2012/04/30/connecticut-focuses-on-
unique-reverse-auctions-to-drive-green/.
8
32
Resources
Community Choice Aggregation
Illinois Community Choice Aggregation Network:
http://www.ippconnect.com/CCA.php.
Local Energy Aggregation Network (LEAN Energy U.S.):
www.leanenergyus.org.
Community Wind and Solar
Coughlin, J.; Grove, J.; Irvine, L.; Jacobs, J.F.; Johnson Phillips, J.; and
Wiedman, J. (2012). A Guide to Community Shared Solar: Utility,
Private, and Non-Prot Project Development. DOE/GO-102012-3569.
Golden, CO: National Renewable Energy Laboratory. http://www.n
rel.gov/docs/fy12osti/54570.pdf.
Northwest SEED and Bonneville Environmental Foundation. (n.d.).
“The Northwest Community Solar Guide.” Accessed July 18, 2012:
http://www.nwseed.org/documents/NW%20Community%20
Solar%20Guide.pdf.
Windustry oers case studies and links to guidebooks and other
information regarding community wind project development on
their website at www.windustry.org.
The Minnesota Project. (December 2009). “Lessons and Concepts for
Advancing Community Wind.” Accessed July 18, 2012: http://dev7.
windustry.org/sites/dev7.windustry.org/les/Advancing-
Community-Wind_Dec09.pdf.
Kubert, C. “Community Wind Financing.” A Handbook by the
Environmental Law & Policy Center. Accessed September 11,
2012: http://www.elpc.org/documents/WindHandbook2004.pdf.
Green Power Challenge and Local Collaborative Electricity
Procurement
Groundswell: www.groundswell.org.
U.S. Environmental Protection Agency (EPA). “Green Power
Communities.” Accessed July 18, 2012: http://epa.gov/
greenpower/communities/index.htm.
EPA. “EPA Green Power Communities.” Webinar. Accessed July 18, 2012:
http://epa.gov/greenpower/events/23feb10_webinar.htm.
Bulk Purchasing of Distributed Energy Systems
World Resources Institute, Joint Venture, and Optony. (2011).
“Purchasing Power: Best Practices Guide to Collaborative Solar
Procurement.” Accessed July 18, 2012: http://www.wri.org/
publication/purchasing-power.
U.S. Department of Energy (DOE). (2011). “Solar Powering Your
Community: A Guide for Local Governments.” Accessed July 18,
2012: http://www4.eere.energy.gov/solar/sunshot/resource_
center/sites/default/les/solar-powering-your-community-guide-
for-local-governments.pdf.
DOE. (2011). “The Solarize Guidebook: A Community Guide to
Collective Purchasing of Residential PV Systems.” Accessed July 18,
2012: www.nrel.gov/docs/fy11osti/50440.pdf.
EPA. (2011). “Clean Energy Collaborative Procurement Initiative.”
Accessed July 18, 2012: http://www.epa.gov/greenpower/cecp/
index.htm.
Reverse Auctions
Practice Greenhealth. “Healthcare Renewable Energy Initiative.”
Accessed July 18, 2012: http://practicegreenhealth.org/topics/
energy-water-and-climate/energy/healthcare-renewable-energy-
initiative.
Practice Greenhealth. “Healthcare Clean Energy Exchange.” Accessed
July 18, 2012: http://practicegreenhealth.org/topics/energy-water-
and-climate/energy/healthcare-clean-energy-exchange.
EPA. “Procuring Green Power Through Reverse Energy Auctions.”
Webinar. Accessed July 18, 2012: http://epa.gov/greenpower/
events/24jun10_webinar.htm.
9. RESOURCES AND REFERENCES
9
33
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9
35
Table A-1. Overview of Community Solar Programs
10
10. APPENDIX
Utility/Provider Program Name Program Size (kW)
Program Start
Year
Ellensburg (WA) Community Solar Project
111 2006
Sacramento Municipal Utility District (CA) SolarShares
1,000 2008
Florida Keys Electric Cooperative (FL) Simple Solar
117 2008
Ashland (OR) Solar Pioneers II
64 2008
St. George (UT) SunSmart
250 2009
Bainbridge Island (WA) Solar for Sakai
5 2009
Holy Cross Energy/Clean Energy
Collective (CO)
Mid Valley Solar Array
(El Jebel)
80 2010
University Park Community Solar LLC
(MD)
University Park Solar
23 2010
Corvallis (OR) Corvallis OR, SunSlice Deal
2 2010
Okanogan County Electric Cooperative
(WA)
OCEC Community Solar
20 2010
Salt River Project (AZ) SRP EarthWise & Copper Crossing Solar Ranch
2,000 2011
Trico Electric (AZ) Trico SunWatts Sun Farm
193 2011
Delta-Montrose Electric Association (CO) Community Solar Array
20 2011
Holy Cross Energy/Clean Energy
Collective (CO)
Gareld County Array
858 2011
Berea Utilities (KY) Berea Solar Farm
14 2011
Edmonds (WA) Edmonds Community Solar Cooperative
4 2011
Okanogan County Electric Cooperative
(WA)
Winthrop Community Solar
23 2011
Poulsbo Project (WA) Poulsbo Middle School
75 2011
Seattle City Light (WA) Community Solar
24 2011
Tuscon Electric Power (AZ) Bright Tucson Community Solar Program
1,600 2011
UniSource Energy Services (AZ) Bright Arizona Community Solar
1,720 2012
Colorado Springs (CO)
Community Solar Garden Facility Incentive
Program
500 2012
Poudre Valley REA/Clean Energy
Collective (CO)
Community Solar
115 2012
Brewster Community Solar Garden
Cooperative Inc. (MA)
Brewster Community Solar Garden
346 2012
Olympia (WA) Olympia WA, SunSlice Deal
75 2012
Acorn Energy Cooperative (VT) Acorn Energy Solar One
150 2012
United Power (CO) Sol Partners Cooperative Solar Farm
10 2012
San Miguel Power Association/Clean
Energy Collective (CO)
SMPA Community Solar
1,000 2012
National Renewable Energy Laboratory
15013 Denver West Parkway
Golden, CO 80401
303-275-3000•www.nrel.gov
NREL is a national laboratory of the U.S. Department of Energy
Oce of Energy Eciency and Renewable Energy
Operated by the Alliance for Sustainable Energy, LLC
NREL/TP-6A20-54991•September2012
Printed with a renewable-source ink on paper
containing at least 50% wastepaper, including
10% post consumer waste.
Cover Photo: iStock/17097256