Clean Energy promises greener

07/23/2015

When Marin Clean Energy announced it would halve 2015 purchases of the controversial “unbundled” renewable energy certificates to only 15 percent of its total electricity, Paul Fenn, a pioneer in the community choice aggregation movement, was cautiously optimistic.  

Mr. Fenn, the author of a 2002 state bill that led to the creation of M.C.E., has worked for decades to develop policies permitting local governments to aggregate electricity demand and provide renewable energy to customers. 

He has not always had a smooth relationship with the joint power authority called Marin Clean Energy, however. Much of that conflict has revolved around the short-term purchasing of renewable energy certificates, or RECs. These tradable commodities are defined by California law as “a certificate of proof… that one unit of electricity was generated and delivered by an eligible renewable energy resource.”

A REC is awarded when an entity—such as a wind farm—creates one megawatt-hour of clean power. The farm can then sell that REC to a broker, who in turn sells it to a power company wanting to improve its clean energy portfolio. A single megawatt-hour REC can cost between $1.50 and $6, depending on the market. 

But the purchasing company is still producing the same brown energy; it is merely paying for clean energy to be produced elsewhere.

Mr. Fenn, who operated Local Power, Inc. out of his bayside home in Marshall until December 2013, when he moved to Mendocino, likens the purchase of unbundled RECs to carbon trading. He said the practice fuels a national trend of delocalized energy, as RECs are most commonly purchased from cheaper out-of-state utilities with no use for them under looser regulations.  

“They are based on the trading of commodities, not the physical actions,” Mr. Fenn said. “Going to out-of-state markets is essentially laundering regulatory mandates… It’s free money to somebody with no real impact on the market.”

For him, purchasing out-of-state RECs goes against the original mission of community choice aggregations, or C.C.A.s, as a whole, which he defines as cultivating physically localized renewable energy. 

Seeing M.C.E. lessen its REC reliance from 35 percent of total power purchases in 2012 to the 15 percent slated for 2015 gives him a renewed sense of hope in the Marin Clean Energy.

Other critics, such as Dr. Al Weinrub of Oakland-based Local Clean Energy Alliance, have mixed feelings about the use of RECs by growing C.C.A.s. Although Mr. Weinrub described the marketing of unbundled RECs as new renewable energy generation as “one false scheme,” he concluded in a 2013 report that their use could be justified in small measure if it was a bridge to developing localized renewable energy projects.  

It seems that M.C.E. has followed this direction in recent years.

“They have gradually diversified to focusing on local projects,” Mr. Fenn said. “I think they’ve learned their lesson because they were widely criticized by all the other C.C.A. activists and governments—as well as utilities and unions—several years back, which has focused their strategy on localization.” 

But, he added, “They are still very weak on energy efficiency and demand reduction, which I think should be their focal point.”

According to Dawn Weisz, M.C.E.’s chief executive, switching to localized renewables was only a matter of time. “It takes time to get projects built in California,” she said. “In the last nine months we’ve had three large projects come online, which has allowed us to shift to the in-state sources.” 

Ms. Weisz insists that the shift from a reliance on unbundled RECs to investing in in-state renewables was just “a fulfillment of our original goals.”

Shell agreement

The climax of Mr. Fenn’s conflict with M.C.E. ignited in 2009, when the Marin Energy Authority—M.C.E.’s former title—signed a five-year purchase agreement with Shell Energy North America. The deal was used to help the authority reach its initial goal of providing 25 percent renewable energy while keeping prices competitive in early stages of the development with the adversary provider Pacific Gas & Electric.  

According to Mr. Fenn, the authority decided against a $300 million localized power project proposed by Local Power. To him, the decision was ill-fitting for a new renewable energy aggregate, and a blow to the C.C.A. movement nationwide.

Ms. Weisz said that taking the Shell bid was the only viable choice at the time. “It was the only option that allowed us to have fixed costs while providing the percentage of renewables that our community was requesting. If we hadn’t accepted that bid, we could not have launched our program,” she said. 

She described the contract with Shell as a short-term bridge that contrasts with M.C.E.’s longer renewable power agreements, including a 25-year purchase agreement with Cottonwood Solar Project, a 24-megawatt solar farm based in Kings and Kern Counties. 

(For a sense of scale, M.C.E.’s San Rafael Airport solar project covers roughly eight acres, covering over 48 hangers, and provides less than 1 megawatt.)

Local Power stresses that purchasing delocalized energy is not only ecologically retroactive, it’s also just bad business. When C.C.A.s invest in local renewables, Mr. Fenn said, “you are also avoiding paying for transmission charges and other such surcharges. So the economic price points change and the opportunities
expand.” 

In the case of out-of-state RECs, he continued, “You are ‘renting’ sustainability just for the term of that agreement, usually for a year or two years, whereas planting a solar panel incorporates a 20 to 70-year investment, depending on how well it works.”

Focus on growth 

Though based in Marin County, M.C.E. now services El Cerrito, Benicia, Richmond, San Pablo and unincorporated Napa County. As the state’s first C.C.A,—and one of the largest in California—many consider it a model of success for other states and regions. 

Marin Clean Energy perceives its growing influence as a chance to spread affordable renewable energy to more Californians while stabilizing the agency’s efforts. “We now have a very diverse portfolio, with suppliers including Calpine, GQ Energy, Energy 2001, EDS and San Rafael Airports Solar Project,” Ms. Weisz said. 

Having different technologies in the mix has also allowed M.C.E. to keep prices stable, she added.

Yet Mr. Fenn is concerned that M.C.E.’s expansion to communities outside of Marin both causes it to stray from its localized mission statement and slows the development of future local utility
aggregations. 

“It’s driven by the inertia of member governments not wanting to do the work to form a C.C.A.,” Mr. Fenn said of the new municipalities  M.C.E. serves. “It’s easier for them to join this existing effort.” And, he said, “It no longer has the public face because M.C.E. is no longer serving just Marin. There was too much focus of growth [rather than on] de-growth.”

Mr. Fenn is also concerned that M.C.E.’s early reliance on unbundled RECs may have caused irreparable damage to other community choice programs. 

“A real challenge we’ve encountered is that a lot of C.C.A.s have copied Marin’s REC-buying strategy, leading some to no longer provide green services,” after volatile fluctuations in REC prices forced them to use “brown” energy, he said. “Other than actually making it work right in Marin, they instead grabbed all these outside jurisdictions.”

The team at Marin Clean Energy anticipates massive strides in achieving their green objectives in the coming calendar year. 

Active local projects include the San Rafael Airport Solar project and solar farms in Novato, which fund the 100 percent renewable and entirely locally produced “Local Sol” energy option—pricier than M.C.E.’s Light Green (50 percent renewable) and Deep Green (100 percent renewable) options.  

Future energy projects include a 49-acre ground-mounted solar project at the site of the formerly blighted Chevron refinery in Richmond. Considered a re-appropriation of a “brownfield,” Solar One is expected to be completed in August 2016.   

As with most C.C.A.s, Marin Clean Energy remains the default electricity generation provider to the communities it services, allowing customers to opt-out if they do not wish to participate. After a 60-day grace period, residents are charged a one-time $5 opt-out fee. 

Although M.C.E. now dominates the local power production, the electricity is still delivered and billed to homes through existing P.G.&E. services.