San Diego, Houston detail paths for cities to purchase renewable energy

Dive Brief:

As cities ramp up their clean energy goals, the options for purchasing renewable energy can vary geographically and based on a city’s needs, speakers said on a webinar last week hosted by the Center for Resource Solutions (CRS).
The market for renewable energy purchases is rapidly growing as utilities develop more solar and wind generation and as cities set ambitious climate change goals. Among the options are renewable energy certificates (RECs), power purchase agreements, green tariffs, community choice aggregation (CCAs) and on-site generation.
Christopher Kent, program manager at the U.S. Environmental Protection Agency’s Green Power Partnership, said most local governments are seeking renewable energy through a utility’s renewable energy program or through a competitive supplier. Kent’s Green Power Communities program, which rewards local governments for purchasing renewable energy, currently has about 100 participants who are collectively using about 8 billion kilowatts of renewable energy.

Dive Insight:

Cities are helping drive U.S. action on climate change, setting zero-emission targets that have expanded the market for renewable energy. In 2020 alone, 95 local governments across 33 states made 143 deals to purchase renewable energy, according to an April report from the Rocky Mountain Institute and World Resources Institute. The 3,683 megawatts (MW) of new renewable energy generation capacity purchased that year was the largest in a single year.

A key reason for that record-breaking total, the report found, was due to cities finding creative ways to fund that procurement. On the CRS webinar, Lara Cottingham, chief of staff and chief sustainability officer for Houston, said that meeting the city’s goal to be carbon neutral by 2050 and powered solely by renewable energy required a combination of ambition and good timing.

The city happened to be renewing a contract with utility NRG at a time when renewable power prices were low, so it locked in a purchase of more than 1 million megawatt hours (MWh) though the utility’s renewable select plan. Houston is also creating a third-party, utility scale solar facility in partnership with NRG that will be dedicated to the city, meaning it can continue to add to the renewable portfolio without striking new contracts with utilities or other providers.

In the end, Houston announced it would be powered 100% by renewable energy in April 2020, five years ahead of schedule. "Part of it was luck," Cottingham said, but she added that years of work with NRG on the city’s internal climate goals made the final negotiations easier.

San Diego took another approach, creating a CCA program that allowed the local government to take control over direct renewable purchasing. Residents can choose to purchase their electricity from the government-run entity or from utility SDG&E and other local governments have joined in a joint power agreement to increase their purchasing power. San Diego sustainability manager Ashley Rosia-Tremonti said the CCA was launched after a lengthy public review process, but was seen as the best choice because it offered more local control than purchasing renewable power from a utility.

"People want a seat at the table" for climate change issues, Rosia-Tremonti said.

CCAs, however, are only authorized in nine states, Utility Dive reports. Kent said that local governments may prefer that strategy, which offers more control, but tariff agreements — like the one Houston reached with NRG — offer an alternative. Cities can also purchase RECs, a market instrument that affirms delivery of electricity to the grid from a renewable resource that can be sold on the open market. Others have also looked at community solar projects to generate renewable energy within city limits.

Cottingham said that with so many options, it can feel overwhelming for cities trying to figure out how to replace fossil fuel power with clean energy. But, she added, those options also mean that most cities can right-size solutions that work for them.

"I always talk about the fact that Houston, this oil and gas capital, can become the largest municipal user of renewable energy in the country," she said. "If Houston can do it, anyone can."