Getting Off The Grid With Community Energy Co-op Plans

CAVANAUGH: In is KPBS Midday Edition. I'm Maureen Cavanaugh. The latest news from the offline San Onofre power plant is not good for those who are concerned about keeping air conditioners up and running this summer. The associated press reports that the nuclear plant's own timeline suggests the plant will remain closed through August. The problems at the plant and frequent rate hike requests from SDG&E have gotten some innovators in San Diego thinking about starting their own energy grid. But it's a daunting task. Lane Sharman, welcome to the show. SHARMAN: Thank you so much, Maureen. It's a pleasure to be here. CAVANAUGH: On the one hand, this sound like a good idea on the other hand it sounds a little bit crazy. First of all, is it legal for citizens to band together to form their own energy grid? SHARMAN: Yes, it is. California is one of five states in the country that has a law that allows citizens inside of a city, and inside the jurisdiction of an investigator-owned utility to pool or aggregate their demand into a single entity. CAVANAUGH: Now, how exactly is that done? Do you generate your own energy? SHARMAN: Well, the idea would be in San Diego, because we have an aspiration to balance the environment together with our economics, to have more and more local renewable energy generated inside of San Diego County in order to decrease our dependency on unsafe sources of energy. CAVANAUGH: So I would imagine that's solar? SHARMAN: That's right. We would have a lot of roof-top solar, parking lot solar, we would have landfill solar, all of those areas are very safe and do not represent environmental hazards for the placement of solar. And furthermore, it eliminates a lot of the loss of energy. Which you transmit energy from great distances, there's a phenomenal amount of loss of energy along the transmission corridor. CAVANAUGH: Okay. So this kind of energy cooperative, it's called a community choice aggregation. It's already being done in Marin county. How is that working out? SHARMAN: Well, Marin county is working out very well. It has adopted a model that relied very heavily on the services of a wholesale energy provider. That wholesale energy provider is shell, energy north America. Bill Towers the other cofounder of the San Diego energy district and I are working with other leaders in the State of California to possibly blend a model that might use a little bit more local energy and that might accelerate the adoption of local energy a little bit more. Our county is blessed with so much radiation, that we would love to use that sun to generate a lot more solar energy here inside of the basin of San Diego. CAVANAUGH: Than they can up in Northern California? SHARMAN: Yes. And also the property values in Marin county make it very difficult. It's a much more rolling terrain. So it's more challenging in Marin. And also the business model may have been challenged by the severe opposition by Pacific gas and electric too. MAUREEN CAVANAUGH: In order to start a CCA, or community choice aggregation, you'd have a group of people who decided to band together and invest in buying energy from a wholesaler; is that right? And then start to invest in producing energy themselves through means here of putting on solar panels and solar parking lots, and all the things you were talking B. Is that how it would work? SHARMAN: That's a great way of describing the evolution of the procurement. And one of the things we might be able to do in San Diego, and I'd like to acknowledge SDG&E's innovation in this area, is to have more independent producers of solar being able to sell back and forth. So there is already a strong inclination to have local solar generation in San Diego. So we might be able to get off the ground with some in basin solar generation already in place, and ready to be purchased. CAVANAUGH: If you're buying the bulk of your energy from a wholesaler, we would imagine -- wouldn't members of the cooperative start out paying just about the same or even more? SHARMAN: No, the idea is to find a mix of energy that has a very high quality. I like to call it the energy quality index. Very high quality, but not so high in quality that it becomes unaffordable. Our feeling is that the energy we sell has to be and will be competitive with SDG&E's price for energy. If it were not, we think it would not be successful out of the gate. CAVANAUGH: So if a cooperative is self-sufficient in securing its own energy, wouldn't it need however the power lines that exist, the meters, etc, that already exist, and how would that work into this? SDG&E is still going to own them, right and SHARMAN: Right. So the CCA by design is energy-only. The sanctity of the infrastructure remeans with SDG&E. So SDG&E is only giving up some of its energy procurement. And by the way, energy procurement for SDG&E is not a profit center. So SDG&E has a little bit of indifference as to whether or not there is it a CCA. And in fact is on the public record as stating that it supports customer choice in San Diego. And it has said that repeatedly and does not view this as competition. So your listeners should not feel that somehow SDG&E is going to rear its head take away certain benefits or hold back electricity or things like that. SDG&E is neutral with regard to energy because it is not a profit center. So what we view this as, as an opportunity to work with SDG&E, and improve the entire dynamic of our energy mix here in San Diego. And yes, it's going to look very much like it does today. You'll get the same bill. Call the same SDG&E customer service man when there's an outage or some problem with your meter. And really all we are is energy-only. CAVANAUGH: Can any city implement this? Are there ordinances that need to be passed or anything like that? SHARMAN: Yes. So the way CCA law works is a city has to authorize and pass an ordinance subject to an implementation plan. And that plan describes the viability of this CCA within the city boundaries. What is the price the citizens are going to end up paying? What is the operation characters of the CCA? How many citizens are likely to stay in the CCA? Maureen, it's a very interesting feature of the law, when a city pass an ordinance for forming a CCA, all of its citizens and meters become customers automatically, and they're given three chances to opt out. CAVANAUGH: I see what you're saying. It seems to me we did a show a while back where SDG&E was asking the PUC to separate out a standard fee for use of the lines and the grid to all ratepayers because they had begun to starting losing money with people who were putting solar panels on their roofs. So would there be now a separate fee if a community aggregate started, for the use of those lines and the power? SHARMAN: No, no. The bill that you would receive would remain unchanged with respect to transmission and distribution and public benefit programs. So there would be absolutely no change as far as that goes. The only change would be on the energy component of your bill, and that energy would be procured on behalf of you, the customer, by the CCA. So the question that is on the table is is there rate shifting? And that's an ongoing debate in California CAVANAUGH: I see. If indeed this energy collective would be producing more energy than it needed? If it would share with the larger grid? SHARMAN: Absolutely. CAVANAUGH: Okay. SHARMAN: And as a matter of fact, that is what wholesalers do every day. It's a very liquid market. And they're constantly buying and selling energy as they need to in order to account for shortfalls or surpluses. CAVANAUGH: What are the challenges in getting people to join an energy co-op? SHARMAN: That's a great question. I think it's kind of the fear of the unknown. And maybe the fear that something will happen as a result of this either with respect to their relationship with SDG&E, for example there are many organizations that are supported by SDG&E, and those organizations are concerned about losing their support. There's also I think the fear that possibly this might be destabilizing either financially or operationally. So we do have a burden of proof here in the CCA community to show that we understand these concerns, and that we're going to address them responsibly. CAVANAUGH: It's my understanding that something like this has been tried in San Diego before, in Chula Vista, and San Marcos. And they were not terribly successful. Why is that? SHARMAN: Well, I think the primary reason is that there was a report by a company named Navigant, that showed during the first couple of years, the price was energy was going to be 5-10% more than the price currently by SDG&E. And I think that created a kind of a dead on arrival condition. CAVANAUGH: And would you expect a similar report on something like this? Why would it be different now? SHARMAN: Okay. Well, that's a great question too. And the reason that it would be different now is we're experiencing a just dramatic drop in the price of solar PV, we're also seeing historical lows in the price of natural gas. Of the fossil fuels, natural gas is the least polluting. That's not to say they should be located in mission trails. I'm not stating that. I'm just stating that there is a particularly good opportunity today I think to provide a competitive price for energy and watch that energy become more and more renewable. CAVANAUGH: Now, I believe that one of your goals is not simply establishing a workable financial model for an alternative energy grid and procurement, but rather it's to get San Diego to produce more green energy. Is that one of your ultimate goals with this? SHARMAN: Absolute. That's a really great vision statement. We believe that the local economy could dramatically improve through self-generation, and through distributed generation, and what we have to do is we have to work with our local grid operator to make that self and reliable for the electrical network. But we're very, very confident that like the Internet, which provides a pretty good model for distributed computing, we have a high degree of reliability through the distribution of computers, and we don't have main frames like we used to when you and I grew up, well, this is the same concept of having a lot of small distributed generations so when it's cloud neone place, it's sunny in another, and you get this beautiful reliability grid through a distributed matrix of solar facilities and maybe even some other innovations like high plasma energy, trash to energy, which does not have any combustion. CAVANAUGH: These are forward-thinking ideas, they're great for alternative energy. I'm just thinking though, you're thinking very optimistically about your relationship with SDG&E. And I'm thinking if this starts to cost SDG&E some profit, that relationship is going to go south pretty fast. [ LAUGHTER ] CAVANAUGH: Are there any roadblocks that power companies could put up to stop this? SHARMAN: Well, there's two laws. The formation law, and then there's the code of conduct law. So interestingly enough, I hope I'm not being a Pollyanna, but SDG&E has gone on the record and says it will not interfere with CCA formation. And that's what the code of conduct is for. PGand E was very aggressive in spending $45†million putting up proposition 16, to make if almost impossible for Marin energy authority to get off the ground. So it's a great observation. We're thinking that we have somebody say to us oftentimes, work with SDG&E make it a win-win situation, and that's the attitude we're taking. CAVANAUGH: What's the next step? SHARMAN: June†21st. On June†21st, we have a conference, invitation only, it's not for the general public, for elected officials. And see we would like to ask all the elected officials in cities like Chone and Carlsbad who have not yet signed on to please come to this conference because this is a place where all of the experts from the state, including the PUC, are going to talk about CCA and they can become informed and educated. CAVANAUGH: Thank you very much for speaking with us. SHARMAN: Thank you very much, Maureen. It's been a real pleasure.