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California Community Choice Aggregation takes off

California Community Choice Aggregation programs are generating attractive revenue streams and acquisition pricing for solar project developers. Community Choice Aggregation programs allow local governments and special districts to aggregate and offset electricity loads for local residents, businesses and municipalities via power purchased from independent solar power producers. These programs work in partnership with existing utilities to efficiently deliver electricity and to consolidate billing.

 

Community Choice Aggregation Model

Community Choice Aggregation Model

 

Surviving and Thriving amidst an extended ITC

Under the Community Choice Aggregation model lower operating expenses, economies of scale and credit-worthy electricity off-takers combine to create attractive project economics and acquisition pricing for developers and their project financiers.   And with the ITC recently extended, the prospects for CCA shine even brighter: A recent IRS private letter ruling found that individual investors in a community-shared solar array can take advantage of the 30 percent federal residential Income Tax Credit available under Section 25D of the Internal Revenue Code… opening the door to stakeholder-financed Community Choice Aggregation and Community Solar projects nationwide.

Community Choice Aggregation in California and other states

In California, Marin County, the City of Richmond, Sonoma, San Francisco, and the Monterey Bay all have established Community Choice Aggregation programs; and efforts are underway to establish programs in many other jurisdictions.  Other states with active Community Choice Aggregation programs include Illinois, Massachusetts, New Jersey, New York, Ohio, and Rhode Island.

The new kid in town: Shared Renewables

But solar developers aren’t limited to Community Choice Aggregation.  California utilities will soon roll out Shared Renewables programs, creating new opportunities for development of PPA projects from 500kW to 20MW.  The utilities are procuring these developments aggressively – indeed PG&E seeks to procure 50MW by Q1 2016, and they are reportedly waiving System Impact Study, Phase I Study, and WDT/CAISO Fast Track screens prior to bid submittal.

The Green Tariff Shared Renewables Program

These programs are driven by the California Public Utility Commission’s Green Tariff Shared Renewables (GTSR) Program, which allows PG&E, SCE and SDG&E customers to receive 50% – 100% of their electricity demand from solar generation. The GTSR program includes a “green tariff” (GT) component, which allows customers to pay the incremental cost of procuring solar generation. A separate “enhanced community renewables” (ECR) component permits customers to purchase a share of a local solar project directly from a solar developer; in exchange they receive a credit from their utility for the customer’s avoided generation procurement as well as their share of the benefit of the solar development to the utility,

Shared Renewables Eligibility

Eligible projects will be newly constructed, located in communities with over 50,000 residents and must be interconnected to PG&E, SCE or SDG&E’s distribution or transmission system within their territory.  Some of these programs’ capacity will be earmarked for certain economically disadvantaged communities – many in California’s Central Valley.

How to maximize your profits with Community Choice Aggregation and Shared Renewables

The best opportunities will go to solar developers and EPCs who already have or can quickly establish site control and can thus quickly scope and bid Community Choice Aggregation and Shared Renewables projects this year for deployment in 2016, before the likely Investment Tax Credit cliff.   But how can your team quickly advance your solar development opportunities without staffing up and spending speculatively?

Helio MicroUtility has a strong track record for creating value and maximizing development fees for solar developers and EPCs.  By providing trusted counsel and comprehensive or a-la-carte services on a consulting or success fee basis, we help our partners deliver projects and profits without adding headcount.  For these we expect independent developers and EPCs may benefit from any or all of these services:

PLANNING AND STRUCTURING SUPPORT

PROJECT DEVELOPMENT AND PLACEMENT

  • Development-stage funding, including equity retention strategies
  • Preliminary due diligence surveys
  • Investor-facing project summaries
  • 1-week turnaround to indicative pricing
  • Investor comparisons and recommendations
  • PPA, Site Lease, SNDAs and other project documents crafted for investor acceptance and value creation
  • Term sheet negotiations
  • Investor data room creation and administration
  • Purchase-Sale agreements and other definitive investment documents
  • Acquisition and financing negotiations through close

EPC AND ASSET MANAGEMENT SUPPORT