Asset-Based Supply is more Cost Effective than Market-Based Supply | Local Clean Energy Alliance of the Bay Area

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Asset-Based Supply is more Cost Effective than Market-Based Supply

From COMMUNITY CHOICE AGGREGATION DEMONSTRATION PROJECT,
SUMMARY FOR IERP WORKSHOP: COMMUNITY CHOICE AGGREGATION DEMONSTRATION PROJECT, Navigant Consulting.

Community choice aggregators possess an important competitive advantage relative to investor owned utilities in their ability to utilize low cost financing for capital projects such as generation resources, and such financing can be used to create ratepayer savings for CCA customers. Figure 3 illustrates the benefit to the community choice aggregator of utilizing low cost debt to finance generation projects within their CCA programs. For purposes of this analysis, two diversified supply portfolios were created for each participant to meet a 40 percent renewable energy target. The market-based supply strategy includes a mix of long and short-term power purchases, and the asset-based supply strategy replaces a portion of the power purchases with production from community generation projects (a mix of wind, geothermal and natural gas combined cycle resources).[1] Figure 3 shows program benefits for the alternative supply portfolios.

Figure 3: Electric Cost Savings For CCA Demonstration Project Participants Utilizing Alternative Supply Strategies

Whereas just three of the Demonstration Project participants would realize ratepayer benefits by pursuing the market-based strategy, nine of the eleven would realize ratepayer benefits under the community generation alternative.

[1] The community generation projects were assumed financed at an annual interest rate of 5.5 percent for thirty-year terms.