Report: California Power System Shifting Dramatically through DER, EVs and CCA

With California’s grid facing an era of rapid change as access to renewable energy grows, three new reports from the nonprofit, nonpartisan think tank Next 10 examine key issues involving the state’s power system. The reports take a deep dive into how the grid might be challenged or helped by the rise of electric vehicles; the increase in distributed energy resources (DER), such as rooftop solar panels; and the growth of community choice aggregation (CCA), which allows cities and counties to join together to purchase electricity on behalf of their community members.

“These innovations are all key elements in California’s efforts to transition to clean, renewable energy that is both reliable and affordable,” said F. Noel Perry, businessman and founder of Next 10. “As the state adds more variable renewable energy to the grid, these resources – electric vehicles, distributed energy resources and community choice aggregators – represent a challenge to the traditional energy management system, but also provide opportunities for us to manage a more efficient and cleaner grid. There are a lot of complex issues for Californians — especially policymakers — to consider as we work toward a clean energy future.” 

Electric Vehicles 

California currently has about 369,000 plug-in electric passenger vehicles (PEVs). In order to reach Gov. Jerry Brown’s goal of 5 million PEVs by 2030, sales need to grow significantly. Also on the horizon: electric medium- and heavy-duty vehicles, and the prospect of private vehicle ownership being lowered by fleets of electric, self-driving PEVs. 

The California grid is well placed to handle rapid growth in PEVs but advance planning and smart policy can ease the transition for the state’s power system, according to Next 10’s report Electric Vehicles and the California Grid, by Anand R. Gopal and Julia Szinai of Lawrence Berkeley National Laboratory. 

Among the report’s key takeaways:

  • Energy demand is only modestly increasing as PEV sales surge
  • Transportation trends towards automation and increased usage of mobility services like ride-hailing could rapidly expand the share of electric vehicles on the road.
  • The growth of electric vehicles in California will require upgrades to the energy system, but the costs are likely to be low compared to the benefits. 
  • New management strategies can help optimize potential benefits and minimize potential risks of more PEVs needing more electricity but are challenging to implement.

Distributed Energy Resources 

“There’s a lot of buzz around distributed energy resources, which have rapidly growing capabilities and falling costs,” said Bentham Paulos of PaulosAnalytics, who produced The Growth of Distributed Energy: Implications for California for Next 10.  

“While they can help make the grid more reliable, resilient, and equitable, DER represent a potential shift from the status quo of central control and ownership. As many decisions are made by individual customers, regulators and utilities are ceding some control of the system, requiring new flexibility and a new set of incentives. If DER are going to reach their full potential, their value must be recognized and properly rewarded.” 

California has already adopted virtually every policy conceived to encourage DER, the brief notes, and is a leader in deployment, as well. For example:

  • 90 percent of the nation’s small-scale energy storage and nearly half of all U.S. large-scale storage is in California.
  • California has over 800,000 customers with rooftop solar systems, totaling over 6,500 MW of capacity.  The state has been adding 100,000 systems annually.
  • In May 2018, the California Energy Commission added rooftop solar as a building code requirement, which could lead to an additional 75,000 installations per year.
  • Smart grid investment is trending nationally and in California to help automate distribution system controls. Last year, nearly $2 billion was invested nationally, with California utilities having invested nearly $250 million.
  • As of early 2017, there were 36 operating microgrids in California, with an additional 80 under construction or planned. Altogether, these microgrids will provide over 650MW of peak capacity to the grid.
  • More than 220 MW of fuel cell systems have been installed in close to 200 California cities.

California is also a leader in energy efficiency programs, including building codes, appliance standards, and ratepayer-funded utility programs with investor-owned utilities investing more than $700 million annually in programs. Over the course of decades, these have reduced energy demand, saved customers money, reduced the need for investment and infrastructure, and cut pollution. But while California is a leader in energy efficiency, it is lagging behind in using flexible power demand to provide services to the grid, known as “demand response.”

“Distributed energy resources represent an economic opportunity for California, with tremendous growth potential,” said Perry. “California companies lead in energy efficiency, energy storage, energy software, and rooftop solar. 

Community Choice Aggregation 

Communities across California are forming Community Choice Aggregators (CCAs) at a rapid rate since 2010, with over half of them starting within the last two years. County and city governments administer CCAs as local alternatives to investor-owned utilities (IOUs). 

Next 10’s report, The Growth of Community Choice Aggregation: Impacts to California’s Grid, written by JR DeShazo, Julien Gattaciecca, and Kelly Trumbull of UCLA’s Luskin Center for Innovation, finds that if current growth trends continue, CCAs may serve a majority of California’s power consumers within the next 10 years, transforming California’s retail electricity sector.  

According to the report, the rise of CCAs has both direct and indirect positive effects on overall renewable energy consumed in California, helping contribute to the state meeting its 2030 RPS targets approximately ten years in advance. 

Even with such an important impact on the penetration of renewable energies, CCAs’ effects on the grid have been negligible so far. This is in part because when a CCA starts, it handles the needs of existing electric customers, and often gets power from existing power plants. 

In the long term, though, CCAs’ impact on the grid depends on their energy procurement strategies and their local investments. 

“The public and local nature of CCAs positions them to implement local energy programs that will help to reduce or shift energy consumption, benefiting the grid as well as their customers,” DeShazo said. The report finds that some CCAs have been especially innovative in responding to customers’ preferences by offering programs that focus on efficiency, rooftop solar, electric vehicles, and demand response.

Among the report’s other findings: 

  • CCAs are offering customers electricity with renewable energy content ranging from 37 percent to 100 percent, with an average of 52 percent.
  • IOUs are offering renewable content between 32 percent and 44 percent. They estimate a renewable content that exceeds 50 percent by 2020. 
  • CCAs rely more on short-term and out-of-state renewable energy contracts, compared to IOUs, due in part to the fact that they are relatively new entities. It’s unclear if this pattern will persist as CCAs continue to mature. 
  • CCAs compensate their rooftop solar customers for energy generated in excess of their consumption at rates up to three times higher than IOUs.
  • Some CCAs have demonstrated more success at engaging hard-to-reach customer groups in energy efficiency, compared to their IOU counterparts. For example, MCE’s multi-family energy efficiency program is more cost-effective than the comparable PG&E’s program. 

Next 10’s briefs on the grid and distributed energy generation, community choice aggregation, and electric vehicles are the third, fourth and fifth entries in a five-brief series on the grid. The first two reports — on grid regionalization and a primer on California’s electricity system — were released earlier this month. All five briefs can be found at

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