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Alex Boyd's picture

Alex Boyd is the CEO of the PSC Group. He joined PSC in 2007 to found and lead its North American business. In 2017, he successfully completed a management buyout of the Group from PSC’s...

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  • Mar 30, 2023

While an individual response may not be enough to move the dial, collective action can achieve considerable change. Today, collectives may help to reduce energy bills, go green or even help manage the grid.

Growing interest in clean energy, the desire for greater local control over energy resources, and the hope of lower prices is prompting a local government and consumer rethink when it comes to energy purchasing. Instead of relying on incumbent utility suppliers, businesses and communities are joining forces to strike better deals. In a process known as Community Choice Aggregation (CCA), among other names, communities, local authorities, and businesses are acting together to procure power at preferential rates.

In the USA, some ten states have already enacted legislation that authorizes this kind of collective purchasing. According to the US National Renewable Energy Laboratory (NREL), more than 5 million consumers were taking advantage of these schemes by the end of 2020. With the collective buying power of entire communities allowing bargaining not possible under normal circumstances, electricity prices can be substantially lower, with figures of 15-20 percent recorded by the US EPA.

CCA consumers are not only able to secure better pricing but can also strike deals for exclusively renewable energy supply, for example. This approach also ties in with the emergence of prosumer collectives, which increasingly have a stake in energy production, with rooftop solar, for example, allowing more agency than consumers who purchase and use energy.

The European Commission and EU countries are also actively promoting these kinds of structures. In Europe, known as energy communities, like their North American counterparts, these legal entities empower individual households, small businesses, and local authorities to take an active role in producing and managing their energy.

Corporations are also adopting this approach to take control of energy production and use collectively. Late last year, the fast-food giant McDonald's and the five members of its logistics council signed agreements with ENEL North America to purchase renewable energy from the Blue Jay solar project in Texas. This aggregation of a significant company and its logistics partners has positively impacted the supply chain's carbon footprint (Scope 3 Emissions). By acting as the anchor buyer but working with its supply chain, McDonald's has reached elements of its carbon impact that may not be possible even by such a corporate behemoth alone. Collective action is also seeping into other aspects of the energy market, such as collective demand response services that can support network stability when needed.

Market trends and the demands of consumers and local authorities who want far more agency over electricity resources and their cost drive interest in community aggregation. At any scale, it’s an approach that offers clear benefits.

Henry Craver's picture
Henry Craver on Apr 7, 2023

Very interesting. Does this sort of democratization ever backfire? Like a collective opting for an unreliable mix of energy sources?

Alex Boyd's picture
Alex Boyd on Apr 12, 2023

The increasing interest in clean energy, i.e. renewables, and declining cost certainly make CCAs attractive for some customers, however, CCAs have to abide by local/state regulations like any utility. If there aren't any renewable energy mandates, for example, the CCA may be served via fossil fuel-generated electricity. Ultimately, it's up to the utility to maintain the grid's reliability and provides the service where the CCA is simply purchasing the power.

Alex Boyd's picture
Thank Alex for the Post!
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