California Demonstration Brings Prosumers into Energy Markets

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A prototype community southeast of Los Angeles, California, aims to demonstrate the advantages of prosumers in a disadvantaged community selling into electricity markets and reaping a cleaner environment plus income and resilience.

The Basset-Avocado Advanced Energy Community (BAAEC) is funded in part by a $9 million grant from the California Energy Commission’s  EPIC program, said Luis Felipe Cano, CEO of Community Electricity. His company has partnered with The Energy Coalition, Energy Web, UCLA and others on the project, the second phase of which is expected to be completed in 2023. The Energy Coalition is the prime contractor for the EPIC grant.

prosumers

Image courtesy Community Electricity

The total investment for the prototype project’s first and second phase will be about $20 million, which includes matching funds from partners that include vendors, he said.

Initially, a prosumer network made up of 50 single family homes equipped with PV and energy storage will be created. Also critical to the project will be a resilience hub, based on a microgrid, located at the Evergreen Baptist Church campus. It will consist of rooftop PV solar, community solar, electric vehicle (EV) charging and battery energy storage.

Residents will be equipped with a mobile app, called iDecarb, that will help community residents become prosumers, showing them how to generate revenues by selling electricity and renewable energy credits into California markets while at the same time decarbonizing the community, Cano said. The app connects to a platform, Energy Web, that allows members to sell green energy and allowances to California markets using a community operating system. For now, the possible sales are simulated because all of the regulatory frameworks aren’t in place to allow for the sales.

Long-term vs short-term PPAs

One of the goals of the project is to demonstrate how short-term power purchase agreements (PPAs) with community choice aggregators (CCA) reap more economic benefits than long-term PPAs.

Long term PPAs are generally contracts between utilities and clean power generators to buy electricity over 10 years or more, said Cano. “We are exploring the business case to create 30 day contracts to sell local clean electricity to community choice programs,” he said. The contracts would automatically renew. This arrangement will benefit both the seller and the buyer because it minimizes long-term price fluctuations, he added.

This will be accomplished using a blockchain middleware platform. Using blockchain, Community Electricity and its partners will also certify and verify the amount of clean electricity produced by solar panels and simulate the sales of carbon offset credits to companies regulated by California’s cap and trade program.

Two new sources of revenues for the disadvantaged communities — selling electricity and also offsets — will be created and the community and the project will help with decarbonization, said Cano.

The community, 4.1 square miles, will include 28,000 residents. 5,500 single family homes, 152 industrial companies, 120 multi- family homes and 113 commercial buildings.

Pop-up spaces in the community aim to educate residents about the project.

EV chargers and an EV vanpool program will reduce the need for residents to own cars. They will expand residents’ access to zero-emission vehicles while reducing carbon emissions.

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The project will be monitored by an indoor and outdoor pollution sensor network designed to give real-time decarbonization effects.

“After 12 months of the simulation, state regulators, investors, community developers and others will have information on the performance of the community’s assets,” Cano said.

Initially, the electricity produced by consumers will be sold to Los Angeles Community Choice Energy.

“Our first approach during the simulation is to sell the electricity using short term contracts — 24 hour contracts — and prove the benefits. In the end, we will take it to the investor-owned utilities in the same format,” said Cano.

100% renewable

Under the state’s green tariff program for disadvantaged communities, subscribing customers in the community will receive 100 percent renewable energy generated by disadvantaged communities anywhere in the state and purchased by California investor-owned communities. The subscribers will receive a 20% discount on the price of the green electricity from utilities. People best suited for this program are those who rent their homes, can’t afford solar or whose homes are unsuitable for solar.

Community Electricity partnered on the project with Energy Web, a nonprofit organization that aims to accelerate the move to a low carbon electricity system using blockchain and other decentralized technologies. Energy Web makes the sales by prosumers to utility markets possible through its platform.

“We provide what I call the missing digital infrastructure needed between microgrids and other assets…”Jesse Moris, Energy Web

“We have brought to market a decentralized operating system. We provide what I call the missing digital infrastructure needed between microgrids and other assets in them and the utility systems they are participating in,” said Jesse Morris, chief commercial officer for Energy Web.

The organization works with about 130 utilities and large energy companies that are ready to open or have opened their markets.

“We build software for utilities to deploy in their ecosystem. Customers participate and benefit. Anyone can participate,” he said. For example, an EV owner would have a “passport” to bid into the wholesale market or participate in local demand response or virtual power plant programs.

Energy Web also operates in Germany and Austria, where the goal is to allow any prosumer to sell into electricity markets.

Energy Web helps Community Electricity sell into markets. But there’s still a need to sell California stakeholders on the model.

“We believe that a data-driven decarbonization protocol combined with a bottom-up approach is the starting point to decarbonize California and beyond,” said Cano.

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