The City’s Two Paths to Clean Power

One way or another, the city is about to rearrange a bunch of electrons.

Right now, much of San Diego’s electricity comes from local power plants that burn natural gas to create electricity. City officials want to ditch that power and replace it with green energy to meet their goal of using only clean power by 2035.

Don’t expect to see windmills or solar farms popping up all over the city just yet, though. So far, it’s unclear where all the new power will come from.

There are two paths to get 100 percent renewable energy. This will be energy, mostly solar and wind, that doesn’t emit greenhouse gases.

The city could form its own utility to buy and sell power to its 1.4 million residents. If this happens, San Diego Gas & Electric would still own its power lines but the city would choose what power runs through them.

The other path is to let SDG&E keep its monopoly but change how it does business.

The city has determined it’s possible to start its own utility but is still working on a business plan for how it would operate.

SDG&E has made a counter offer to avoid having to compete with the city. But it’s so thin on details that the company is testing the patience of city staff.

How a City-Run Utility Would Get to Green Power

If San Diego decides to compete against SDG&E, the city will join dozens of other local governments in California. By the mid-2020s, most of the power consumed in the state could come from cities that are doing their own buying and selling.

At first, these government-run utilities buy nearly all of their power from the energy market – a pool of power that is traded every day – and through relatively short-term contracts with existing power plants, hydroelectric facilities or wind and solar farms.

This power is currently pretty cheap, which allows cities to beat the prices charged by the state’s three major power companies – SDG&E, Southern California Edison and Pacific Gas & Electric. But relying on the market can mean relying on power from far away, and on power that may not reduce greenhouse gas emissions locally or at all.

Slowly, some of these local agencies – known as community choice aggregators, or CCAs – are also beginning to build their own power supplies or to sign long-term contracts.

That’s nearly everybody’s goal. It’s the only way to provide price and supply stability. It’s also the only way to satisfy environmentalists and unions.

Environmentalists want self-sustainable communities.

Unions want jobs. In particular, unions here want a guarantee that new power for San Diego will come from local projects, which unions define as anything built in San Diego or Imperial counties. So far, the unions haven’t gotten the guarantees they’re looking for from the city or from SDG&E.

“At this point, neither proposal has what we want to see in it, so we’re educating on the benefits of what we’d like to see,” said Lydia Van Note, the environmental organizer for the International Brotherhood of Electrical Workers, Local 569.

The challenge is coming up with the money to pay for local projects. Land in Southern California can be expensive – and the state’s environmental laws, ironically in this case, can be used to stall any kind of new development.

There is one major energy project already in the works: For years, the city and the San Diego County Water Authority have talked about building a giant water battery in East County that could store green energy. The project would attempt to make money off daily changes in energy prices and provide enough green energy to power 325,000 homes.

After nearly a decade in business, the oldest of the state’s CCAs, Marin Clean Energy, says it has committed $1.6 billion to build new renewable generation, mostly wind and solar farms, in California. Unions have criticized the agency in the past for buying far-away power, but most of its new projects employ union workers. Still, many of the projects are in the Central Valley or Northern California, away from Marin’s San Francisco Bay Area customers.

Power companies have argued that it’s mostly wealthy areas, like Marin County – one of the richest in the state – that are starting CCAs. The insinuation is that only elites can afford clean energy. This masks two things.

First, some low-income communities are served by CCAs. Marin also provides power to the Contra Costa County city of Richmond, which has a higher poverty rate than the state as a whole.

Second, so far, government-run power has been cheaper than the power offered by the power companies.

A new CCA, East Bay Community Energy, is expected to begin selling power later this year to most of Alameda County, which includes Oakland, a city that is both booming because of the nearby tech sector but also home to extraordinary poverty.

Anne Olivia Eldred, an organizer for the California Nurses Association, is head of East Bay Community Energy’s community advisory committee.

She’s pushing to make sure projects are built in Alameda County. Right off the bat, the agency’s power will be slightly cheaper than PG&E’s, but it will all come from the market or contracts. Edlred said she is making sure the agency has a plan to change that.

“Because you can’t launch with everything you want in the world, but if you don’t plan for it, it will be very difficult,” she said.

The first CCA in San Diego County will be Solana Beach’s. The agency is supposed to be up and running in several weeks, but City Manager Gregory Wade said this week he wasn’t sure yet where the power would be coming from. The city hired a company, Florida-based The Energy Authority, to do the purchasing.

“We will not have the breakdown of renewable procurement generation sources until sometime in June,” Wade said in an email. “As soon as we have it, we will make it available.”

If San Diego starts a CCA, it’s not clear yet when it will have enough money to begin making major local investments.

How SDG&E Would Get to Green Power

It’s also not clear what SDG&E’s plans are if it’s able to hang on to its monopoly. While it employs thousands of workers locally, including at several gas plants in the county, some of its biggest projects are not local. According to a 2016 filing, three of its 10 largest sources of renewable energy are in Montana, Mexico and Arizona. The others are in California. About 43 percent of SDG&E’s power is considered green.

SDG&E has told the city it could concentrate on building projects in San Diego and Imperial. But it’s not made a firm offer about what, when or where it would build anything. This stands in contrast to some major companies – including some, like Apple, that are not power companies – that have moved quickly to use only clean energy.

Kendall Helm, SDG&E’s director of portfolio optimization, said the company is offering the city a chance to use the company’s experience to buy the kind of power the city wants.

“It’s different than just saying, ‘You go do this and come back in year 2035 when you have completed the mission’ – they wanted to have local input,” Helm said.

A consultant hired by the city said SDG&E’s offer lacked details. But that seems intentional, because the company doesn’t seem to have a vision yet of how it would transform the grid itself.

“I do not have that personal vision of what that would look like, but what SDG&E has a vision on is what would be the most prudent process to follow to put a strategy in place,” Helm said.

City staff, though, seem a bit frustrated by this.

In an April 24 letter to the company, the city’s chief sustainability officer, Cody Hooven, said, “SDG&E’s response provided a concept for the city to consider, but did not provide a fully described program proposal.”

CCAs aren’t just trying to get new power, they also want to actively get rid of old, dirtier power.

East Bay Community Energy is working to replace a power plant in Oakland that burns jet fuel. PG&E, which was once hostile to cities trying to enter the power market, is cooperating.

Ironically, Dynegy, the same company that once owned a plant on Chula Vista’s bayfront, owns the Oakland plant. The air-polluting eyesore helped prompt Chula Vista officials to consider forming their own utility years ago. SDG&E successfully killed that effort. The plant was eventually torn down.

It’s plants like that, though, that environmentalists argue show power companies have traditionally failed to look out for communities.

“I believe the reason that CCAs developed is because there is a need to change our relationship to power,” Eldred said. “Currently it functions as a rotating debt that is paid every month and we have the opportunity to create a public resource that we can use to address the needs of our community.”

Disclosure: Mitch Mitchell, SDG&E’s vice president for government affairs, sits on Voice of San Diego’s board of directors.