1. COMMUNITY CHOICE ENERGY BUSINESS MODELS 1
Sustainable energy for cities and local governments:
An integrated assessment of Community Choice
Energy business models in California
By
Silvia Zinetti
MBA Renewables
Beuth University of Applied Sciences Berlin
October
4,
2016

2. Agenda
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1. Introduction
2. Theory and Methodology
3. Main Findings
4. Key Points
5. Conclusion & Recommendations
6. Summary

3. Community Choice Energy (CCE), also known as Community Choice Aggregation
(CCA), is a tool that allow “cities and counties to serve the energy requirements of their
local residents and businesses” (California Public Utilities Commission,
2012,
p.2)
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What is CCE?
SOURCE
CCE
DELIVERY
Utility
CUSTOMER
Residents &
Businesses

4. Ø Growing interest of innovative business models at local level
Ø Creates competition in the retail market (California 3 utilities have ≅75% of the market)
Ø Provides project financing for renewable energy and energy efficiency investments
Ø Offers many benefits to a local community
• Gives a choice to the citizens
• Local control over its energy resources
• Potential to provide electricity to its residents at lower costs
• Significant reduction of GHG emissions
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Why CCE?

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Objective
To assess CCE business model with an integrated approach that allows a deeper
analysis from multiple viewpoints to determine its replication more widely globally.
Main Research Task
Ø Design a sustainable and robust CCE business model that allows an increase of
renewable energy and energy efficiency investments at the local level.
Objective & Main Research Task

6. 2. Theory & Methodology
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• Market
forces
• Industry
forces
• Key
trends
• Macroeconomic
forces
The
Business
Model
Environment
(Osterwalder
&
Pigneur,
2010)
• 9
building
blocks
• +
2
addiZonal
ones
The
Business
Model
Canvas
(Osterwalder
&
Pigneur,
2010)
• 94
quesZons:
• Internal
criZcal
factors
• External
factors
Weighted
SWOT
Analysis
• Outlines
the
Key
objecZves
of
the
four
perspecZves
of
the
balanced
scorecard
The
Strategy
Map
(Kaplan
&
Norton,
2004)
From Business Model Evaluation to Strategic Guidance

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Multi-Case Study as Research Method
(Yin, 2014)
A Linear and Iterative Process
Ø The evidence from multi-case study
ensures stronger and more
convincing arguments for
replications (Yin, 2014)

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Sonoma Clean
Power (SCP)
Started in May 2014
190.000 customers
Marin Clean Energy
(MCE)
Started in 2010
170.000 customers
(256.000 end of 2016)
The Case Studies: MCE & SCP
Interviewees:
Ø Ms. Weisz, Dawn (CEO of MCE)
Ø Mr. Stillman, Cordel (Project manager for the start-up of SCP)

10. 3. Main Findings
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CCEs’ External Environment
CCE
California has
strong climate
& renewable
energy goals
The
primary
compeZtor
is
the
incumbent
uZlity
Policies and
regulations
affect the CCE
Growing
industry,
new
technology,
changing
consumer
behavior

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Higher % of Renewable Energy

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Competitive prices

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Ø Total cost of electricity ($/kWh) is highly influenced by the PG&E delivery rate and
the PCIA fee
Total Cost of Electricity
Genera&on(rate(
33%(
PG&E(delivery(
rate(
57%(
PCIA(fee(
10%(
Local
accountability
+ program
administration,
including the
selection of energy
sources
CPUC
determines
approximately
67% of total
electricity cost
(for residential)

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Ø CCEs reinvested part of the profits to support local renewable energy projects (MCE
reserves $0.01/kWh premium; SCP reserves 50% of the total net annual surplus)
Renewable Energy Development

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Ø Results for the overall perspective and the building blocks of both case studies
are very similar
Main Strengths/Weaknesses

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Main Opportunities

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Main Threats

19. 4. Key Points
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20. External
Environment
Mission &
vision
Plan
carefully
Customer &
local needs
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Key Points

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Two critical elements
Keep
customers in
the program
Guarantee
price stability
and
competiveness
Basis for a
sustainable
and robust
CCE
Ø Tighten customer
relationships
Ø Communicate the value
proposition and mission
through efficient and
effective channels
Ø Long-term contracts for
the energy procurement
Ø Continuous development
of renewable energy
locally

22. 5. Conclusions & Recommendations
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A model for cities and local governments
Decrease
their
overall
GHG
emissions
Shib
toward
a
more
sustainable
energy

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Recommendations for the case studies

25. MISSION: Reduce GHG emissions through the increase of local renewable
development & energy efficiency
VISION: Become 100% renewable energy by 20...
Learning
and Growth
Financial
Internal
Customer
Develop internal technical workforce skills and
competencies
Build a strong and diverse
portfolio of energy resources
aligned with Value Proposition
Maintain a diversity
of Key Partners
Design effective
communication
channels
Maximize
cost-efficient
operation
Allocate funds for
energy resources
development
Design
adequate price
charges
Strengthen
customer
relationships
Deliver customer-
focused value
service
Strategy Map

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Ø Extend the research to a broader range of stakeholders (e.g.
customer perspective)
Ø Deeper analysis on price mechanism
Ø Analysis of the external environment in other areas
Next Steps

27. 6. Summary
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Ø CCE is an innovative business model for cities and local governments
Ø The integrated assessment of CCEs business models through the Business Model
Canvas and SWOT analysis allowed an evaluation from multiple viewpoints
Ø The evidence from multi-case study ensured stronger and more convincing arguments
for replications
Ø REPEATER PROJECTS: external environment, mission & vision, plan carefully,
customer & local needs
Ø Two critical elements:
Keep customers in the program
Guarantee price stability and competitiveness
Ø TANGIBLE OUTCOMES: Specific recommendations + strategy map_9 key objectives
Ø Next steps: external environment of other areas, price mechanism, customer perspective
Summary

29. Thank you for your attention!
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Any questions?