Fulfilling America’s Pledge – How Cities are Taking Charge in the Next Wave of Clean Energy Procurement
December 6, 2018
By Alexandra Rotatori, Rocky Mountain Institute and Celina Bonugli, World Resources Institute
This blog post is the second in a series explaining how U.S. city, state and business leaders are working together to fulfill America’s Pledge on climate change through win-win solutions that are good for the climate, for the economy and for people’s lives and livelihoods. Learn more about America’s Pledge.
Cities in the United States are uniquely positioned to spur growth in demand for renewable energy procurement, accelerate the transition to a clean energy system, and provide visible and practical examples for the country as whole. By demonstrating to states, regions, and the federal government that it is possible to take practical, actionable steps to decarbonize electricity use, city leaders have the potential to inspire impact far beyond their limited jurisdictions. (Case in point: the Washington, D.C., City Council just unanimously voted “yes” to require 100 percent of the district’s electricity to come from renewable sources by 2032—against a background of political gridlock at the federal level.)
Today, according to the Fulfilling America’s Pledge analysis, the United States is almost halfway to reaching the original US target of forcing emissions 26 to 28 percent below 2005 levels by 2025. But cities need to go much further. Mayors understand this; many of them have committed to renewables procurement targets of 80 percent or more. If they achieve their goals, cities will increase demand for non-hydroelectric renewable generation to over 500 terawatt hours by 2025—enough to power 56 million homes.
As outlined in a recent blog by Rocky Mountain Institute principal Carla Frisch, intensified engagement by cities, states, or businesses can significantly contribute to the overall U.S. decarbonization pathway over the coming years and fulfill America’s Pledge on climate.
The American Cities Climate Challenge
Bloomberg Philanthropies’ American Cities Climate Challenge has given a huge shot of adrenaline to this effort, offering at least 20 cities a two-year acceleration program with cutting-edge resources and support to help them meet—or beat—their near-term carbon-reduction goals.
Here’s how a few of these standout cities are already driving innovative, high-impact renewable energy solutions.
Boston, Massachusetts: Aggregated VPPA
A virtual power purchase agreement, or VPPA, is a financial agreement that can be used by multiple small buyers to procure renewable energy equivalent to their aggregated electricity loads, enabling them to achieve economies of scale similar to those available to large buyers. VPPAs can be arranged so that the buyer, and in this case multiple buyers, can promote the development of a renewable energy project (and claim the associated renewable energy credits, or RECs) anywhere in the country, regardless of whether the project is located in the buyer’s electricity market.
Boston is taking the lead on using this tactic for cities, releasing this past July a request for information on potential renewable energy projects that could meet the aggregated energy demands of the 20 cities from across the United States included in the request. With this effort, multiple cities will not only be able to achieve better economies of scale, the cities can also take advantage a streamlined procurement and negotiation process. Although individually these cities may not grab the attention of national developers, their combined load is similar to that of Google, the largest corporate renewable buyer in the United States.
Minneapolis, Minnesota: Green Tariff & Community-Scale Solar
Setting an example for the wider community, Minneapolis has established an ambitious goal of procuring renewable energy for 100 percent of the load of its municipal operations by 2023. The city has taken a variety of approaches to rapidly progress toward this goal while keeping its energy costs low.
Xcel Energy’s Renewable*Connect program, which supplies Minneapolis with RECs from wind and solar farms in the upper Midwest region, is currently the city’s largest source of renewables. The city is also working with Xcel and the state’s public utilities commission to purchase an additional amount through a new five-year contract.
Minneapolis has also made considerable progress on local solar installations. Eight city facilities have on-site solar, with more currently undergoing feasibility studies.
While Xcel Energy’s program and on-site installations are key to achieving the city’s 2023 goal, both incur additional electricity costs up-front. Minneapolis is utilizing Xcel’s community solar program to offset these costs while also supporting more local solar generation. To date, Minneapolis has signed agreements for 24 solar gardens with four developers. The program requires the RECs to stay with Xcel, so they do not officially count toward the city’s goal; however, the contracts are structured so that the city will be saving money from the outset—and hopefully an increasing amount over time.
Philadelphia, Pennsylvania: Physical PPA
Philadelphia has taken a bold and unique approach to meeting its goal of sourcing 100 percent clean electricity for municipal operations by 2030. The city recently introduced a bill that would offset over 20 percent of its annual load through a 20-year, fixed-price power purchase agreement (PPA) in western Pennsylvania. The city is not only viewing this deal as a way to reach its renewable goal; it has also included an economic opportunity plan to promote the creation of new solar installation jobs in the state. Furthermore, by procuring energy from a nearby plant, the project could help improve air quality by reducing the electricity needed from dirtier generation sources. Philadelphia’s approach combines the sustainability benefits of local renewables with the scalable and economic benefits of large-scale procurement.
The Urban Sustainability Directors Network
The US cities recognized by the American Cities Climate Challenge are not the only ones tackling the climate challenge. Rocky Mountain Institute (RMI) and World Resources Institute (WRI) are also working with the Urban Sustainability Directors Network (USDN), a peer-to-peer network of local government officials from over 150 cities, both large and small, to help advance their renewable energy agendas. USDN emphasizes peer learning, so individual city successes create strong ripple effects within the broader network.
Here are a few more leading cities, all members of USDN, that are implementing innovative renewable energy projects.
Houston, Texas: Direct PPA through Utility
Houston was one of the earliest cities to move into large-scale renewable procurement, and it is currently the largest municipal buyer of renewables in the United States. The city’s municipal operations are currently powered by nearly 90 percent renewable energy, and city leaders hope to reach 100 percent by 2024.
One of Houston’s most notable achievements is its signing of a 20-year contract for 50 megawatts of solar energy with a retail electricity provider and a third-party renewable developer, which accounts for over 10 percent of the city’s annual load. The rest of Houston’s renewable energy comes from Green-E certified RECs. As the fourth-largest city in the country, in a state ranked sixth in per capita energy consumption, Houston is a leading example for other cities wondering if it’s possible to set and reach 100 percent renewable in a short time frame.
Bellevue, Washington: Utility Green Tariff
In Washington state, where customers have limited electricity choices and must work with their utility to meet their energy needs, green tariffs are a great option. Green tariffs take a variety of forms across the country but traditionally enable customers to access affordable large-scale renewable energy through their utility, where both the RECs and the energy associated from the project are delivered to the customer.
The city of Bellevue exemplifies the opportunity represented by utility green tariffs. Starting in 2019, Bellevue will purchase half of its total energy usage through Puget Sound Energy’s Green Direct program, which will reduce its overall municipal emissions by 30 percent. In addition, 10 other Washington cities, corporate buyers such as Target and REI, and several government agencies have signed up for the program. By utilizing Green Direct, Bellevue will meet its energy goals and help support the creation of new, local renewable energy.
Every City Can Lead
For many cities looking to make progress against the Paris Agreement goals, it can be hard to know where to start or what to prioritize. But between philanthropic efforts such as the American Cities Climate Challenge, the leadership of USDN, technical support from organizations like RMI and WRI, and the inspiration offered by an increasing number of fast-moving cities, now is very clearly the time to act.
To learn more about what your city can do today, download RMI’s The Carbon-Free City Handbook, or visit www.usdn.org for details on how the network is helping member cities advance ambitious renewable energy goals. Learn more about America’s Pledge at www.americaspledge.com.