MBA Renewables_Master Thesis_Silvia Zinetti_ppt_Final Linkedin

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

Agenda

October 4, 2016 COMMUNITY CHOICE ENERGY BUSINESS MODELS 2

1.  Introduction

2.  Theory and Methodology

3.  Main Findings

4.  Key Points

5.  Conclusion & Recommendations

6.  Summary

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)


What is CCE?

SOURCE CCE

DELIVERY Utility

CUSTOMER Residents & Businesses

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


Why CCE?


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

2. Theory & Methodology



• 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


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)


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)

3. Main Findings



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


Higher % of Renewable Energy


Competitive prices


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)


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


Ø  Results for the overall perspective and the building blocks of both case studies

are very similar

Main Strengths/Weaknesses


Main Opportunities


Main Threats

4. Key Points


External Environment

Mission & vision

Plan carefully

Customer & local needs


Key Points


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

5. Conclusions & Recommendations



A model for cities and local governments

Decrease their overall

GHG emissions

Shib toward a more

sustainable energy


Recommendations for the case studies

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


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

6. Summary



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

Thank you for your attention!


Any questions?

Documents

MBA Renewables_Master Thesis_Silvia Zinetti_ppt_Final Linkedin