NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency 

and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC.

Innovations in Voluntary 

Renewable Energy 

Procurement: Methods 

for Expanding Access 

and Lowering Cost for 

Communities, Governments, 

and Businesses
2

Acknowledgments 

This work was funded by the U.S. Department of Energy’s (DOE’s) Office of Energy Efficiency and Renewable Energy (EERE), 

prepared under task number SAO9.3110. The authors wish to thank Steven Lindenberg, Linda Silverman, and the EERE technology 

programs for their support of this work. For their thoughtful review of the document, the authors thank Blaine Collison of the U.S. 

Environmental Protection Agency; Lisa Daniels of Windustry; and Lynn Billman, Jason Coughlin, Robin Newmark, and Bethany Speer 

of NREL. The authors thank Mary Lukkonen of NREL for her editorial support and Anthony Castellano of NREL for his design work.

Notice 

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3

Table of Contents

1 Introduction 5

2 Community Choice Aggregation 9

2.1 Experience with CCA 9

2.2 Design and Implementation Considerations 11

2.3 Benefits of CCA 12

2.4 Challenges of CCA 13

3 Community Wind and Solar Programs 14

3.1 Experience with Community Wind and Solar Programs 14

3.2 Design and Implementation Considerations 16

3.3 Benefits of Community Wind and Solar Programs 16

3.4 Challenges of Community Wind and Solar Programs 17

4 Green Power Challenges and Local Collaborative Electricity Procurement 18

4.1 Experience with Green Power Community Challenges and Local Collaborative Electricity 

 Procurement 18

4.2 Design and Implementation Considerations 20

4.3 Benefits and Challenges of Green Power Challenges and Local Collaborative 

 Electricity Procurement 20

5 Bulk Purchasing of Distributed Energy Systems 21

5.1 Experience with Bulk Purchasing of Distributed Energy Systems 21

5.2 Design and Implementation Considerations 23

5.3 Benefits of Bulk Purchasing Programs 24

5.4 Challenges of Bulk Purchasing Programs 24

6 Reverse Auctions for Voluntary Purchases 25

6.1 Experience with Reverse Auctions 25

6.2 Design and Implementation Considerations 26

6.3 Benefits of Reverse Auctions 26

6.4 Challenges of Reverse Auctions 27

7 Summary and Conclusions 28

8 Endnotes 31 

9 Resources and References 32

10 Appendix 35
4

List of Figures

Figure 1. Decision trees for selecting an innovative purchasing method 6

Figure 2. Investor-owned utility, Community Choice Aggregation, and municipal electric-sector models 9

Figure 3. Capacity and number of community solar programs 15

List of Tables

Table 1. Five Methods to Encourage Voluntary Procurement of Renewable Energy Generation or Systems 5

Table 2. States with CCA-Enabling Legislation 9

Table 3. Overview of CCA Programs Offering Renewable Energy 10

Table 4. Green Power Community Purchase Requirements 18

Table 5. Top EPA Green Power Communities 19

Table 6. Overview of Innovative Renewable Energy Procurement Mechanisms 30

Table A-1. Overview of Community Solar Programs 35

Photo from iStock 6868818

Photo from iStock 19136801
5

The options described in this guide offer a variety of benefits, 

including lower cost, simplified transactions, expanded access 

to green energy, and increased impact (see Text Box 1). Each 

chapter describes one option, provides examples of its use, lays 

out design and implementation considerations, and discusses 

benefits and challenges. 

This guide explores five innovative options for voluntarily procuring renewable energy generation or systems. 

The options and their descriptions are shown in Table 1. These methods can be replicated by a variety of 

stakeholders—including local governments, not-for-profit organizations, businesses, and utilities. The three 

decision trees in Figure 1 indicate which method may best suit a particular stakeholder’s needs. 

1. INTRODUCTION

Method Description Examples

Community Choice Aggregation (CCA) 

Section 2 (page 9)

CCA programs allow communities to collectively 

choose the source of their electricity generation 

while maintaining transmission and distribution 

service from the existing provider. CCA programs 

may or may not select renewable energy supply; 

this paper focuses on such programs that do 

provide renewable energy.

Marin Clean Energy (CA)

Oak Park Community Choice Aggregation (IL)

Community wind and solar programs

Section 3 (page 14)

Community programs allow participants to 

invest in renewable energy projects; these 

programs include community solar and 

wind programs. Programs typically fund new 

local solar or wind capacity; each participant 

purchases a portion of the capacity. 

Community solar: Sacramento Municipal Utility 

District’s SolarShares Program (CA)

Community wind: Huerfano River Wind Project 

(CO)

Green power challenges and local collaborative 

electricity procurement

Section 4 (page 18)

Green power challenges are media campaigns 

sponsored by local governments, utilities, 

third-party marketers, and/or environmental 

organizations to encourage increased levels 

of voluntary green power purchasing in a 

community. Local collaborative electricity 

procurement aggregates the demand of a few 

organizations in deregulated electricity markets 

to procure renewable electricity.

Green power challenge: Lake Oswego (OR)

Local collaborative electricity procurement: 

Groundswell’s Community Power Project (D.C.)

Bulk purchasing of on-site systems

Section 5 (page 21)

Bulk purchasing programs aggregate demand 

from a group of individuals or companies 

interested in installing on-site systems, 

attracting reduced prices from vendors, and 

simplifying the purchasing process. 

Solarize Portland (OR)

One Block Off the Grid (National)

Reverse auctions for renewable energy

Section 6 (page 25)

Reverse auctions are mechanisms for one or 

more buyers to request a renewable energy 

product and have many sellers bid to provide 

the product; the bidder that can provide the 

product for the lowest price wins the auction.

World Energy Solutions (National)

Table 1. Five Methods to Encourage Voluntary Procurement of Renewable Energy Generation or Systems 

New purchasing methods have been created 

by utilities, local governments, businesses, 

and others to expand access, lower the 

cost, and simplify the process of procuring 

voluntary renewables.

1
6

Voluntary purchasing of renewable energy—through 

utility green pricing programs, competitive suppliers, 

unbundled renewable energy certificate (REC) markets, 

and installation of on-site systems—is on the rise. 

Individual, corporate, and institutional purchasing 

of renewable energy has expanded rapidly in recent 

years, increasing from 11.9 million MWh in 2006 to 

35.6 million MWh in 2010 (Heeter and Bird 2011). Onsite solar photovoltaic installations have also been 

increasing: In 2011, the capacity of distributed gridconnected PV doubled compared to 2010, reaching 

1.3 GWdc (Sherwood 2012). 

Methods for voluntarily procuring renewable energy are 

detailed in the Guide to Purchasing Green Power,

1

 which 

describes how entities can procure renewable energy 

from utilities or electricity suppliers and in the form of 

unbundled RECs. 

A number of new models have emerged through which 

participants have been able to leverage their purchasing 

power or work together to lower costs and increase 

access to renewable energy. This guide focuses on 

experience with five innovative options currently being 

used to procure renewable electricity or on-site systems. 

These next-generation methods do not provide an 

exhaustive list. Utilities, local governments, businesses, 

and others are developing new models that respond to 

market drivers. 

Figure 1. Decision trees for selecting an innovative 

purchasing method 

Buy or promote 

renewable electricity 

or RECs

Develop a project or 

on-site generation

Small scale/

Residential

Promote green 

purchasing 

within a 

community

Large scale

Buy for a 

specific 

organization

Bulk purchasing of 

on-site systems

Section 5

Community Choice 

Aggregation 

Section 2

Green power challenge/

collaborative electricity 

procurement

Section 4

Non-Governmental Organizations 

and Local Governments

Reverse auction

Section 6

Community 

solar/wind

Section 3

1

Photo from iStock 14461782
7

Promote voluntary 

renewable electricity or 

REC purchasing

Develop a project or 

on-site generation

Small scale/

Residential Large scale

Bulk purchasing of 

on-site systems

Section 5

Green power 

challenge/

collaborative 

electricity 

procurement

Section 4

Community 

solar/wind

Section 3

Utilities

Buy renewable 

electricity or RECs

Develop a project or 

on-site generation

Large scale Small scale

Bulk purchasing of 

on-site systems

Section 5

Green power 

challenge/

collaborative 

electricity 

procurement

Section 4

Reverse auction

Section 6 Community 

solar/wind

Section 3

Businesses

1
8

Text Box 1: Benefits of Innovative 

Mechanisms

Decrease costs of obtaining renewable energy. Bulk 

purchasing of on-site systems and reverse auctions 

in particular are models built on the assumption of 

providing lower cost, but Community Choice Aggregation 

(CCA) programs and community solar programs may also 

provide renewable energy at lower cost. 

Expand access to renewable energy. Innovative 

mechanisms work to increase access to renewable 

energy by making it easy to participate or by addressing 

common barriers. CCA programs with opt-out1 structures 

ensure that a portion of a customer’s electricity comes 

from renewable energy, unless that customer opts out. 

Community solar programs provide options to renters 

and to homeowners with shaded roofs.

Facilitate the process of buying renewables. Bulk 

purchasing programs relieve individuals of complex 

decisions that must be made when installing an on-site 

system. Community solar and wind programs enable 

participants to invest in a renewable energy project 

with one phone call or an online sign up. Green power 

challenges can also make it easier for participants by 

providing greater exposure to renewable options and, in 

some cases, providing alternative methods of signing up 

(e.g., at a farmers’ market). 

Make a larger impact. For communities looking to 

transition to renewable energy, many of the mechanisms 

discussed can provide solutions. Cincinnati recently 

developed a CCA program; Office of Environmental 

Quality Director Larry Falkin explained that CCA is one of 

the biggest opportunities to reduce Cincinnati’s carbon 

footprint (Simes 2012). Green power challenges and 

reverse auctions also have the opportunity for a large 

impact.

1 Opt-out programs are those where customers are automatically 

enrolled and must take action if they do not want to participate.

1

Photo by Dennis Schroeder, NREL/PIX 20373
9

Source: LEAN Energy U.S. (2012)

CCA programs can choose any type of electricity supply.2 In the 

1990s, communities in Ohio chose alternative suppliers that 

did not provide renewable energy. However, incorporating 

renewable energy has been of interest to many communities 

pursuing CCA in recent years. Other drivers for communities 

to participate in CCA programs are reduced electricity cost 

and increasing the percentage of electricity derived from local 

sources. For the most part, a CCA will purchase electricity from 

existing renewable energy projects; however, it can be designed 

to stimulate new development. Cape Light Compact helped 

establish the Cape & Vineyard Cooperative, which is developing 

18.2 MW of new solar at up to 10 local sites. Marin Clean Energy 

has 31 MW of new, local solar development under contract 

(LEAN Energy U.S. 2012).

Importantly, implementing a CCA program requires authority 

from the state. Some states passed CCA-enabling legislation as 

part of electric restructuring in the late 1990s and early 2000s. 

Illinois was the state to most recently pass legislation enabling 

CCAs, in 2009 (see Table 2). We highlight recent experience with 

this model in this guide due to the resurgence of interest in the 

mechanism and because of its potential to enable communities 

to leverage their purchasing power to procure renewable energy.

2.1 Experience with CCA

Table 3 provides an overview of CCA programs offering or 

planning to offer renewable energy options as of March 2012. 

Illinois is currently a hotbed of CCA development, though 

additional communities in California and Massachusetts are 

also pursuing programs. 

CCA allows communities to determine their electricity generation sources by aggregating the community 

load and purchasing electricity from an alternate electricity supplier while still receiving transmission and 

distribution service from their existing provider. CCAs are sometimes described as a hybrid between services 

offered exclusively by investor-owned utilities (IOUs) and municipal utilities (see Figure 2). 

CCAs allow for local control of the power source, like in the traditional municipal model, without having to 

manage transmission lines or provide customer service.

2. COMMUNITY CHOICE AGGREGATION

IOU PURCHASES POWER

TRADITIONAL INVESTOROWNED UTILITY MODEL

HYBRID COMMUNITY CHOICE 

AGGREGATION MODEL

TRADITIONAL MUNICIPAL 

UTILITY MODEL

CCA PURCHASES POWER MUNICIPAL PURCHASES 

POWER

IOU MAINTAINS 

TRANSMISSION LINES

IOU MAINTAINS 

TRANSMISSION LINES

MUNICIPAL MAINTAINS 

TRANSMISSION LINES

IOU PROVIDES 

CUSTOMER SERVICE

IOU PROVIDES 

CUSTOMER SERVICE

MUNICIPAL PROVIDES 

CUSTOMER SERVICE

State Year CCA-enabling 

legislation passed

Massachusetts 1997 (HB 5117)

Ohio 1999 (SB 3)

Rhode Island 2002 (H 7786)

California 2002 (AB 117)

New Jersey 2003 (P.L. 2003, CH 24)

Illinois 2009 (HB 362)

Table 2. States with CCA-Enabling Legislation

Figure 2. Investor-owned utility, Community Choice Aggregation, and municipal electric-sector models

2
10

In 2002, Cape Light Compact in Massachusetts was the first 

CCA in the nation to offer a green option. It is currently offered 

at a price premium of $0.009/kWh for 50% green power and 

$0.016/kWh for 100% green power. The program requires 

customers to opt-in (i.e., customers must take action to sign 

up), and it had approximately 1,113 green power accounts as of 

March 2012 for total annual sales of 7,318 MWh of green power. 

Three additional Massachusetts communities have submitted 

CCA implementation plans. One of those, the Hampshire 

Council of Governments, is planning to offer a renewable 

energy component.

California is soon to have two CCA programs. Marin Clean 

Energy (MCE) began operating in 2010, offering the Light Green 

option (50% renewable) and the Deep Green option (100% 

renewable). MCE had approximately 8,000 accounts as of May 

2011 and is expected to reach 100,000 accounts by the time 

the program is fully rolled out in July 2013. Further details are 

provided in Text Box 2. 

CleanPowerSF is preparing to launch in 2012, providing a 

100% green power option. The San Francisco Public Utilities 

Commission voted in December 2011 to move forward with the 

program, but the board of supervisors will also need to approve 

the plan. CleanPowerSF estimated that residential customers 

would pay an additional $7.00 to $54.50 per month for 100% 

green power, depending on electricity usage. 

Additional communities in California are exploring CCA 

options. Sonoma County is moving forward with a CCA 

program, and the East Bay communities of Berkeley and 

Richmond, in conjunction with the East Bay Municipal Utility 

District, which is a water agency with 350,000 accounts, are 

exploring CCA options (Matson 2012).

While all of those communities may not adopt CCAs or select 

renewable energy, there is large potential in Illinois for CCAenabled renewable energy purchasing. Potential programs in 

Location Program 

Name

Percent of 

Renewable 

Energy 

Content in 

CCA Product

Type of 

Renewables Start Date Premium

Number of 

Electricity 

Customer 

Accounts

Estimated 

Annual 

Sales of 

Renewable 

Energy 

(MWh)

Marin County, 

CA

Marin Clean 

Energy

50% or 100% 

green power

Wind, solar, 

biomass 2010 100% is $0.01/kWh extra >8,000 291,000 MWh 

(2013) 

San Francisco, 

CA CleanPowerSF

Negotiating 

for 100% green 

power

Under negotiation

Expected in 

2012

Finalizing 

terms, conditions, and rates

Estimated at 

75,000*

Not available

Cape Cod, MA Cape Light 

Compact

50% or 100% 

green power

Run-of-river 

hydro, landfill 

gas, wind, solar

2002

$0.009/kWh– 

$0.016/kWh 

premium

1,113** 7,318 MWh**

Cincinnati, OH

Cincinnati 

aggregation 

program

100% green 

power

Partially from 

local solar 

projects

2012

Average 

residential 

annual savings 

of $133 

52,400 eligible Not available

Oak Park, IL

Oak Park 

electricity 

aggregation 

program

100% green 

power

Wind 2012 

25% discount 

to standard 

supply

~20,000 171,000 MWh 

Table 3. Overview of CCA Programs Offering Renewable Energy

In “opt-out” programs, all eligible 

customers are enrolled automatically and 

it is up to the customer to contact the CCA 

program if they wish to be removed.

* Sabatini (2011a) **Soares (2012) 

2
11

Illinois have not faced opposition from incumbent suppliers as 

communities in California have, perhaps because the Illinois 

electricity market is already deregulated. 

Oak Park, Illinois, began its CCA in 2012, providing a 100% 

wind product sourced from within the state at a price 

discount of 25% to standard supply. Prices for distribution 

and transmission remain the same. With approximately 

20,000 accounts, the CCA has total annual renewable sales of 

171,000 MWh. 

Evanston and Peoria, Illinois, have selected renewable energy 

suppliers, though program designs are being finalized. 

Evanston has contracted to provide a 100% renewable energy 

product at a rate about 38% lower than the city’s current 

electric rate. 

The future price difference between CCAs and existing supply 

in Illinois remains to be seen. Existing supply contracts were 

entered into when power prices were higher, but these are set 

to expire in June 2013 (Lydersen 2012). 

In Ohio, Cincinnati has launched its CCA program for residents 

and small businesses. The city selected a supplier and is 

currently negotiating the contract. 

2.2 Design and Implementation 

Considerations 

CCA programs are designed by local governments (often with 

assistance from consultants) within any confines of CCAenabling legislation.3

 Programs differ in terms of the type of 

renewable offer, price premium, eligible customer classes, optout provisions, and the type of renewables selected. 

Opt-out provisions. CCAs can be designed either as “opt-in” 

or “opt-out” programs. With opt-out programs, all eligible 

customers are enrolled automatically, and it is up to the 

customer to contact the CCA program if they wish to be 

removed. State CCA laws may specify conditions for whether 

programs are opt-in or opt-out. For example, in Illinois, 

programs can be designed either way, but opt-out programs 

require approval through a referendum in a general election. 

Opt-out rates (the percent of eligible customers that decide 

to remain with the incumbent supplier) are typically less than 

20%. In Marin County, which was heavily targeted with antiCCA messaging, the opt-out rate was around 20%. In Oak Park, 

the opt-out rate has been around 3% to 4%; an additional 5% 

to 6% of residents are not eligible to participate for a variety of 

reasons. The opt-in rate in Cape Light Compact has been 1,113 

customers out of approximately 150,000 customers—or less 

than 1%. 

Text Box 2: Marin Clean Energy

Using legislation passed by California in 2002 (AB 117) as a 

guide, residents of Marin County, California, administered 

a survey in 2007 in order to gauge local public interest in 

increasing the community’s use of renewable energy. The 

response to that survey was overwhelmingly positive:

•	 90% of residents said that reducing greenhouse gases 

was important to them, and 74% said they would 

support the local government becoming a provider of 

greener energy.

•	 69% of residents said they would pay up to 5% more, 

while 58% said they would pay up to 10% more for an 

increase in renewable energy (MCE 2012).

The Marin Energy Authority (MEA) was established as 

a public agency in December 2008 with the target of 

“significant greenhouse gas emissions reductions” (MEA 

2011). In May 2010, the MEA launched MCE.

Based on the market insight provided by the 2007 

public survey, MCE developed two levels of green power 

procurement: Light Green, which provides 50% renewable 

energy at prices competitive with traditional energy 

generation, and Deep Green, which provides 100% 

renewable energy at a price increase of $0.01/kWh. MCE 

has retained Shell Energy North America as their renewable 

energy provider, and Pacific Gas & Electric will remain the 

transmission and distribution provider.

Details within AB 117 provided a key piece to the MCE 

program success: Customers are automatically enrolled in 

the CCA unless they explicitly opt out of the program during 

the initial 60-day period following the commencement of 

service. MCE achieved roughly an 80% rate of participation 

in the program’s initial phase of implementation. In May 

2011, the number of MCE accounts totaled over 8,000. 

MCE expects similar rates of participation going forward 

into Phases II and III, due to be complete in August 2012 

and July 2013, respectively. MCE expects to reach a total of 

roughly 100,000 accounts by the end of Phase III. MCE’s 

ultimate goal is to meet the demand of these customer 

accounts by acquiring 100% of their energy supply from 

renewable energy sources (MEA 2011).

Through a combination of demand-side efficiency 

incentives, a two-tiered subscription system catering to 

cost-sensitive and environmentally progressive customers 

alike, a “do nothing” program opt-in strategy, high levels of 

public support, and favorable net-metering conditions, the 

MEA expects to achieve a 33% renewable energy supply by 

2015. The achievement of that goal would equal California’s 

renewable portfolio standard (RPS) 5 years ahead of 

schedule.

2
12

Type of offer. CCA programs can be designed to offer different 

percentages of renewable energy. While all existing programs 

offer a 100% renewable energy product, some programs 

include other percentage offers. The MEA and Cape Light 

Compact both offer 50% and 100% renewable energy products. 

Oak Park only offers the 100% renewable product because the 

rate for 100% renewables was comparable to the existing utility 

rate for traditional power. 

Price premium. The price premium indicates how much a CCA 

product costs relative to standard supply. Premiums in current 

programs vary from zero (Oak Park) to $0.01–$0.02/kWh (Cape 

Light Compact). As discussed later, some CCA programs are 

able to offer products at lower cost than standard supply. 

Eligible customer classes. Due to differences in state 

regulation, not all customer classes (residential, commercial, 

and industrial) are eligible to participate in all CCA programs. 

In Illinois, industrial and large commercial classes can choose 

their supplier, without the existence of a CCA. Therefore, Oak 

Park’s CCA is only open to residential and small commercial 

customers.

Type of renewables. CCA programs can determine the type of 

energy they wish to supply. Communities may want to support 

local resources or may favor one technology type (e.g., wind) 

over another. Oak Park is using 100% wind from Illinois under 

a 2-year contract with Integrys Energy Services. Marin County 

uses wind, solar, and biomass, and Cape Light Compact uses 

run-of-river hydro, landfill gas, wind, and solar. In Oak Park, 

the city is considering a longer-term (5-year) contract with a 

wind developer to help support the construction of new wind 

projects.

2.3 Benefits of CCA 

CCA can provide lower-cost renewable energy products, 

make a large environmental impact, provide an easy way for 

consumers to support renewable energy, and access lowercost, tax-exempt debt by using the borrowing capacity of the 

local government.

Reduced-cost renewable energy. Through aggregation, 

communities can solicit renewable energy supply at a 

potentially lower cost than individuals could solicit on their 

own. A main driver of CCA adoption nationally has been the 

reduced electricity rates resulting from competition between 

suppliers. 

The City of Oak Park obtained rates for 100% renewable energy 

that were at a discount to standard electricity rates. In Illinois, 

communities receive renewable power for an average of 25% 

less than standard power. In Massachusetts, there is a small 

premium for 100% renewable energy, with the default supply 

being 6% cheaper on average. MEA offers competitive rates for 

partially renewable products, while there is a small premium for 

100% products (Marshall 2012). 

Large environmental impact at the community level. 

Many communities are striving to meet already established 

carbon reduction and/or renewable energy targets. Given 

that electricity consumption makes up a large part of a city’s 

carbon footprint, developing a renewable offer can produce 

substantial carbon savings. According to Dawn Weisz of MEA, 

“When we were reviewing the GHG reductions that would 

come from various measures we realized that all were very 

small compared to a CCA, which would take over choosing 

power sources. With one fell swoop you could eliminate all 

GHG from power sources” (Braly 2011). In Cincinnati, Office 

of Environmental Quality Director Larry Falkin explained that 

approximately 85% of the city’s energy currently comes from 

coal, and that a CCA “is probably the biggest opportunity 

we’ll have over the next several years to dramatically reduce 

Cincinnati’s carbon footprint” (Simes 2012).

Easy for consumers to procure renewable energy. In optout CCA programs, no action is required on behalf of the 

consumer in order to choose renewable energy. This results in 

larger usage of green power; opt-out CCA programs can have 

participation rates of more than 80%. Traditional utility green 

pricing programs (which are opt-in programs) have average 

participation rates of only around 2%, with the top programs 

reaching 5.3%–21.5%. 

Access to low-cost, tax-exempt debt. CCAs may contract for 

supply or develop and own supply-side resources. MCE has 

contracted with Shell Energy for supply but is also developing 

local renewable energy projects as part of their supply mix. In 

order to obtain electricity supply, public entities can use lowcost, tax-exempt debt (Speer 2011), while IOUs have a higher 

cost of capital in order to cover debt, equity, and income taxes. 

In 2008, MCE estimated its cost of capital conservatively to be 

in the range of 5.5% to 7.0%, while noting that the incumbent 

supplier, Pacific Gas & Electric (PG&E), had a cost of capital 

between 12% and 13% (MCE 2008). 

A CCA “is probably the biggest 

opportunity we’ll have over the next 

several years to dramatically reduce 

Cincinnati’s carbon footprint.”

— LARRY FALKIN, CINCINNATI OFFICE OF 

ENVIRONMENT QUALITY, DIRECTOR

2
13

2.4 Challenges of CCA 

CCAs require enabling legislation, can potentially have 

significant start-up costs, may face resistance from the 

incumbent electricity supplier, and require education and 

outreach.

Enacting CCA-enabling legislation. In order for a community 

to establish a CCA, the state must have established a CCA 

mechanism through legislation. CCAs change the nature of 

the existing supplier—in regulated states, it challenges the 

monopoly granted to incumbent utilities, and in deregulated 

states, CCA changes the role of retail suppliers. 

Start-up costs can be significant. Start-up activities include 

surveying consumers for potential interest, developing an 

implementation plan, educating consumers about new 

options, and soliciting offers for supply. Start-up costs for a 

CCA program can be significant, particularly for communities 

that are pioneering the effort in their state. In San Francisco, 

planning efforts for the CleanPowerSF program cost almost 

$3 million. Start-up costs, including a $15 million escrow 

account in case the CCA was terminated before contract 

expiration, were expected to cost $19.5 million (Sabatini 

2011b). In Oak Park, the city worked with the Galvin 

Electricity Institute to develop a program. City staff prepared 

educational campaigns and relied on environmental groups 

to campaign for the CCA initiative passage. Costs for future 

CCA development should be lower than those paid by the 

pioneering communities. 

Possible resistance from incumbent electricity supplier. In 

California, MCE faced strong opposition from the incumbent 

electricity supplier, PG&E. In May 2010, the California Public 

Utilities Commission (CPUC) notified PG&E to cease the use 

of unapproved opt-out mechanisms that were in violation of 

tariffs and rules (CPUC 2010a). In a separate docket, the CPUC 

refined marketing rules for CCA, ordering that utilities would be 

subject to penalties for marketing or advertising that is untrue 

or misleading (CPUC 2010b). In Oak Park, however, there was 

no opposition from the incumbent electricity supplier, likely 

due to the fact that retail electricity is already deregulated in 

Illinois. 

Need for education and outreach. In Oak Park, the biggest 

challenge was getting people to think about where their 

electricity comes from. In the run-up to the city’s referendum 

for approval to pursue a CCA, the city was limited to citizen 

education—it could not campaign for or against the 

referendum. Oak Park organized forums, created an energy 

committee, and partnered with environmental groups to 

educate local residents. 

2

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14

3.1 Experience with Community Wind and 

Solar Programs

Cooperative ownership schemes, in which individuals in 

a community own a portion of the project and receive 

the associated economic benefits, have been a successful 

development model for wind energy projects in Europe for 

decades. Similar models for both wind and solar are now 

growing in popularity across the United States. 

Community wind and solar programs (also known as “solar 

gardens”) allow customers to invest in a wind project or a 

solar system and receive some of the benefits of the project’s 

production in return, such as tax incentives, utility bill credits, 

and production incentive payments. A local utility, business, 

school, non-profit organization, or group of citizens may initiate 

a community renewables program. 

Although community wind and solar programs often offer the 

project shares to residents and businesses that are close to the 

project site, the community model can be modified in several 

ways. The share offer can be initially made to those in the 

immediate vicinity of the project and then opened to a broader 

population later if all the shares are not sold. Alternatively, 

the “community” to which the share offer is made may not be 

defined by geography. For example, shares may be offered to 

all members of a specific environmental organization or other 

interest group, regardless of the members’ locations. 

Community renewables project ownership can be structured in 

a variety of ways. 

•	 The 18 investors in the 80-kW Holy Cross Energy 

photovoltaic project in El Jebel, Colorado, purchased 

shares at an upfront cost of $3.15/W. In return, they receive 

$0.11/kWh, according to the system’s production and the 

number of shares purchased. The credit appears directly on 

their monthly electricity bill (Green Power Network 2011a).

Text Box 3: Crowdfunding Renewable 

Energy

Crowdfunding renewable projects differs slightly from 

community solar or wind projects in that crowdfunding 

participants provide upfront capital (as a loan) to support 

the development of the project rather than purchasing 

shares of the project. Crowdfunded programs allow anyone, 

regardless of utility territory, to invest in the development 

of a renewable project. Crowdfunding is used to finance 

many types of projects, not just renewable energy. Kiva and 

Kickstarter, for example, are two platforms through which 

individuals can support a wide variety of projects. 

Solar Mosaic (www.solarmosaic.com) is a crowdfunding 

program based in California, specifically for solar 

development. It gives anyone (regardless of utility 

territory) the opportunity to invest in the development of 

a solar facility, which is typically hosted by a non-profit 

organization. To date, Solar Mosaic has financed five solar 

facilities totaling 73 kW by aggregating investments of over 

400 people, for a total of more than $350,000. Solar Mosaic 

offers a full return of each individual’s principal over 10 

years. In April 2011, Solar Mosaic filed with the Securities 

and Exchange Commission (SEC) and several states to offer 

“Solar Power Notes” that would offer a return on investment 

(Revkin 2012). Details are not yet available on how the 

return on investment would function. The JOBS Act, signed 

in April 2012 by President Obama, grants crowdfunded 

projects raising up to $1 million annually an exemption 

from SEC securities regulation, allowing them to provide 

a return on investment, provided that they file initial and 

periodic disclosures to the SEC.

Community renewables programs provide opportunities for individuals to participate and benefit from 

larger-scale renewable energy projects located in their vicinity. To date the focus of community renewables 

has been on wind and solar projects, although the models could be used to develop other types of 

renewable energy technologies as well. Several ownership models have evolved for community wind 

projects, some of which are detailed below. While many definitions of community solar programs exist, 

this guide focuses on community solar programs organized or hosted by a utility company. The emerging 

crowdfunding model is discussed in Text Box 3. 

3. COMMUNITY WIND AND SOLAR PROGRAMS

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15

•	 New Centennial Power, LLC, a company formed and 

jointly owned by community members, is developing 

the 9-MW Huerfano River Wind Project near Walsenburg, 

Colorado. Joint owners receive an annual rate of return 

on their investment, based on the company’s profits (New 

Centennial Power 2012). 

•	 The “Minnesota Flip” structure helps community wind 

projects take full advantage of the national investment 

tax credit. A limited liability company (LLC) is formed to 

own and operate the wind project. The LLC is owned in 

partnership by local investors and a large equity investor 

that has greater tax appetite. For the initial years of 

the project, the equity investor owns the majority of 

the project, receives investment tax credits, and makes 

management payments to the local investors. After the 

project has received all the tax credits it can produce, or 

the equity investor has received its pre-agreed internal 

rate of return, the ownership flips such that local investors 

own the majority of the project and receive the majority 

of net revenue distributions over the rest of the project’s 

remaining lifetime. The Minnesota Flip structure is a 

broadly replicable and increasingly popular ownership 

model (The Minnesota Project 2009; Windustry 2012). 

Community wind was initially spurred by the passage of 

Minnesota’s Community Based Energy Development, or 

“C-BED”, legislation in 2005. Other states, including Illinois, 

Iowa, Massachusetts, Nebraska, Oregon, Washington, and 

Wisconsin, have followed Minnesota’s lead and adopted their 

own C-BED legislation. 

Some key elements of the Minnesota legislation ensure that 

the benefits of the project are spread broadly through the 

community to local individuals. Each C-BED project must 

obtain a local resolution of support. Owners of the projects 

must be local, and ownership rules limit the percentage that 

any individual may have in the project. The power purchase 

agreements of C-BED projects must provide levelized cash flow 

to the project owners. In addition, public utilities are required 

to consider C-BED projects when they make new energy 

acquisitions and to set a special tariff for C-BED projects, based 

on net present value. Utilities are also encouraged to assess 

interconnection issues for C-BED projects. 

Community solar programs appeared in the United States 

around the same time as community wind but were somewhat 

slower to take off, perhaps due to higher technology costs. In 

2011 there was substantial growth in community solar projects, 

however, with 10 new programs developed that year alone 

(see Figure 3). Overall, the number of programs has increased 

from 3 in 2008 to nearly 30 projected by the end of 2012. The 

appendix provides a list of community solar programs and 

relevant program details.

Number of programs added annually

Cumulative capacity (kw)

12,000

10,000

8,000

6,000

4,000

2,000

0

12

10

8

6

4

2

0

2006 2007 2008 2009 2010 2011 2012

(as of 8/15)

Number of new programs

Cumulative capacity (kW)

Figure 3. Capacity and number of community solar programs

Community wind and solar programs allow 

customers to invest in a wind project or a 

solar system and receive some of the benefits 

of the project’s production in return.

Source: NREL (2012)

Note: Only the residential portion of Salt River Project’s community solar facility 

is included above. An additional 7.8 MW are designated for purchase by schools.

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In 2011, Salt River Project, a utility in Arizona, established the 

largest community solar program on a capacity basis with 

the launch of its community solar program. Salt River Project 

offers blocks in a 20-MW solar facility, of which 7.8 MW are 

designated for purchase by schools and 2.0 MW are designated 

for residential purchase (Green Power Network 2011b). 

Some community solar programs have expanded over 

time, indicating the popularity of the model. For example, 

Ellensburg, Washington, began with a 27-kW system in 2006 

and expanded the program to 111 kW. In Colorado, the Clean 

Energy Collective, working with Holy Cross Energy, expanded 

its program from 80 kW in 2010 with a new 858-kW system 

installed in 2011. 

3.2 Design and Implementation 

Considerations 

In developing community-funded programs, the following are 

important design and implementation issues:

Program size. Community solar and wind programs can be 

developed regardless of the size of the system. Some programs 

are just a few kilowatts (Bainbridge Island’s 5-kW program), 

while others are on the megawatt scale (Salt River Project’s 

9,840-kW program). 

Upfront cost. Community solar programs typically allow 

customers to purchase a panel or unit upfront (sometimes 

referred to as a “share” or “slice”), though some programs 

allow customers to purchase smaller increments. Upfront 

costs for panels typically range from $3–$6/W for a minimum 

purchase of one panel (around 200 W). A few programs allow 

customers to purchase smaller increments. Trico Electric, a 

utility in Arizona, allows customers to purchase quarter panels 

at $230. Delta-Montrose Electric Association (Colorado) allows 

customers to purchase blocks of 2.67 W for $10 each. Tucson 

Electric Power (Arizona) bases the premium on 150-kWh blocks 

at $3 per block. 

Bill credits. Community solar participants generally receive a 

bill credit per kilowatt-hour based on the electricity production 

of their share. Rebates per kilowatt-hour typically range from 

$0.07/kWh to $0.11/kWh. For example, Seattle City Light offers 

$0.07/kWh generated. In addition, some customers may receive 

upfront rebates (payments based on the kilowatt purchased) 

or incentive payments from the state (in Washington, up 

to $1.08/kWh can be obtained). Colorado Springs Utilities 

offers a one-time upfront rebate of $1.08/W, up to 30% of the 

participant’s investment. 

Community inclusion. For community wind projects in 

particular, broad community participation in the planning, 

implementation, and economic benefits of the project can 

play a role in public acceptance and the ultimate success of the 

project. For instance, community members can be included 

in relevant siting decisions; local businesses can be used in 

construction and maintenance activities; and local schools may 

benefit from educational opportunities offered by the project. 

In the United Kingdom, a wind turbine in the town of Swaffham 

was constructed with a viewing platform under the nacelle, 

and for a small fee tourists can climb a stairwell up the turbine’s 

tower to get a bird’s eye view of the region (EcoTech Centre 

2012). 

Renewable energy certificate treatment. RECs represent the 

environmental attributes of 1 MWh of electricity generation. 

RECs can be sold separately from electricity generation. 

Without ownership of RECs, environmental claims cannot 

be made. For example, if a commercial customer were to 

participate in a community solar program where the RECs 

stayed with the local utility, the commercial customer could 

not advertise that it was solar powered. Community solar 

programs generally, but not always, allocate the RECs to the 

utility. Similar to many utility solar incentive programs, which 

provide residential and commercial customers with an upfront 

rebate to install solar, community renewables projects often 

ensure that RECs stay with the utility, allowing it to meet any 

RPS or other environmental target. In theory, the allocation of 

the REC to the utility should result in a lower purchase cost to 

the participant, although each case may vary. Participants not 

receiving RECs may have other reasons for joining community 

programs, such as supporting local development.

3.3 Benefits of Community Wind and 

Solar Programs 

Community wind and solar programs offer many benefits, 

including: expanded access to renewables, ease of 

participation, cost efficiencies, local connections, and local 

economic benefits. The program design is highly flexible and 

encourages innovative solutions to local challenges.

Expands access. Community programs allow renters and 

homeowners with poor solar resource or shading to receive the 

financial benefits of renewable energy.

Community members can be included in 

relevant siting decisions; local businesses 

can be used in construction and maintenance 

activities; and local schools may benefit from 

educational opportunities offered community 

renewables projects.

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Easy to sign up. Residents 

can be overwhelmed by the 

process of installing solar 

on their home. Community 

programs allow customers 

to “go solar,” or participate in 

a wind energy project, with 

one phone call, although 

project organizers may 

spend years developing the 

project. 

Cost efficiencies of a larger 

project or procurement. 

Depending on the size of the community solar project, there 

could be cost savings from building one large project rather 

than many small distributed systems, which should be reflected 

in the cost to purchase from a community program. 

Increase connections and reduce tensions. Wind (and solar) 

projects that include local ownership and involvement are 

more likely to be publicly accepted. Community renewables 

programs help make local connections between the variety of 

stakeholders involved. Positive models encourage community 

discussion and involvement in the earliest stages of the 

project. These projects can be a source of community-building 

and pride within a locality, in addition to the economic and 

environmental benefits they provide.

Increased economic development impacts. Research has 

shown that community projects provide more jobs and 

increased economic impact over traditional energy projects. A 

U.S. Government Accountability Office study found that local 

ownership of wind systems generates an average of 2.3 times 

more jobs and 3.1 times more local dollar impact compared to 

other projects. Overall, such studies indicate that communitybased wind projects provide around 1.5 to 3.4 times the 

economic benefit to communities during the operation of the 

project than projects owned by absentee companies (Lantz 

and Tegen 2009). 

Flexibility. Community renewables programs may be initiated 

by utilities, existing groups, and/or a few local citizens. The 

programs may define “community” in a variety of ways and do 

not have to be dependent on a participant’s physical location. 

Community solar membership is often tied to the sponsoring 

utility’s service territory, but if participants move they typically 

can keep their membership (if they move within the utility 

service territory) or sell the membership (if they move outside 

of the utility service territory). A variety of mechanisms for 

return on investments can be used. 

Encourage innovative ideas. Community projects often spawn 

creative solutions to challenges. Community renewables 

projects have been used to test innovative financing models 

and as a way for equipment manufacturers to enter new markets 

with which they have limited experience (Bolinger 2011). 

3.4 Challenges of Community Wind and 

Solar Programs 

Community programs certainly face challenges. Policy 

favors large-scale investors/developers, programs have long 

development times, there is a need to fund initial project 

development costs, and there are restrictions on offering a 

return on investment.

Policy favors large-scale investors/developers. Existing 

policy structures often create barriers to the development 

of community-owned projects. The federal production tax 

credit, for instance, is designed to make use of the tax appetite 

of large-scale investors, thus government entities and small 

investors often cannot take advantage of tax credits. It can 

also be difficult for community-owned projects to obtain 

loans through traditional avenues. Public entities may also not 

be able to make use of options like Clean Renewable Energy 

Bonds.

Long development times. Community renewables project 

leaders need to be persistent. They should be prepared for 

many hurdles and for long development times. David Brosch 

of University Park Community Solar noted, “It took us over two 

years to develop our project structure and only two months to 

find our members” (DOE 2011, p. 34). Some community wind 

projects have experienced development times of 5 years or 

more (Bolinger 2011; The Minnesota Project 2009).

Need to fund initial project development costs. Those 

planning community renewables projects often focus their 

efforts on raising funds for construction and permanent 

financing costs; however, many such projects will incur 

significant costs before even getting to the construction 

financing stage. Raising the seed capital needed to cover the 

initial costs of developing community renewables projects can 

be a significant hurdle for some community projects (Bolinger 

2011).

Restrictions on offering a return on investment. Community 

renewables programs should be aware of potential securities 

regulation. In order to avoid any appearance of selling 

securities, the DOE’s A Guide to Community Solar recommends 

avoiding “references to ‘shares’ or ‘stock,’ since those terms 

are the classic ones used to describe securities issued by a 

corporation and might create an expectation of profits and 

other rights customarily associated with stock or shares” (DOE 

2011, p. 33).4

3

Photo from iStock 10468794
18

Local collaborative electricity procurement aggregates the 

demand of a few organizations in deregulated electricity 

markets to procure renewable electricity on a voluntary basis. 

This mechanism is similar to CCA but only involves a limited 

number of organizations, which must be located in states with 

retail choice. Because retail choice states allow customers to 

switch electricity suppliers, customers can band together to 

negotiate a better price or product. This type of procurement 

has happened in the Washington, D.C., area through the 

assistance of a non-profit organization, Groundswell. 

Groundswell does not supply electricity but rather coordinates 

large customer procurement in retail choice states.

Though not developed as “challenges” or campaigns, other 

initiatives have sought to highlight the ability to purchase 

renewable energy in a given state. The ChoosePAWind initiative 

provides links to retail electricity suppliers and REC marketers 

sourcing supply from Pennsylvania wind facilities. The initiative 

also highlights the economic benefit of purchasing from local 

renewable facilities. A similar service focused on New York, 

Green Power NYC, provides links to competitive suppliers 

sourcing renewable energy from New York State facilities. The 

effort is sponsored by the Natural Resources Defense Council 

and the Alliance for Clean Energy New York. 

4.1 Experience with Green Power 

Community Challenges and Local 

Collaborative Electricity Procurement 

Green power challenges proliferated in the late 2000s as a 

way to boost involvement in utility green pricing programs. 

More recently, local collaborative electricity procurement 

has emerged as a way for organizations to buy renewable 

electricity at lower cost.

Green Power Challenges 

Challenges were particularly active in Oregon, where Portland 

General Electric (PGE) worked with numerous communities to 

develop and implement challenges. In 2006, PGE worked with 

the City of Salem, Oregon, which ran a challenge for 6 months 

with the goal of attracting upwards of 500 customers. Since 

then, PGE has also worked with the City of Beaverton, the City 

of Gresham, and the City of Lake Oswego (see Text Box 4). 

Each of these cities, along with 28 others, are also part of U.S. 

EPA’s Green Power Communities program, which provides 

public recognition to communities for meeting or exceeding 

minimum renewable energy purchase requirements. Purchase 

requirements vary depending on the community’s annual 

electricity usage (Table 4).

Community Annual 

Electricity Usage

Minimum Green Power 

Community Purchase 

Requirements 

>100,000 MWh 3%

10,001–100,000 MWh 5%

1,001–10,000 MWh 10%

≤1,000 MWh 20%

Table 4. Green Power Community Purchase Requirements 

Source: U.S. EPA (2012a) 

Communities can encourage members to purchase voluntary green power by developing a green 

power challenge. In many cases, communities partner with local utilities, third-party marketers, and/or 

environmental organizations to raise awareness of green power purchasing options. With buy-in from a 

large stakeholder group, community challenges can increase participation in utility green pricing programs 

by providing multiple communication avenues. Short-term green power challenges set goals for having 

a certain fraction of their residents and businesses purchase green power within a specified time, usually 

around 6 months. 

4. GREEN POWER CHALLENGES AND LOCAL COLLABORATIVE 

ELECTRICITY PROCUREMENT

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19

Since the program launched, the purchasing by the top 

community has increased from 163 million kWh in September 

2010 (Santa Clara, California) to 752 million kWh in June 

2012 (Washington, D.C.). Table 5 provides a list of the top 

five EPA Green Power Communities in terms of annual green 

power usage and the green power percent of total electricity 

use. Green power sales in these communities are heavily 

dominated by large purchases by non-residential participants. 

Communities can play a large role in the voluntary green 

power market; EPA’s Green Power Communities are currently 

collectively buying more than 4.2 million MWh of green power 

annually, which represents 12% of all voluntary sales in 2010. 

Local Collaborative Electricity Procurement 

Model 

The local collaborative purchasing model aggregates 

purchasing power from existing community organizations in 

retail choice states to solicit competitive bids for renewable 

electricity generation. Instead of purchasing shares of a 

renewable facility or providing upfront capital, this model seeks 

to procure renewable electricity from one alternative supplier. 

By aggregating the electricity demand of multiple participants, 

cost savings can be achieved. Groundswell, a Washington, 

D.C.-based non-profit organization, operates the Community 

Power Project, which works with neighborhood organizations 

and faith institutions. For example, First Trinity Lutheran 

Church partnered with other Washington, D.C., churches to 

buy wind power and saved $6,000 annually. Groundswell 

estimates that since 2011 the Community Power Project has 

procured $5 million in renewable electricity, with participants 

saving up to 20% annually on energy bills (Groundswell 2012). 

Groundswell has organized 109 organizations to procure 

56,000 MWh of renewable energy, the majority of which (98%) 

was Green-e Energy Certified wind (Witherbee 2012). Although 

the Community Power Project operates in retail choice market 

and procures bundled renewable electricity (energy and RECs), 

this model could be used for unbundled REC purchases as well.

Rank Community

Annual Green 

Power Usage 

(MWh)

1 Washington, D.C. 752,505

2 Portland, OR 708,667

3 Hillsboro, OR 678,600

4 Philadelphia, PA 593,309

5 Aurora, IL 250,975

Rank Community

Green Power 

Percent of Total 

Electricity Use

1 Oak Park, IL 91.9%

2 Brookeville, MD 45.7%

3 Hillsboro, OR 33.7%

4 Swarthmore, PA 27.9%

5 Corvallis, OR 21.2%

Table 5. Top EPA Green Power Communities (as of June 19, 2012)

Text Box 4. Green Power Challenge in Lake 

Oswego, Oregon

In 2009, Lake Oswego, Oregon, the sixth-largest city in the 

Portland area with a population of 36,000, launched a 2-month 

Green Power Challenge. Lake Oswego had been looking at 

sustainability issues for the past 10 years, and in 2007 adopted a 

sustainability plan that, among other things, examined energy 

use. PGE approached the city’s newly formed Sustainability 

Advisory Board with a Green Power Challenge proposal, and the 

board recommended that the city council support the proposal. 

Working with PGE, Lake Oswego set a goal of 300 new 

participants. The mayor of Lake Oswego began the Green 

Power Challenge by issuing a proclamation. The city promoted 

the challenge through its monthly newsletter, press releases, 

and website. Working with PGE, they conducted door-to-door 

outreach and tabled at the local farmers’ market. 

Ultimately, Lake Oswego exceeded its goal, enrolling 336 new 

residential and 20 new business customers in PGE’s renewable 

programs. The community benefited by receiving national 

recognition. EPA staff made a presentation to the city council, 

street signs promoting Lake Oswego as a Green Power Community 

were installed, and the city received favorable local press 

coverage. 

As of February 2010, more than 1,600 residences and businesses 

enrolled in one of PGE’s programs and the community was 

collectively purchasing 9% of its power as green power, or almost 

35 million kWh of renewable power.

Source: U.S. EPA (2012b)

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4.2 Design and Implementation 

Considerations 

Green power challenges and local collaborative electricity 

procurement programs need to set appropriate, realistic 

targets, decide how to distribute costs among partner 

organizations, and consider administrative issues. 

Setting appropriate, realistic targets. With green power 

challenges, communities can work with their local utility 

to establish a target of either number of participants or 

percentage renewable energy purchased. Utilities can help 

partners understand existing participation and sales rates. 

Final targets for a percentage of sales from renewable energy 

are already established for communities seeking to join the 

EPA Green Power Communities program; working with the 

local utility company can help partners develop a plan to reach 

these targets.

Distributing costs among partner organizations. 

Organizations should determine in advance who will pay for 

the various components of the program. 

Considering administrative issues. Consider what information 

is needed in order for a consumer to sign up for a green 

product and work with the utility to streamline the enrollment 

process. For example, if consumers need to provide their 

electric account number, this may prohibit them from signing 

up at community events like farmers’ markets and concerts.

4.3 Benefits and Challenges of Green 

Power Challenges and Local Collaborative 

Electricity Procurement 

Community green power challenges can contribute to the 

branding of a community, provide education and outreach to 

community members, and provide an easy way for community 

members to support green power. 

Raise awareness and expand access to renewable options. A 

large barrier to participation in utility green power programs is 

lack of awareness. According to the Natural Marketing Institute, 

approximately one in six adults are aware of renewable 

power options (NMI 2011), yet more than half of consumers 

have the option to purchase renewable energy through 

their utility (Bird and Sumner 2010). Of course, all consumers 

have the ability to buy RECs separately from their electricity. 

Community challenges can help overcome the awareness 

barrier by targeting community residents during short, intense 

campaigns using multiple methods of communication. 

Education efforts by non-profits seeking to aggregate demand 

can also help organizations better understand renewable 

energy options.

Easy to sign up. By providing different ways of enrolling (e.g., at 

a farmers’ market), green power challenges can make it easier 

for consumers to sign up.

May encourage friendly competition among suppliers. 

In regulated electricity markets, utilities offer green pricing 

programs, while in deregulated or restructured states, 

competitive marketers offer renewable options. In all states, 

renewable energy can be supplied by RECs independently 

from electricity. By running a campaign that includes a 

utility or competitive marketer in addition to a REC supplier, 

communities may encourage friendly competition. Boulder’s 

Wind Power Challenge campaign worked with the local utility, 

Xcel Energy, and REC suppliers Clean and Green, Community 

Energy, and Renewable Choice Energy. Xcel Energy’s green 

pricing program is in competition with REC suppliers for 

customers. Local collaborative electricity procurement also 

focuses on getting the lowest-cost product from suppliers.

Contribute to branding of a community. Green power 

challenges generate publicity for the local government and 

any other co-sponsors, such as large institutional purchasers 

and the local electric utility. In Oregon, communities looking to 

attract high-tech businesses were interested in promoting their 

community’s green image (Hinckley 2010). 

Lower cost. By aggregating demand and soliciting renewable 

electricity bids for multiple organizations, local collaborative 

electricity purchasing through Groundswell achieved up 

to 20% annual savings on energy bills for participants 

(Groundswell 2012). 

Green power challenges are fairly straightforward to 

implement. The primary implementation activities may include 

scheduling the challenge with the city council, determining the 

timing, and getting space at the local farmers’ market. Because 

many organizations might be involved with a green power 

challenge, it is important to clarify funding needs upfront 

and determine which organizations will cover which costs. 

Local collaborative electricity procurement requires a lead 

organization to educate potential partners and develop the 

actual procurement. 

Green power challenges and local 

collaborative electricity procurement 

programs need to set appropriate, realistic 

targets, decide how to distribute costs 

among partner organizations, and consider 

administrative issues.

4
21

A bulk purchasing program requires a clear leader to organize 

the process. The leader may be a local government agency, 

interest group, cooperative, private enterprise, or a partnership 

between these. The organizer plays a variety of important roles 

throughout the process, including: 

•	 Defining the potential participant base

•	 Seeking out participants

•	 Providing information and education on renewable energy 

options 

•	 Assessing the possible sites and types of demand and 

conducting resource assessments 

•	 Issuing a request for proposals (RFP) to potential vendors

•	 Selecting the winning vendor(s)

•	 Overseeing the signing of standard contracts between 

participants and vendors

•	 Assisting with coordination during the installation phase.

5.1 Experience with Bulk Purchasing of 

Distributed Energy Systems 

The group purchasing model began in the United States with 

the Solarize Portland initiative, which functions as partnerships 

between the city and neighborhood associations. The model 

has since grown to include a wide variety of programs that are 

organized by not-for-profits, private enterprises, public utility 

commissions, and governmental agencies at various levels. 

Examples of several of these models are provided below. 

City Government Model 

Portland, Oregon

Neighborhood associations in the City of Portland can obtain 

technical and programmatic assistance from the city to offer 

group solar purchasing programs to their residents. The city 

assists the associations in program design, provides outreach 

and educational materials, and aids in the selection of solar 

contractors. It also helps coordinate and deliver educational 

workshops about the volume purchasing concepts and the 

benefits of solar energy. The Energy Trust of Oregon, Solar 

Oregon, and local solar contractors also played key roles in the 

program’s success. Since its beginning in 2009, the program has 

resulted in over 600 solar installations and cost savings of up to 

35% (U.S. Department of Energy 2011a). Additional programs 

have been developed in Pendleton, Beaverton, and Salem, 

Oregon.

Los Angeles, California

Other cities across the nation have followed Portland’s lead. 

In 2009, a group of citizens in Los Angeles County, California, 

came together to form the Open Neighborhoods community 

solar program. Solar panels were installed on 32 homes in the 

first round. Another round of installations was organized in 

2011, which brought the cost of solar close to that of electricity 

from the grid. The price of around $4.40/W was reported to 

be the lowest cost for residential solar systems in California. 

The Open Neighborhoods program encourages broader 

participation by making donations to schools and non-profits 

Bulk purchasing programs are an increasingly common mechanism to encourage solar installations, in 

particular, but could also be used for other distributed energy technologies (U.S. Department of Energy 

2011a). These programs identify a group of individuals or companies interested in installing solar systems 

and aggregate their demand. By buying the systems in bulk, group purchasing attracts reduced prices 

from vendors. The programs also save buyers the time and effort that would be required to navigate the 

purchasing process individually. 

5. BULK PURCHASING OF DISTRIBUTED ENERGY SYSTEMS 

5

Photo by Dennis Schroeder, NREL/PIX 21499
22

when community members participate in the group-buy 

program (Farrell 2011). 

Santa Barbara, California

The Community Environmental Council of Santa Barbara, 

California, initiated a pilot group purchasing program in 

2011, installing 49 systems in 3 months. The program began 

its second phase in August 2012, offering both solar system 

purchasing and lease options to satisfy a variety of financing 

needs. The council selected two solar contractors to provide 

the systems, obtaining a bulk price for program participants. 

A one-time fee of $0.15 per installed watt is paid by the 

contractors to fund the council’s continued efforts. 

Madison, Wisconsin

The City of Madison, Wisconsin, helped facilitate the first 

residential group solar purchasing effort in Wisconsin. The 

22 participants in the first round of the MadiSUN program 

obtained solar systems for an average of $5,320/kW, a discount 

of 20% (MadiSUN 2012). Marshfield, Wisconsin, has also started 

a group-buy program, Solarize Marshfield, funded by a DOE 

SunShot grant (Midwest Renewable Energy Association 2011). 

Private Enterprise Model 

One Block Off the Grid

One Block Off the Grid (1BOG) is a for-profit enterprise that 

acts as an intermediary between potential customers and 

solar installers. The company identifies potential solar system 

customers, provides information on solar options, and finds 

and vets installers on behalf of the customers, obtaining bulk 

pricing for the systems. The service of amassing the demand 

within a region is valuable to system providers as well, who 

pay a fee to 1BOG for each watt they install for customers 

through 1BOG. The fee is built into the price of the installed 

solar systems but is more than offset by the price savings 

obtained from buying in volume. 1BOG’s success began when 

they assisted the San Francisco Department of the Environment 

in conducting aggregated solar purchases at the request of 

several neighborhoods in the city (U.S. Department of Energy 

2011b). 

Utility Model

Orlando Utilities Commission

In 2011, the Orlando Utilities Commission (OUC), a municipal 

utility company, carried out the pilot Commercial Customer 

Solar Aggregation program to assist its large commercial 

customers with installation of solar technologies. OUC 

identified nine large commercial customers interested in 

installing solar systems. OUC issued an RFP for this aggregate 

demand, which totaled an estimated 1,237 kW of solar electric 

and 77 kW of solar thermal capacity. Developers were allowed 

to bid on solar thermal, solar electric, or both. The chosen 

developer will construct, own, and finance the solar projects 

through a power purchase agreement (PPA), with OUC acting 

as the billing agent. OUC purchases the RECs and excess 

electricity generated at the facilities under a long-term fixedprice PPA of at least 25 years (OUC 2011). 

Collaborative Partnership 

City of San Jose, Bay Area Climate 

Collaborative, and San Jose Credit Union

The City of San Jose, the Bay Area Climate Collaborative,5 

and the San Jose Credit Union partnered to form a solar 

group-buy program called SunShares, supported by a federal 

Solar America Cities grant. The program offers employees 

and retirees of the over 360 Silicon Valley Leadership Group 

member companies the opportunity to purchase solar thermal 

and photovolatic systems at discounted rates and take 

advantage of financing options as low as 3.99%. The program 

is administered with assistance from GroupEnergy, a company 

specializing in collaborative purchasing programs (BACC 2012).

Silicon Valley Collaborative Renewable Energy 

Procurement Project

Another collaborative, the Silicon Valley Collaborative 

Renewable Energy Procurement Project, was formed through 

a partnership between the City of Santa Clara, Joint Venture: 

Silicon Valley Network, and the Public Sector Climate 

Task Force.6 The program facilitates public agencies in the 

installation of renewable energy systems. Nine public agencies 

are participating in the first phase to develop 70 sites on 43 

locations, for a total capacity of 14.4 MW. As such, the effort 

represents the largest multi-agency procurement of renewable 

energy in the United States at this time. The agencies sign a 

Memorandum of Understanding in the initial stages to express 

their intent to carry through the entire development process.

Types of sites identified for development include office 

rooftops, carports, water storage tanks, ground-mounted 

systems, bus depots, senior centers, parking garages, and 

health centers. Site assessments were contracted prior to 

Successful bulk purchasing programs 

explore creative financing options to 

enhance customer participation and 

encourage competition between many 

vendors through effective outreach.

5
23

the release of the RFP, both to ensure site feasibility and to 

provide bidders with accurate site information on which to 

base their bids. These technical and economic assessments 

were undertaken by Optony, Inc. for all of the sites, on behalf 

of the participating agencies. This relieved the agencies of the 

need to conduct individual analyses, for which they may not 

have resources or expertise. While this process reduced the 

number of sites considerably, it ensured that only sites that met 

technical and economic feasibility were included in the bidding 

process.

Because the systems were of a broad range of sizes, the 

project team grouped the installations into strategic bundles 

of 6–15 locations each, based on system size and across 

different owners. The team allowed developers to bid on one 

or more bundles. This encouraged participation by bidders 

who specialize in a subset of system sizes or who would be 

deterred if the entire contract were offered to a single bidder. A 

point system in the selection process gave preference to local 

vendors.

Participating agencies buy the power generated by the systems 

from the developer but have the option to purchase the system 

at several stages in the contract period. This arrangement 

means that agencies that cannot afford the high upfront cost of 

going solar can still participate. 

According to the Solar Labor Force Impact Model, 

approximately 200 jobs will be created by the program, with 

one-third of those being permanent positions in fields such as 

contract management and system maintenance (U.S. EPA 2010; 

Joint Venture: Silicon Valley Network 2011).

As a result of the success of the program, the EPA is 

implementing a similar effort called the Clean Energy 

Collaborative Procurement Initiative, which targets federal, 

military, and higher education facilities in the Washington, D.C., 

metro area (U.S. EPA 2011).

5.2 Design and Implementation 

Considerations 

General

General design and implementation considerations include:

•	 Consider local resource availability and likely participant 

base

•	 Leverage an existing group or organization to serve as 

the program leader; look for strategic partnerships and 

make use of available expertise in outreach, financing, site 

assessment, and contracting

•	 Identify the state and federal incentives; keep an eye on 

them and meet the deadlines

•	 Use independent experts to assess and refine your 

program plan and to carry out site assessments

•	 Explore creative financing options to enhance participation

•	 Identify program goals and metrics of success early in the 

process.

Communication and Participant Outreach

Communication and participant outreach considerations 

include:

•	 Use a variety of communication methods with program 

participants; avoid a one-size-fits-all method

•	 Provide contact options that suit a variety of 

communication styles

•	 Maintain participant satisfaction with as much personal 

communication as feasible

•	 Hold informational meetings to encourage broad 

participation and to answer participant questions 

throughout the process

•	 Create an online forum to inform interested communities, 

connect participants, and solicit program feedback.

Bidding Process

Program success depends on both buyers and sellers 

benefiting from participation. In order to accomplish this, 

programs could:

•	 Provide information to vendors on the benefits of 

aggregated demand

•	 Encourage competition between many vendors through 

effective outreach 

•	 Bundle sites by installation type, host facility, size, and 

other attributes

•	 Allow vendors to bid on one or more of the bundles.

Vendor Selection

The strength of a vendor can impact the success of a program. 

In selecting a vendor, programs could:

•	 Consider a variety of factors when selecting winning 

bidders, such as cost, system design, quality assurance, and 

ability to provide long-term maintenance and support

5
24

•	 Select one or more reputable vendors with a track record 

of high-quality installations and be very clear about the 

terms of the contract.

5.3 Benefits of Bulk Purchasing Programs 

Bulk purchasing programs provide a variety of benefits, ranging 

from lower costs to broader adoption of solar energy.

Lower costs. Aggregating demand unlocks volume discounts 

from local solar installers.

Reduced transaction costs. Administrative costs are spread 

amongst a large group of customers.

Reduced risk perception/ease of decision making. As a 

member of a group, participants have reduced risk perception. 

The leadership of the organizing group relieves individuals of 

complex decision-making processes.

Company reputation/employee satisfaction. Companies 

and agencies can offer group-buy programs as part of their 

employee or membership benefit packages. The unique offer 

can increase employee satisfaction, attract new members, and 

enhance the company’s overall reputation for sustainability.

Encourage broader use of solar energy. Because groupbuy campaigns can be made available to employees, 

neighborhoods, and other broad bases of individuals, they 

encourage people who would not have otherwise considered 

or investigated the option to install solar energy. Peer pressure 

to participate may work to increase solar deployment.

Public education. Through workshops and participant 

outreach, group-purchasing campaigns enhance overall public 

education about solar energy.

Solar providers. Vendors of solar systems receive substantial 

new business with reduced sales expenditures.

Competitive contract terms. Developers are more likely to 

agree to competitive contract terms (e.g., buyout options, 

performance guarantees, and termination options) when 

making bulk deals.

Flexibility of design. Group-buy programs can be designed 

to suit a wide variety of goals and needs. They can incorporate 

direct purchases, leases, or unique financing and ownership 

models. They can target a variety of participant types, system 

sizes, and technologies.

Quality assurance. Thorough vendor-selection processes 

ensure system quality, which improves buyer satisfaction as 

well as the overall reputation of solar energy.

5.4 Challenges of Bulk Purchasing 

Programs 

Bulk purchasing programs require a champion and provide less 

flexibility than an individually designed procurement process.

Requires a champion. One or more organizations must be 

willing to take the lead and have the resources to carry out the 

program.

Less flexibility. Individual buyers may have less flexibility to 

select vendors, customize systems, or specify contract terms. 

Scheduling challenges. Participating installers may be pressed 

to complete many installations in a short time frame. The 

individual participant is subject to program schedules and 

deadlines. If individuals are required to wait too long for the 

installation of their system, they may be tempted to withdraw 

from the program and accept bids from vendors that are not a 

part of the program. 

Photo by Dennis Schroeder, NREL/PIX 20689

5
25

A few elements are essential to the functioning of a reverse 

auction:

•	 The product to be supplied must be a standardized 

product of known quality

•	 There must be multiple sellers of the same product

•	 There must be a range of prices at which the product can 

be produced and sold.

Energy production is a natural fit for a reverse auction because 

it meets all three of the above criteria. The standardized 

product to be supplied is electricity. There are many energy 

developers who can compete to provide this product, and the 

price at which power can be provided is variable. 

Reverse auctions provide a flexible method to purchase 

renewable energy generation in deregulated electricity 

markets. In addition, reverse auctions can be used to purchase 

RECs or to contract for the construction of a renewable 

energy system in all electricity markets. Private companies, 

government agencies, and non-profit groups can all use a 

reverse auction.7 These buyers can either organize and hold 

their own reverse auctions or use an independent auction 

manager to coordinate auctions on their behalf. Using an 

auction manager avoids the need for buyers to go through 

the learning process needed to organize a successful auction. 

World Energy Solutions is one company that offers reverse 

auction services for clients in deregulated electricity markets. 

Well-designed auctions create an open, market-driven process 

that draws in a variety of potential product suppliers. Preauction planning and analysis helps buyers and sellers make 

informed decisions on auction day. Thorough pre-auction 

documents ensure that all bidders are clear about the product 

and terms of provision on which they will bid. Once the auction 

opens, all bidders see the prices their competitors are willing 

to contract for. In the moments prior to auction closure, the 

opportunity to make a final blind bid encourages bidders to 

submit their lowest possible final offer. The transparency of the 

process ensures equality and enhances participant trust while 

creating a highly competitive environment that drives down 

prices. 

Reverse auctions can be used for entities that aggregate their 

demand to increase their purchasing power. Reverse auctions 

in which buyers are requesting bids to provide large quantities 

of electricity draw more bidders and typically result in lower 

prices per kilowatt-hour than smaller auctions. World Energy 

Solutions runs auctions for clients with demand levels of 

4+ million kWh/year (roughly the demand of 350 American 

households) (Joyce 2010). Aggregating demand can allow 

buyers to take advantage of this leveraging effect. Aggregating 

the demand of several buyers within the same power service 

area allows those with smaller demands to participate in the 

reverse auction process. Even aggregating accounts that are 

already large may provide further price benefits. Combining 

the purchase of traditional electricity with that of green energy, 

such that total demand is supplied through a single auction, is 

another form of aggregation.

6.1 Experience with Reverse Auctions 

The Healthcare Clean Energy Exchange (HCEE) provides 

an example of how buyers with limited demand can be 

aggregated to allow for broader participation in reverse 

auctions. The HCEE is a reverse auction service offered to its 

members by Practice Greenhealth, a non-profit organization 

for healthcare facilities. Through HCEE, member facilities can 

participate in custom-tailored, online reverse auctions to 

procure renewable energy or the development of hospitalsited renewable energy systems. The exchange makes use 

of the World Energy platform described above. In 2009, 

Mercy Hospital and Medical Center participated in their 

first reverse auction with the goal of reducing their annual 

electricity expenditures, which totaled about $2.5 million. The 

facility procured 10% green electricity and saved more than 

$190,000/year compared to their previous utility contracts 

(Pizzi 2009). Multiple hospitals in the same distribution 

area may also choose to aggregate their renewable energy 

demand in order to reach the capacity minimums required for 

auction participation and further drive down prices (Practice 

Greenhealth 2012). 

A reverse auction is an auction in which the roles of the buyer and seller are switched. In a traditional 

auction, a seller puts a product up for sale, which is bid on by many potential buyers. The buyer willing to 

pay the highest price wins the auction. In a reverse auction, a buyer requests a product, and many sellers bid 

to provide that product. The bidder that can provide the product at the lowest price wins the auction. 

6. REVERSE AUCTIONS FOR VOLUNTARY PURCHASES 

6
26

The General Services Administration (GSA) provides another 

example of how a reverse auction can be used to procure 

power for multiple loads with notable price benefits. The GSA is 

an independent agency of the U.S. government that supports 

federal agencies by managing assets, such as office buildings 

and transportation fleets, and leveraging the government’s 

buying power through bulk acquisition of products and 

services. Since 2001, GSA has used the World Energy Solutions 

services to procure electricity for government facilities across 

the country. More recently, GSA has used in-house expertise to 

hold reverse auctions themselves (Shah 2011). 

Through a reverse auction, GSA has obtained electricity for 

federal agencies at significantly lower prices than existing 

contracts. Through a round of auctions organized by World 

Energy in 2008, GSA purchased 100% wind power for the 

Statue of Liberty and Ellis Island at prices under the current 

standard offer contract rate. Through a round of auctions in 

January 2012, new contracts were signed to provide electricity 

to New York federal facilities for 35% lower cost than previous 

utility contracts (World Energy 2012).

6.2 Design and Implementation 

Considerations

A reverse auction can be used to procure renewable energy in 

deregulated (competitive) electricity markets and can be used 

to procure RECs in all electricity markets.

Clearly written and thorough pre-auction announcements 

are an important feature of a successful reverse auction 

process. These documents specify the amount of electricity 

to be purchased, any technology or location restrictions, and 

all contract terms that would be offered to a winning bidder. 

These documents ensure that bidders understand exactly what 

they will be bidding on.

A reverse auction can be used to influence the market in a 

number of ways, including: 

•	 Encouraging the development of new renewable energy 

facilities by specifying that the generation to be purchased 

must come from a new facility

•	 Encouraging local development by specifying that the 

generation to be purchased must come from within a 

particular region

•	 Encouraging a particular technology (e.g., solar) by 

specifying that the generation to be purchased (or a 

portion thereof) must come from a certain technology.

Ongoing verification and auditing requirements ensure that the 

renewable power being procured through the reverse auction 

is not also being used to satisfy a state RPS or other renewable 

energy targets. 

In a reverse auction, each bidder aims to bid lower than all 

other bidders. Bidders will only bid as low as necessary to 

beat the most recent bid. If the auction time runs out before a 

bidder reaches their lowest possible offer, the buyer could pay 

more than necessary for the product requested. Thus, a pure 

reverse auction may not result in the lowest possible price for 

the buyer. This drawback can at least partially be addressed 

by switching the reverse auction to a blind auction for the final 

seconds of bidding. All bidders place their best and final offer 

at the end of the auction, without seeing their competitors’ 

final bids. This increased uncertainty during the final seconds 

of the process encourages bidders to place their best offer on 

the table. 

Today’s reverse auction platforms are high-speed, time 

sensitive, and dependent on the Internet. If a bidder has 

technological difficulties at the time of the auction, their 

bids will not be available for consideration. The technology 

requirements may also inhibit some buyers from holding their 

own reverse auctions and necessitate going through an auction 

coordinator at additional cost. Some auction platforms require 

bidders to register for a fee, which could discourage potential 

providers.

6.3 Benefits of Reverse Auctions

Reverse auctions are not entirely a new concept in the 

electricity supply realm. Many of the same elements are present 

in the traditional methods for acquiring electricity supply 

contracts, such as RFPs or requests for bids. Several benefits, 

however, set the reverse auction process apart from traditional 

methods of acquiring electricity service contracts. The benefits 

of using a reverse auction include:

Increased transparency. Favoritism between bidders is 

impossible during the auction process, and all bidders have 

an equal opportunity to win. There is also price transparency 

with all parties able to see the lowest bid. The impartiality 

and transparency of the auction process increases confidence 

amongst bidders and encourages broad participation.

Well-designed auctions create an open, 

market-driven process that draws in a 

variety of potential product suppliers.

6
27

Increased competition. Today’s online reverse auctions are 

fast-paced. The details of the product being requested and 

the contract terms that will be offered are announced well 

in advance so that bidders can prepare. The actual bidding 

process typically lasts for only a few minutes. While the auction 

is open, bidders receive instant feedback on the prices their 

competitors are offering. They know that if they do not respond 

with a lower bid quickly, they will lose the contract. This 

environment taps the competitive nature of bidders and drives 

down prices.

Price discovery and consumer education for buyers. Reverse 

auctions allow buyers to quickly test the current market and 

easily compare prices between products before making a 

purchase decision. Buyers become more educated consumers 

as they learn about their electricity usage, product options, and 

prices as a result of participating in the auction process. 

Reduced administrative burden. Participating in reverse 

auctions is faster and less burdensome for bidders than 

responding to RFPs. Buyers avoid lengthy proposal review 

processes. 

Fast award and contract times. Contract terms and other 

details are set by buyers and announced to bidders ahead of 

auction day. Contract negotiations are limited and contracts 

can be signed quickly. Often, contracts between buyers and the 

winning bidder can be signed on the same day as the auction. 

6.4 Challenges of Reverse Auctions

Due to the cost and logistics of implementing a reverse 

auction, this mechanism is generally available only to 

customers with high electricity demand or customers who are 

able to aggregate their demand with others, which limits its 

applicability.

Reverse auctions must be carefully designed in order to ensure 

fairness amongst bidders and in order to encourage the lowest 

possible price for customers. Thus, reverse auctions are often 

coordinated by third parties for a fee.

Using a reverse auction process, Mercy 

Hospital and Medical Center procured 

10% green electricity and saved more 

than $190,000 per year, compared to its 

previous utility contracts.

6

Photo from iStock 20787546
28

Community choice aggregation programs, though 

not available in every state, allow communities to select 

an alternative energy supplier while continuing to 

receive transmission and distribution service from their 

existing supplier. While not all CCAs select renewable 

resources, programs such as MCE in California, Cape Light 

Compact in Massachusetts, and Oak Park in Illinois all 

offer renewable options. San Francisco is preparing to 

launch a renewable offer in 2012, and 242 communities 

in Illinois have voted to move forward with a CCA, though 

whether they will offer renewable energy is yet to be 

determined. CCAs can provide a lower-cost electricity 

product, large environmental impact, an easy way for 

consumers to support renewables, and access to lowercost, tax-exempt debt. CCAs can be challenging to 

implement because they require state legislation, can 

have significant start-up costs, face possible resistance 

from the incumbent electricity supplier, and because 

residents may be unaccustomed to thinking about their 

electricity use. 

Community programs allow customers to invest 

collaboratively in renewable energy. In community solar 

programs, all participants purchase a share of a solar 

system and receive the financial benefits of the energy 

produced by their share. While few programs existed as 

late as 2008, by 2012, nearly 30 programs were identified. 

Community wind programs are emerging in the United 

States and are more common in Europe. Community 

programs expand access to renewable energy, provide an 

easy way to sign up, take advantage of cost efficiencies 

from larger projects or procurements, may offer a unique, 

local product, and may be more flexible, allowing 

participants to keep their investment, even if they move. 

However, programs can be challenging to establish, 

due to tax, finance, and legal concerns; developing the 

program structure can be more challenging than finding 

subscribers. 

Green power challenges and local collaborative 

electricity purchasing programs expand access to utility 

green pricing and competitive supplier programs. Local 

governments often partner with local utilities, thirdparty marketers, and/or environmental organizations to 

increase awareness of green pricing options through a 

green power challenge. EPA’s Green Power Communities 

are collectively buying more than 3.3 million MWh of 

green power annually, representing 9% of all voluntary 

sales in 2010. Groundswell’s Community Power Project is 

a local collaborative electricity purchasing program that 

has facilitated procurement of 56,000 MWh of renewable 

energy for 109 organizations in the Washington, D.C., 

area. Green power challenges and local collaborative 

electricity purchasing programs raise awareness and 

expand access to renewable options, provide alternative 

ways to sign up for renewable energy, may encourage 

friendly competition among suppliers, and can 

contribute to branding of a community. Challenges and 

procurement programs are fairly easy and straightforward 

to implement. One barrier may be organizing the timing 

of the challenge and clarifying funding responsibilities 

between organizations. Local collaborative electricity 

procurement programs require a lead organization 

to educate potential partners and develop the actual 

procurement.

Group on-site purchasing programs identify a group 

of individuals or companies that are interested in 

installing solar systems and aggregate their demand for 

the equipment and installation services. This can result 

in attractive bulk pricing from vendors. In addition, 

the programs save buyers the time and effort that 

would be required to navigate the purchasing process 

individually, which may encourage more customers to 

install renewable energy systems. The program may 

also include a financing aspect, which can further ease 

the process for customers and help expand the market. 

Increasingly, communities, businesses, non-profits, and utilities are partnering to provide a wider variety of 

options for procuring renewable energy. CCA programs, community wind and solar programs, green power 

community challenges, local collaborative electricity purchasing, bulk purchasing of on-site renewables, 

and reverse auctions provide unique methods, often resulting in cost savings and expanded access for 

consumers. The mechanisms are summarized below, as well as in Table 6.

7. SUMMARY AND CONCLUSIONS 

7
29

7

A group purchasing program requires a clear leader to 

organize the process. Successful programs have been 

organized and offered by a variety of leader organizations 

representing the private and public sectors, including 

the cities of Portland and San Jose, a citizen group in Los 

Angeles, a nation-wide enterprise called One Block Off 

the Grid, and the Orlando Utilities Commission.

Reverse auctions provide a flexible method for 

organizations and companies in restructured electricity 

environments to contract for electricity provision, 

including electricity from renewable energy sources. 

Customers in any electricity market can purchase RECs 

or contract for the construction of a renewable energy 

system using the reverse auction mechanism. Although 

many customers make use of paid auction organizers 

(e.g., World Energy Solutions), buyers with significant 

demand may choose to organize their own auctions, as 

the GSA has recently done. The transparency of the online 

bidding process often draws in a variety of potential 

bidders. The competitive environment created by reverse 

auctions has yielded significantly reduced prices for 

renewable energy, compared to traditional contracting 

processes. Careful pre-auction analysis and planning pays 

off in the increased confidence of buyers and bidders, as 

well as rapid post-auction contract signing. 
30

7

Innovative Mechanism Sector Developing 

the Method Procuring Sector Benefits of Approach Challenges to Approach

Community Choice 

Aggregation Local governments Utility consumers

-Potential lower cost

-Large impact

-Easy for consumers

-Access to lower-cost, 

tax-exempt debt

-Need enabling legislation

-Start-up costs can be 

significant

-Possible resistance from 

incumbent electricity supplier

-Need for education and 

outreach

Community wind and 

solar programs

Typically municipal or 

cooperative utilities 

and/or third-party 

project developers 

Utility consumers, local 

residents, residents 

from anywhere

-Expanded access 

-Easy to sign up

-Cost efficiencies of larger 

project or procurement

-May offer a unique, local 

product

-Can move subscription 

within service territory 

-Tax and financial issues 

-Concerns over potential 

securities regulation

Green power challenges 

and local collaborative 

electricity procurement 

Partnership 

between utility, local 

government, and/

or large institutional 

purchasers

Utility consumers

-Contributes to branding 

of community

-Provide education and 

outreach to community 

members

-Easy to sign up

-May encourage supplier 

competition

-May lower cost 

-Setting appropriate, realistic 

targets

-Distributing costs among 

partner organizations

-Administrative issues 

Bulk purchasing of 

distributed energy 

systems

Government agencies, 

businesses, non-profit 

organizations 

Local residents, 

government agencies, 

schools, businesses

-Lower-cost solar 

-Reduced administrative 

effort for buyers 

-Improved company 

reputation for sponsors

-Flexibility of 

program design and 

implementation

-Quality assurance

-Requires a champion to 

coordinate

-Potentially reduced flexibility 

for individuals in project 

design or contract terms

Reverse auctions

Businesses, 

governments, 

non-governmental 

organizations

Businesses, 

government 

agencies, non-profit 

organizations

-Increased price transparency and competition

-Price discovery and buyer 

education

-Reduced administrative 

burden

-Fast award and contract 

times 

-Pure reverse auction may 

not allow sufficient time to 

generate lowest bid 

-Relies on auction software 

technology

Table 6. Overview of Innovative Renewable Energy Procurement Mechanisms
31

8. ENDNOTES 

1 The guide was produced by a collaborative effort between the U.S. 

EPA, the U.S. Department of Energy, the World Resources Institute, 

and the Center for Resource Solutions. http://www1.eere.energy.gov/

femp/pdfs/purchase_green_power.pdf. 

2

 Though not discussed in this paper, CCAs exist in Rhode Island and 

Ohio, but they do not offer substantial renewable energy products. 

The Northeast Ohio Public Energy Council (NOPEC) aggregates natural 

gas and electricity consumer load, and the Rhode Island Energy 

Aggregation Program (RIEAP) aggregates load of local governments in 

the state. RIEAP renewable percentages have ranged from 5% to 10% 

(LEAN Energy U.S. 2012).

3 For example, in Illinois, opt-out programs can be implemented 

but must be approved through a referendum question at a general 

election. 

4 For more on securities issues, see Coughlin et al 2012. 

5

 The Bay Area Climate Collaborative is a public-private initiative 

developed by the Silicon Valley Leadership Group to encourage a 

clean-energy economy. See http://www.baclimate.org. 

6

 The Public Sector Climate Task Force is made up of sustainability 

officers from across the region.

7

 While the focus here is the use of reverse auctions in voluntary 

renewable energy markets, the mechanism is also being used in 

compliance markets. For example, the State of Connecticut’s Public 

Utilities Regulatory Authority approved the ZREC (zero-emissions) 

and LREC (low-emission) renewable energy program. Through the 

program, state utility companies will hold a series of reverse auctions 

that will result in long-term contracts to purchase the RECs associated 

with electricity generated by customers of the state’s distribution 

companies. The program was mandated by the state Energy Act of 

2011. See http://www.ct.gov/pura/cwp/view.asp?A=4144&Q=502078 

and http://energy.aol.com/2012/04/30/connecticut-focuses-onunique-reverse-auctions-to-drive-green/. 

8
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Resources

Community Choice Aggregation

Illinois Community Choice Aggregation Network: 

http://www.ippconnect.com/CCA.php.

Local Energy Aggregation Network (LEAN Energy U.S.): 

www.leanenergyus.org.

Community Wind and Solar

Coughlin, J.; Grove, J.; Irvine, L.; Jacobs, J.F.; Johnson Phillips, J.; and 

Wiedman, J. (2012). A Guide to Community Shared Solar: Utility, 

Private, and Non-Profit Project Development. DOE/GO-102012-3569. 

Golden, CO: National Renewable Energy Laboratory. http://www.n

rel.gov/docs/fy12osti/54570.pdf.

Northwest SEED and Bonneville Environmental Foundation. (n.d.). 

“The Northwest Community Solar Guide.” Accessed July 18, 2012: 

http://www.nwseed.org/documents/NW%20Community%20

Solar%20Guide.pdf. 

Windustry offers case studies and links to guidebooks and other 

information regarding community wind project development on

 their website at www.windustry.org. 

The Minnesota Project. (December 2009). “Lessons and Concepts for

 Advancing Community Wind.” Accessed July 18, 2012: http://dev7.

windustry.org/sites/dev7.windustry.org/files/AdvancingCommunity-Wind_Dec09.pdf. 

Kubert, C. “Community Wind Financing.” A Handbook by the 

Environmental Law & Policy Center. Accessed September 11, 

2012: http://www.elpc.org/documents/WindHandbook2004.pdf.

Green Power Challenge and Local Collaborative Electricity 

Procurement

Groundswell: www.groundswell.org.

U.S. Environmental Protection Agency (EPA). “Green Power

 Communities.” Accessed July 18, 2012: http://epa.gov/

greenpower/communities/index.htm.

EPA. “EPA Green Power Communities.” Webinar. Accessed July 18, 2012:

 http://epa.gov/greenpower/events/23feb10_webinar.htm.

Bulk Purchasing of Distributed Energy Systems

World Resources Institute, Joint Venture, and Optony. (2011). 

“Purchasing Power: Best Practices Guide to Collaborative Solar 

Procurement.” Accessed July 18, 2012: http://www.wri.org/

publication/purchasing-power.

U.S. Department of Energy (DOE). (2011). “Solar Powering Your 

Community: A Guide for Local Governments.” Accessed July 18, 

2012: http://www4.eere.energy.gov/solar/sunshot/resource_

center/sites/default/files/solar-powering-your-community-guidefor-local-governments.pdf. 

DOE. (2011). “The Solarize Guidebook: A Community Guide to 

Collective Purchasing of Residential PV Systems.” Accessed July 18,

 2012: www.nrel.gov/docs/fy11osti/50440.pdf. 

EPA. (2011). “Clean Energy Collaborative Procurement Initiative.” 

Accessed July 18, 2012: http://www.epa.gov/greenpower/cecp/

index.htm.

Reverse Auctions 

Practice Greenhealth. “Healthcare Renewable Energy Initiative.” 

Accessed July 18, 2012: http://practicegreenhealth.org/topics/

energy-water-and-climate/energy/healthcare-renewable-energyinitiative.

Practice Greenhealth. “Healthcare Clean Energy Exchange.” Accessed 

July 18, 2012: http://practicegreenhealth.org/topics/energy-waterand-climate/energy/healthcare-clean-energy-exchange.

EPA. “Procuring Green Power Through Reverse Energy Auctions.” 

Webinar. Accessed July 18, 2012: http://epa.gov/greenpower/

events/24jun10_webinar.htm. 

9. RESOURCES AND REFERENCES 

9
33

References

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9
35

Table A-1. Overview of Community Solar Programs 

10

10. APPENDIX 

Utility/Provider Program Name Program Size (kW) Program Start 

Year

Ellensburg (WA) Community Solar Project 111 2006

Sacramento Municipal Utility District (CA) SolarShares 1,000 2008

Florida Keys Electric Cooperative (FL) Simple Solar 117 2008

Ashland (OR) Solar Pioneers II 64 2008

St. George (UT) SunSmart 250 2009

Bainbridge Island (WA) Solar for Sakai 5 2009

Holy Cross Energy/Clean Energy 

Collective (CO)

Mid Valley Solar Array 

(El Jebel) 80 2010

University Park Community Solar LLC 

(MD) University Park Solar 23 2010

Corvallis (OR) Corvallis OR, SunSlice Deal 2 2010

Okanogan County Electric Cooperative 

(WA) OCEC Community Solar 20 2010

Salt River Project (AZ) SRP EarthWise & Copper Crossing Solar Ranch 2,000 2011

Trico Electric (AZ) Trico SunWatts Sun Farm 193 2011

Delta-Montrose Electric Association (CO) Community Solar Array 20 2011

Holy Cross Energy/Clean Energy 

Collective (CO) Garfield County Array 858 2011

Berea Utilities (KY) Berea Solar Farm 14 2011

Edmonds (WA) Edmonds Community Solar Cooperative 4 2011

Okanogan County Electric Cooperative 

(WA) Winthrop Community Solar 23 2011

Poulsbo Project (WA) Poulsbo Middle School 75 2011

Seattle City Light (WA) Community Solar 24 2011

Tuscon Electric Power (AZ) Bright Tucson Community Solar Program 1,600 2011

UniSource Energy Services (AZ) Bright Arizona Community Solar 1,720 2012

Colorado Springs (CO) Community Solar Garden Facility Incentive 

Program 500 2012

Poudre Valley REA/Clean Energy 

Collective (CO) Community Solar 115 2012

Brewster Community Solar Garden 

Cooperative Inc. (MA) Brewster Community Solar Garden 346 2012

Olympia (WA) Olympia WA, SunSlice Deal 75 2012

Acorn Energy Cooperative (VT) Acorn Energy Solar One 150 2012

United Power (CO) Sol Partners Cooperative Solar Farm 10 2012

San Miguel Power Association/Clean 

Energy Collective (CO) SMPA Community Solar 1,000 2012
National Renewable Energy Laboratory

15013 Denver West Parkway 

Golden, CO 80401

303-275-3000 • www.nrel.gov

NREL is a national laboratory of the U.S. Department of Energy

Office of Energy Efficiency and Renewable Energy

Operated by the Alliance for Sustainable Energy, LLC

NREL/TP-6A20-54991 • September 2012

Printed with a renewable-source ink on paper 

containing at least 50% wastepaper, including 

10% post consumer waste.

Cover Photo: iStock/17097256