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Solar Bonds - The Landmark "Green Bonds"

In addition to creating CCA, Local Power founder Paul Fenn wrote the world's first "green bond" or "climate bond" authority in San Francisco in 2001, to complement San Francisco's Community Choice Aggregation of grid power procurement, for the finance, installation and maintenance of local renewables and energy efficiency measures on homes and businesses in 2001, known as "H Bonds" or Solar Bonds.

Since then, Green Bonds have played a major role in Local Power's development of the CCA business model, and at the same time have become a $3T industry worldwide, transforming renewable energy even apart from CCA -- in addition to the $10B in Solar Bonds that California CCAs have issued in recent years in addition to leveraging $20B in private investment, a combined $30B in new local and regional renewables, exceeding 11 Gigawatts, or 1% of the combined domestic US renewable and non-renewable electricity generation supply. CCA Green Bonds issued by half a dozen California CCAs constituted the largest issuance of Green Bonds in the US in 2023, finally demonstrating the massive transformative potential of CCA with Green Bonds.

CCA added to Green Bonds delivers a whole new level of CCA climate fire power. We estimate that CCA 2.0, which is defined by the combination of renewable wholesale CCA and Green Bonds, is 20-50x more powerful a climate impactful model than CCA 1.0 in Massachusetts, site of the first aggregation to use state energy efficiency funds. But the scale and per capita reach of CCA 2.0 in California is an exponential leap, delivering over $30B of investment in local and mostly in-state renewables compared to CCA in Massachusetts, where the focus has been Renewable Energy Certificates (RECs) and pilot projects. While we have received less acclaim for creating Green Bonds than we have for creating CCA, we consider it just as prideworthy and important - not just Green Bonds in general, but the specific kind of Green Bond we articulated and/or won approval for in San Francisco, Marin, Sonoma County, East Bay and dozens of other CCAs during their formation between 2000 and 2010. Most of them held back, for over a decade. Until now, and the impact is needless to say, epic.

Local Power authored the landmark CCA H Bond program with San Francisco voter approval of the bond in 2001. Local Power Co-founder Julia Peters ran the citywide campaign, which won 55% approval from voters, who amended San Francisco's charter (Proposition H, City Charter Section 9.107.8) to read that "no voter approval shall be required with respect to revenue bonds issued to finance or refinance the acquisition, construction, installation, equipping, improvement or rehabilitation of equipment or facilities for renewable energy and energy conservation." In 2004 and 2007 San Francisco adopted a CCA ordinance and CCA Draft Implementation Plan, and H Bond Action Plan for a service to "meet or beat" the utility rate while using the solar bond authority to finance and build 360 MW of local renewables and energy effficiency measures. The San Francisco Board of Supervisors approved of the authority to issue CCA bonds in 2004 with Local Power's CCA Ordinance, and the "Community Choice Aggregation, H Bond Action Plan."In 2007, the “In City Buildout Plan” including bond counsel on forms of H Bonds such as prepurchase, was submitted to the San Francisco Local Agency Formation Commission in 2009. The “In City Buildout Business Case” based on the use of Green Bonds was completed in 2013, including a full profits and loss sheet for a ten year operation, and including the use of the Green Bond or "H Bond" Authority. This was the landmark body of work that constitutes CCA 2.0. Thanks are due to Howard Golub and bond counsel of Nixon Peabody for providing revenue bond expertise to Local Power's work on the H Bond model to augement the CCA program in 2005; also to Bradley Turner and his team at Booz Allen Hamilton, and Local Power first employee Robert Freehling's early work with Local Power, David Erickson, Chris Kiriakou, Charles Schultz and Sam Golding, who all contributed important work in various stages of its articulation to H Bond integration with California's formative CCAs.

The voter approved revenue bond authority in 2001 in the form of a city charter amendment (Section 9.107.8), known as the "solar bonds," authorized the City of San Francisco to finance renewable energy and energy conservation measures on homes, businesses and government buildings. The campaign for solar bonds, Proposition H, was motivated by the need for the city to take meaningful action on climate change beyond financial instruments like RECs, by building and installing renewable generation and efficiency. We proposed the same structure to Main Clean Energy in 2009 and Sonoma County in 2013. The solar bond authority was used as part of the city's renewable energy program, administered by the San Francisco Public Utilities Commission, CleanPowerSF, with bonds first issued in 2012.

The California Community Choice Financing Authority, which helped organize a group of California CCAs in California to issue Green Bonds through their platform, is responsible for the largest issuance of Green Bonds in the United States!

Community Choice Aggregation is allowed in half of the US energy market, dominates the electricity industry in several states and serves one in ten Americans. Most of California is served by CCAs, its CCA 2.0 is being absorbed by the 1.0 programs across the rest of the country, and New York State is on the verge of another Big Leap in climate impactfulness beyond even CCA and Green Bonds, by engaging neighbors in shared systems, CCA 3.0. We anticipate that CCAs in California will ultimately go even further and beyond the supply side paradigm so many still follow, into a new territory of customer ownership, cooperation, local job creation and local economic development.

But combining CCA and Green Bonds is the revolutionary formula for true energy transformation on the scale and 2030 schedule called for by the United Nations in 2019. Solar Bonds, which may be issued in most municipalities and joint powers agencies by a simple ordinance, provide a key component for taking Community Choice Aggregation from the "CCA 1.0" business model focused on controlling power procurement, to a "CCA 3.0" model focused on localizing a community's energy and shifting energy ownership to customers. CCAs control rates and program revenues, which for a city like San Francisco run in the hundreds of millions of dollars per year, providing a payback mechanism for revenue bond investments in local power without impacting taxpayers. Since creating the Solar Bonds, 2001, Local Power's technical work has been largely focused on how to make CCAs invest locally in this manner. Not only has Local Power incorporated H Bonds into San Francisco and Sonoma County's program designs for the past decade, but virtually all California cities and counities that are now focused on using CCA to build local renewable resources, increase energy efficiency and create green jobs will requiee a financing authority like H Bonds to realize the palpable and enduring benefits of "real" distribiuted energy resources. As of 2024, Califoria CCAs have issued $10 Billion in Green Bond financing alongside over $20B of private financing. Green Bonds themselves have grown into a $3 Trillion market worldwide. The solar bond model spawned a solar and efficiency finance movement even larger than CCA, all over the world, branching out into "green bonds," "climate bonds," and "PACE financing" to "third party finance." Green Bonds are a key component of bringing CCAs to a climate scale of what the United Nation's calls (2019) "energy transformation": a third iteration of CCA developed by Local Power released in 2020, following 20 years of developing CCA 2.0's "build local" model, which continues to transform and drive decarbonization of California's electrical supply. Today, Local Power LLC awaits regulatory approval to implement CCA 3.0 in New York State, where we think it will be even bigger than CCA 2.0 in California. .

View Green Bond Authority on a page from our old web site (San Francisco Charter Section 9.107.8, approved by voters 2001)

View nation's first CCA 2.0 Ordinance - Local Power's San Francisco CCA/H Bond Ordinance (#86-04, adopted 2004)

View Nixon Peabody's Analysis of the use of H Bonds in Local Power's CCA 2.0 Ordinance (2005)

View nation's first CCA 2.0 Implementation Plan - Local Power's CCA Program Design, Draft Implementation Plan and H Bond Action Plan for San Francisco (based on Ordinance 86-04, adopted as Ordinance 447-07 in 2007)

View Local Power's CCA Program Report for San Francisco Local Agency Formation Commission (2009)

View Local Power White Paper on CCA and H Bonds: "CCA 2.0" (Updated 2016)

View Local Power's In-City Buildout Business Case Documents (about 500 pages including a Solar Bond financial model) for the City of San Francisco (2013)

San Francisco Ordinance authorizing issuance of Solar Bonds referencing Charter Section 9.107.8 (2012)

View Local Power's Sonoma Climate Action Plan Energy Element - the first model to use H Bonds with CCA to finance a 67% regional localization with renewable development (completed 2008)

View Wikipedia Article on Solar Bonds

View Wikipedia Article on Climate Bonds and Green Bonds

View Local Power's Fact Sheet for the H Bond Campaign - the Campaign for Solar Neighborhoods (2001)

View Back Page of Local Power's Voter Fact Sheet for the H Bond Campaign - the Campaign for Solar Neighborhoods (2001)

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