CITY OF POMONA
COUNCIL REPORT
June 6, 2022
To: Honorable Mayor and Members of the City Council
From: James W. Makshanoff, City Manager
Submitted By: Chris Diggs, Water Resources Director
SUBJECT: APPROVE AN MOU WITH DISTRO ENERGY AND POMONA CHOICE ENERGY FOR A PEER TO PEER ENERGY TRADING PILOT PROGRAM RECOMMENDATION:
It is recommended that the City Council take the following actions:
1) Approve an Memorandum of Understanding (MOU) for the Distro Energy (Distro) Peer-to-Peer Energy Trading Pilot Program (Program); and 2) Authorize the City Manager to execute said MOU, contingent upon City Attorney’s review.
EXECUTIVE SUMMARY:
If approved, the City of Pomona (City) would be the first city in the United States to participate in a peer-to-peer (P2P) energy trading. This Program is currently being successfully operated in the Port of Rotterdam, Netherlands. At this juncture, staff is seeking to implement a pilot program that will allow customers to sell back excess power they are producing, via their solar panels, to specific individuals within the City, or back on the grid to Pomona Choice Energy (PCE). There is no cost to the City or its PCE customers, regardless of how successful this program becomes.
FISCAL IMPACT:
There is no fiscal impact to Pomona Choice Energy (PCE) for the pilot project. Distro is expected to invest approximately $300,000 for the initial deployment of the pilot. If however the program is successful, it is anticipated that the City will participate in the revenues generated from the program.
PREVIOUS RELATED ACTION:
None.
DISCUSSION:
Distro was introduced to the City through the Community Home Energy Retrofit Project (CHERP) Solar Works who is producing advanced solar panels in a not-for-profit factory located in Pomona. Currently CHERP is working with the City on the Transformative Climate Communities (TCC) Program grant project to reduce carbon emissions, improve air quality, and build resiliency in low income and disadvantage communities.
Distro, developed by S&P Global Platts, is a P2P marketplace, which enables energy consumers, generators and storage owners/operators (Participants), to buy and sell electric power with one another. In doing so Distro is creating an electrical microgrid where participants can buy and sell their unused electrical energy to whomever and whenever they want. Additionally, this system is designed to make all these trades based on past performance and predictions using artificial intelligence (AI). By use of this system communities like Pomona, can decarbonize while reducing energy costs for its Participants.
Distro adds to the opportunities the City has already embarked on, PCE. Because PCE already purchases power for most of the City’s businesses and residents, Distro can enable PCE to smooth out its purchasing demands by automating when power is discharged to the grid and when it is being stored. This allows for a better utilization of power during peak and off-peak demand cycles.
The Distro Program is being used in the Port of Rotterdam, which is the largest port in all of Europe. Becoming operational in 2020, Distro is expected to allow the port to become carbon neutral by 2050. There are 32 participants at the port which trade on the world’s first high-frequency decentralised energy market. Rooftop solar and battery storage increased participant profits, while at the same time lowered their electricity bills.
How Distro Works
Distro enables local renewable energy production to be transferred from any PCE local business or household to another, or be sold back to PCE. An example of this may be if a customer is generating more power than they are using they can sell it back to PCE, or directly to another PCE customer. Incentives to change the way a solar panel owning customer uses power is created by providing these customers with payments for their power, or reductions in their power bills. These incentives can be increased if the customer changes their power use patterns, thereby generating power for PCE during on-peak times and using during off-peak times. Additionally, customers with storage batteries can do the same, sell power to PCE during on-peak and store power during off-peak. This transfer all happens automatically, and with the use of Distro AI. Through Distro, peak shaving and load shifting is created within Pomona and the overall demand for on-peak power is smoothed and reduced. As a result, resource adequacy (RA) requirements – and expenses – are reduced.
Finally, P2P trading allows for trading to occur within PCE and at a rate significantly higher than SCE. Savings created from this exchange are shared between the customer via power bill reductions, the PCE through the reduction of on-peak power purchases and the reduced demand for purchased resource adequacy, and Distro through shared profits.
Next Steps
If council approves moving forward with the pilot project with Distro, the next step is to implement an initial small scale deployment. During this phase, data will be gathered to determine if large scale will provide the anticipated benefits of a full-scale deployment. The initial deployment would include 5 to 15 PCE customers who have already installed solar panels or a battery storage system.
Additionally, staff will work with Distro, and our PCE partners CalChoice, Pacific Energy, and Calpine Energy Solutions to strategize on the best ways to leverage project benefits. If the Program works as planned, staff will return to Council for a more robust agreement to implement the program full scale.
Prepared by:
Julie Carver, Environmental Compliance Supervisor
ATTACHMENT:
Attachment No. 1 – Draft MOU
Approve Distro and Pomona Choice Energy Pilot Project