Emergence of aggregators, acting as intermediaries that combine many distributed renewable sources of energy, enabling them to participate in national energy market, will represent a key condition to integrate green technologies in the future. This model already exists, implicitly within the portfolio of large utility integrated companies.
This model has started to combine not only megawatt but also “negawatt” by aggregating different sources of flexibility on the demand side, and not only on the production side. Successful business models already have proven their short term viability in the US and now are introduced in Europe. They should reinvent themselves in the future to create added value for every participants of the very complex value chain.
I believe that this aggregation model could act a catalyzer of projects in the future low carbon city.
Firstly, aggregating various technological options at the city level would achieve a scale of emission reduction suitable to access carbon markets. Aggregation is widely practiced in investment focused programs. Establishment of cooperatives and financing programs are already examples of channeling funds to achieve a common goal. A crucial characteristic of such an aggregated programmatic approach is to enable alliances between public and private agencies, as well as financial and policy instruments. Broadly, aggregation can be described in two categories:
- Aggregation of similar actions in a given sector or sub sector (e.g. large scale replacement of light bulbs, high-efficiency premises, decarbonization of fleet programs).
- Aggregation of actions coordinated by a player across a range of sectors or sub-sectors (e.g. initiatives targeting energy efficiency in buildings, low carbon transport). A program run by a local government could overlap a range of activities in its area of jurisdiction, with direct intervention in its own activities and incentive-based initiatives that facilitate the participation of private sector and the community.
Carbon finance has an important role to play in reducing these mitigation costs. Carbon finance is accessible through regulated mechanisms, such as the Clean Development Mechanism (CDM) and Joint Implementation (JI) under the Kyoto Protocol and through the voluntary markets, using the Voluntary Carbon Standard and climate exchanges. The carbon finance approach gives a value not only on the multiple individual sector interventions but also on the integration of the different sectors. It attempts to factor in the numerous interdependencies between the various sector efforts and the corresponding direct local benefits.
City authorities, however, have not been able to fully access market mechanisms for carbon credits. Less than 1% of projects registered with the CDM are credited to cities. Indeed, as of Dec. 2009, more than 1900 CDM projects have been registered by the UNFCCC, the entity responsible for registering, approving, and monitoring projects and another 2600 are in the pipeline for registration. The number of registered CDM projects in urban areas is approximately 150, of which more than 90% are in the solid waste sector.
This is very limited number that is not reflecting the potential of citywide projects in the world.
