A functional approach to decentralization in the electricity sector: learning from community choice aggregation in California

Abstract

Decentralization of the electricity sector has mainly been studied in relation to its infrastructural aspect, particularly location and size of the generation units, and only recently more attention has been paid to the governance aspects. This article examines power sector (de)centralization operationalized along three functional dimensions: political, administrative and economic. We apply this framework to empirically assess the changes in California’s electricity market, which saw the emergence of institutional innovation in the form of community choice aggregation (CCA). Unpacking the Californian case illustrates how decision-making has moved from central state government and regulators to the municipal level in uneven ways and without decentralized generation keeping pace. We also explore the impacts this multidimensional and diversified decentralization has on the ultimate goals of energy transition: decarbonization and energy security. Our framework and empirical findings challenge the conventional view on decentralization and problematize the widespread assumptions of its positive influence on climate mitigation and grid stability.