The city of San Francisco’s Board of Supervisors recently voted 8-3 in favor of a program that would allow residents to switch to 100 percent renewable energy in a move that offers hope for drastic reduction in carbon emissions.
The $19.5 million program, called CleanPowerSF, will be operated by Royal Dutch Shell’s (NYSE: RDS.A) Shell Energy North America, and it will automatically enter half of SF’s residents, giving them an opt-out option. The program (scheduled for a duration of 5 years) requires at least 90,000 of the 375,000 residents to make the whole idea worth the effort.
Should the program work, the city would see drops in carbon emissions almost 10 times more than what it has already cut. CleanPowerSF also presents a competition to Pacific Gas and Electric Company (NYSE: PCG), which currently operates the city’s utilities. Under a 2002 state law, municipalities can choose their own electricity provider.
Residents who decide to stick with the program will face a $9–per-month rise in their utility bill, while commercial increases may average around $18 per month.
Should customers balk at that, the city of San Francisco might end up owing Shell up to $15 million. On the other hands, if residents can wait around for the long run, the city will earn profits overall and can develop city-owned renewable power facilities.
The whole idea bears echoes of what Direct Energy is doing over in Texas under their New Leaf Energy initiative. New Leaf allows customers in the Greater Houston, Dallas-Fort Worth, and Corpus Christi areas the option of sourcing their electricity supply directly from renewable sources (for now, that means Texan wind farms).
It’s a good sign that cities are actively focusing on encouraging mass-scale switch-overs. But the real difficulty lies in convincing customers to give the whole thing a long-term try, since most of us like seeing our returns immediately.