Cities across California are searching for practical ways to meet ambitious climate targets, improve community resilience, and bring energy costs down. From wildfire-related power outages to rising electricity rates, local leaders face mounting pressure to take more control of their energy future. Traditional options like forming a full municipal utility – by acquiring the investor-owned utility’s grid – have proven costly and slow, with only 7 out of 64 attempted municipal takeovers in the U.S. succeeding since 2000. In this context, a new solution is gaining traction: the Spark Community Utility (SCU) model. This approach offers cities a flexible, community-centered way to provide locally governed energy services without the high hurdles of buying out the incumbent utility or obtaining approval from the California Public Utilities Commission (CPUC).

A simple illustration of a community-scale energy network. The Spark Community Utility model lets cities opt-in to develop local energy services – starting with solar and battery programs – alongside the existing utility.

A New Model for Local Energy Services

The Spark Community Utility is a public utility model that enables a city (or group of cities) to operate energy services in parallel with the investor-owned utility (IOU), on an opt-in basis for customers. In plain terms, it’s not an all-or-nothing takeover of the power grid. Instead, the city establishes its own locally governed municipal utility that residents and businesses can choose to join, while the existing IOU (e.g. PG&E, SCE) continues to provide regular electrical service. Because an SCU doesn’t seize or use the IOU’s infrastructure, it can be launched without taking over any utility assets or needing CPUC approval. The city’s elected officials oversee the utility, ensuring that its mission aligns with public goals like clean, low-cost energy, reliability, and equity – rather than private profit.

This “targeted” approach to public power is gaining attention as a workaround to the regulatory and logistical roadblocks that have stalled local energy projects in the past. For example, the City of San José recently voted to explore creating San Jose Power, a city-run electric utility to serve new developments – a move seen as a once-in-a-century opportunity to guide growth with affordable, reliable power. San José’s effort is one instance of a broader trend: communities wanting more say in their energy systems. An informal coalition of energy experts called the Spark Communities Initiative is actively working with California cities, large and small, to advance the SCU model as a “breakthrough opportunity” for distributed clean energy. The core idea is that cities can start small, prove out local solutions, and gradually scale up – all while working alongside (rather than replacing) the incumbent utility.

Starting Small with Behind-the-Meter Solutions

One of the most appealing aspects of an SCU is that it can start at a manageable scale. Rather than immediately taking over as everyone’s power provider, an SCU might begin by offering voluntary, “behind-the-meter” services that help residents and businesses save energy and generate their own power. Behind-the-meter simply means equipment or programs on the customer’s side of the electric meter – things that reduce bills or provide backup power on site. By focusing on these services, a city can make progress on climate and resilience goals without becoming the customer’s primary electricity supplier from day one.

Possible initial offerings through a Spark Community Utility include:

• Solar and Battery Programs: Helping locals install rooftop solar panels and home battery systems, with city-facilitated financing and bulk purchase discounts, and monthly on-bill repayments that lower overall energy costs. This will boost clean energy adoption and provide backup power during outages.
• Energy Efficiency & Building Upgrades: Coordinating retrofits like efficient appliances, insulation, and heat pumps that cut energy use. The SCU can offer assessments, rebates, and on-bill financing to encourage these kinds of upgrades.
• Electric Vehicle Infrastructure: Expanding EV charging stations in the community and even offering shared solar-powered chargers. This supports transportation electrification and makes EV ownership more accessible.
• Neighborhood Resilience Projects: Installing solar + storage at critical sites (community centers, clinics, emergency shelters) so they stay powered if the grid goes down. These projects build public trust and showcase the value of local energy resources.

Crucially, these programs are opt-in – customers participate by choice. The incumbent IOU still delivers electricity and maintains their distribution grid as usual. But the SCU’s behind-the-meter services run in parallel to help achieve local policy goals. For the city, this phased approach is far less risky than a full utility takeover. It allows time to build operational expertise, customer relationships, and proof of concept. Residents see direct benefits (like lower bills and reliable backup power), which drives community support and momentum for further expansion.

City administrators familiar with programs like property-assessed clean energy (PACE) or community choice energy will recognize the pattern: start with voluntary programs that demonstrate impact, then consider expanding the scope. In fact, SCUs can complement Community Choice Aggregators (CCAs) – while CCAs focus on buying cleaner electricity for communities, an SCU can focus on local energy infrastructure and customer-side projects that the CCA and IOU aren’t addressing.

Scaling Up Local Energy Infrastructure

As an SCU gains traction, it can take on a bigger role in physical energy infrastructure. Scaling up might mean extending services from individual rooftops to whole neighborhoods or new developments. Here are two pathways that demonstrate how an SCU can expand its reach:

1. Connecting Community DER Clusters: One opportunity keeps the Spark Community Utility in a supporting role without taking on the responsibility for being the primary provider of power. In this model, the SCU links together clusters of existing distributed energy resources (DERs) – such as homes with solar panels and batteries – to form a local network or microgrid. For example, a neighborhood where many houses have solar + storage could be outfitted with control technology and a few new wires so that the homes can share power with each other. The SCU would operate this dedicated network to significantly reduce energy costs and provide community resilience and flexibility, even as customers stay connected to the main utility grid. Because the SCU isn’t replacing the primary supplier, it doesn’t become a full load-serving entity in this scenario. Instead, it functions more like a “backup grid manager” or a distributed system operator at the local level. This approach can be a win-win: the community gains a resilience boost (neighbors supporting neighbors with locally stored solar power during outages), and the city gains experience running a mini-grid, all without stepping on the IOU’s toes in everyday operations. An SCU facilitating a community microgrid could provide lifesaving resilience in neighborhoods across California.
2. Serving New Developments: Another expansion path is for the SCU to build and operate the electric distribution system in new housing or commercial developments from the ground up. Imagine a new subdivision or business park where, instead of the IOU running the poles and wires, the city’s muni installs its own modern, efficient grid to serve that area. The SCU would then become the load-serving entity for those customers – i.e. their primary power provider – delivering all electricity and maintaining the local grid. This approach offers a clean slate: the city can design the infrastructure for 100% clean energy and resilience (for example, integrating solar, battery storage, and undergrounded wires from day one). It also concentrates the SCU’s operations on a defined area, making the endeavor more manageable from the start. The trade-off is responsibility: once the SCU is a new community’s sole power provider, it must handle power procurement, reliability standards, and customer billing just like any utility. San José’s proposed new development utility is a case in point – it aims to serve large tech campuses via dedicated transmission lines, bringing economic development benefits, but it will entail full utility operations for the city. If done right, new developments served by a municipal utility enjoy lower rates (since public utilities don’t pay shareholder profits and certain taxes) and enhanced reliability by design.

Leverage Local Expertise and Collaboration

Implementing an SCU will require new capabilities for any city – but some may find they’re already well positioned to take it on. Cities that manage their own municipal water or wastewater systems have a leg up when it comes to running a community utility, as the challenges are similar when operating a local electric utility – like managing crews, planning capital projects, balancing budgets, and engaging the public. City agencies skilled in one utility domain can often transfer that competency to another. A public works department that successfully runs water and sewer services likely has procurement and engineering staff who can oversee contractors to build solar-plus-storage systems or new electrical lines. The familiarity with issuing bonds or levying fees for infrastructure could translate into financing local microgrids and solar programs. In short, cities that have already mastered utilities like water will find the SCU model a natural extension of their public service mission.

Even for cities without utility experience, the SCU model isn’t something they have to explore alone. In fact, working as a team may be the best way forward. Neighboring cities or counties with shared goals can band together to study SCU feasibility as a group, pooling expertise and resources. Joint action can range from informal knowledge-sharing networks to formal joint powers authorities that establish a multi-city community utility. Collaboration can also engage regional agencies and existing community choice energy providers, ensuring the SCU complements other local initiatives. Peer learning will be critical as the first SCU projects get underway. Thought leaders can share lessons on what business models work best, how to navigate legal questions, and how to earn community buy-in. Given the novelty of the SCU model, interest is growing in convening city leaders to compare notes – much like climate coalitions have done for zero-emission buses or building electrification. By exploring the SCU model together, cities can inspire confidence among policymakers and the public that this direction fits local priorities. The Spark initiative opens the door for new players: local governments and even private developers are invited to partner in demonstrating what targeted local utilities can achieve.

Moving from Idea to Action

The Spark Community Utility offers an innovative pathway for California cities to accelerate climate action, bolster resilience, foster economic development, and empower their communities – all by starting with practical, opt-in energy solutions and expanding from there. It’s an opportunity to reimagine the role of local government in the energy sector, not to replace the incumbent utilities outright, but to spark incremental change where it’s needed most. By starting small, proving success, and scaling strategically, cities can gradually claim a greater stake in ensuring reliable, clean, and affordable power for their communities.

If this model intrigues you as a city or public agency leader, there are resources to help you take the next steps. The Spark team has developed the SCU Roadmap Overview that outlines implementation steps and considerations for interested communities. Download the overview to dive deeper into how this model works. Then contact Bob Krause on the Spark team to explore the feasibility of a Spark Community Utility in your area. We can even help facilitate introductions to other cities exploring SCU feasibility with a stated interest in working collaboratively as they do so. By working together and thinking outside the box, California’s communities can light the way to a more resilient energy future – one “spark” at a time.