Energy Trends 2021: What’s Happening In Energy & Sustainability
The pandemic has given us an opportunity to take a step back and rethink our response to climate change. Governments are now putting more weight behind the green transition. We discuss some emerging trends in corporate energy and sustainability with expert insight from the team at FlexiDAO.
The pandemic has been a big reset button for many aspects of life. The way we work and socialize has come under the microscope and some aspects may never be the same again. One thing that was due for a reset, however, was our global collective ambition on fighting climate change.
Thankfully, some world leaders have acknowledged this and have signalled that the green transition will be an integral part of recovering from the economic fallout of COVID-19. The recent press release from the “EU-Canada Leaders’ Virtual Meeting” highlighted this sentiment stating, “Leaders emphasized their commitment to build back better by putting in place recovery plans incorporating green transition and digital transformation, while leaving nobody behind.”
With more government support for the green transition, emerging energy trends and trends in the sustainability sector will accelerate in the coming years. In light of this, we’ve internally discussed some energy trends that could become more relevant in 2021 and beyond.
So what are the latest 2021 energy trends?
1.Corporate PPA’s are on the rise
A Corporate PPA refers to a power purchase agreement between an energy generator and a company that typically uses large amounts of electricity. The market for Corporate PPA’s has been largely driven by the big tech companies signing long-term agreements to offtake power from large-scale solar and wind farms.
Companies from other sectors are now also getting involved and continuing to drive the expansion of the corporate power purchase agreement (PPA) market. In 2019, corporations bought a record 19.5 GW of clean energy through PPA’s. The pandemic will undoubtedly have an impact on the 2020 figures. But we would expect to see more records broken in the coming years as the market develops.
PPA’s are getting more competitive with wholesale power pricing, becoming more accessible and suppliers are creating flexible and innovative contracts to tailor to the needs of corporate buyers.
We asked Paul Haupmeijer — Head of Business Development & Innovation at Flexidao — for his thoughts on the Corporate PPA market:
“PPA’s used to be only suitable for the very largest corporates, because of volume, financial requirements, complexity, and long-term nature of the contracts. However, we’re now seeing a movement towards PPA structures that are less intimidating which is opening up the PPA market to lower volume offtakers. Through innovative structures such as ‘fractional PPA’s’, PPA’s could become accessible to small commercial and even residential electricity users in the future.”
2.Hourly Matching for Zero Carbon energy slowly takes off
Hourly Matching (or Synchronicity) will be a new concept for a lot of green energy buyers. Even though the principal is quite straightforward, “Hourly Matching” does have a lot of potential to be a gold standard for impactful green procurement.
With a traditional green power contract, a company’s annual energy consumption will typically be offset with the cancellation of an equivalent amount of renewable energy certificates. The issue with how this works currently is that the time of energy consumed and energy produced do not necessarily match. For example if a corporate operates a plant 24/7 and buys 100% Solar EAC’s to offset this power use, consumption and energy production can’t possibly match. Solar PV doesn’t produce power at night so the real-time energy consumed will need to come from a different source, potentially fossil fuel based power.
Under an “Hourly Matched” green power contract, the power consumed in real-time will be “matched” and offset with an equal amount of green power generated in real-time by a renewable energy plant. This approach is a much better replication of how the grid actually works and how power is produced and consumed. It enables energy buyers to understand exactly where their energy is coming from and what their carbon emissions are at any given moment.
While the uptake of “Hourly Matching” has been limited at the moment, it’s expected to gain traction in 2021. Companies such as Microsoft, Google or FlexiDAO have been recently working on the Energy Tag initiative. This initiative has tasked itself with three main goals:
- Setting a standard for an hourly time-stamped energy certificate and guidelines for a voluntary market
- Coordination of demonstrator projects to showcase technology and kick-start market development
- Raising awareness of the importance of hourly accounting of energy
The CEO of Flexidao, Simone Accornero, offers his insight to the development of hourly matching and the Energy Tag project:
“In 2021, we expect to see early demonstrators of hourly matching at a global scale in Europe and the US. This will be driven by the Energy Tag initiative, which will see the first standard for hourly matching to be adopted worldwide. Our view is that blockchain should take a critical role in this — being the technological enabler of hourly certificates trading and tracking.”
3.More ambitious renewable and carbon targets
Microsoft’s latest sustainability strategy outlined their ambitious carbon targets for 2030. They state that:
“By 2030, Microsoft will be carbon negative, and by 2050 Microsoft will remove from the environment all the carbon the company has emitted either directly or by electrical consumption since it was founded in 1975.”
Source: Microsoft Official Blog
There aren’t many companies with this level of ambition. To target removal of all carbon emitted since its inception is way beyond the norm and sends out a strong signal to other companies. We expect more companies to follow Microsoft’s lead and create highly ambitious renewable and carbon targets in the coming years.
More than 1000 companies have already pledged carbon reduction targets in The Science Based Targets initiative. For many of them, these targets do not only apply to direct Scope 1and 2 emissions but also to their supply chain emissions (Scope 3).
Joan Collell, COO of Flexidao, shared his view on corporate level renewable and carbon targets:
“Since many companies have already reached 100% renewable energy procurement, they’re looking for new challenges to improve their impact. Companies will start looking more at the quality of the renewable energy that they buy. They will focus on additionality, proximity, higher renewable energy quality, and hourly matching. The market leaders such as Google and Microsoft are already doing so.”
4.Green Gas European market takes shape
Keep on reading and discover the entire trends list here!
