How Can Corporates Ensure a More Impactful Renewable Energy Procurement

Corporations are buying more renewable energy than ever before. More than 220 companies have pledged to 100% renewable commitments — the main driving factors being the decrease in costs, stakeholder pressure on sustainability, and regulatory trends.

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Green Energy Not Equally Green In Renewable Energy Procurement

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Today, sustainability leaders are focusing on making a more impactful renewable energy procurement. The hot topic now is purchasing the type of renewable energy that can significantly impact the energy transition. Ten years ago, a building owner could clarify if it had energy efficiency solutions installed or not — a binary choice. After reaching industry maturity, energy efficiency labels have been imposed, becoming a more sophisticated field. This same level of sophistication is now arriving in the renewable energy space.

Companies can purchase different renewable energy products: (1) unbundled energy attribute certificates, (2) green energy tariffs from utilities, (3) Power Purchase Agreements — long-term bilateral agreements directly with the energy producer, and (4) producing their own electricity on-site.

Each of these renewable energy products have a different level of environmental impact.

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What are the most important parameters to achieve leadership in impactful renewable energy procurement?

Additionality

One critical parameter in selecting renewable energy sources is additionality: the extent to which the chosen sourcing mechanism stimulates investment in renewable energy by creating new renewable energy generation assets. For this reason, a direct link between an energy generation asset and a consumer is vital. Consumers need to know where their money flows: the ideal objective is newly built plants from project developers that reinvest profits. Consumers need to be ensured that the environmental benefits they’re paying for are legitimate and wouldn’t have been delivered otherwise.

Energy Attribute Certificates coming from old power plants that have already been funded put in question the reinvestment of those funds into new assets. This is connected with the second important criterion that corporates are looking after when ensuring a more impactful renewable energy procurement.

Proximity

Part of the EU Commission’s Green Deal, the deal includes enabling cleaner air for a local area by replacing fossil fuel plants with renewable. Moreover, local economies and job creation are fostered, creating a more robust social impact case for a corporation. Consuming from local energy sources also helps distribution system operators to reduce grid congestions and therefore reduce costs.

At the present moment, EACs (Energy Attribute Certificates) already certify that the energy comes from a renewable generation plant. In some countries, it describes the location and the age of the plant. However, this information is not always easily accessible by the energy buyer. Often the data is stored in back-office registries managed by energy certificate suppliers. Excel files and calls are crossed between consumers and certificate suppliers, turning the process cumbersome and prone to errors. Therefore, checking additionality and proximity aren’t easy for corporates when buying green tariffs or unbundled energy attribute certificates.

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Emissionality

Emissionality is the third most important parameter in assessing the sourcing options. Emissionality refers to the avoided carbon emissions from renewable energy sourcing. The carbon intensity of energy is a dynamic value that depends on several geographic, meteorological, temporal, and usage variables.

Nowadays, there is a big misconception that being powered by 100% renewable energy implies net-zero emissions. Today, any company can claim to be 100% renewable by merely buying an amount of Energy Attribute Certificates that equals their consumption (in MWh). The problem is that these certificates are not based on time: they don’t carry an hourly stamp.

At the end of the year, a company could calculate their final energy consumption and buy an equivalent amount of certificates for the lowest price, to testify that the same amount of renewable energy was injected in the grid somewhere, at some point in time.

These calculations rely on monthly or yearly average aggregated data, disregarding that electricity’s carbon content varies substantially throughout the day and depending on the location and weather conditions.

This is why sustainability leaders such as Google have already taken action to map out if they’re carbon-free every hour, despite being 100% renewable over the year.

Internet 24/7: Carbon-Free Energy Should Be Too

Figure 1: Google publication on 24/7 carbon free energy

Other corporate examples, such as car manufacturer Daimler or telco giant Telefonica, also have secured 24/7 sourcing of renewables recently. Leading organizations such as RE100 have also published a guide on impactful renewable energy procurement with a longer list of case studies.

How can a company claim, prove, and communicate an impactful renewable energy procurement?

Find out the solution!