In the decades since the voluntary renewable energy credit marketplace cropped up, a bevy of options for acquiring renewables has bloomed. Companies can choose from options including buying RECs, investing in onsite renewables and signing virtual power-purchase agreements.
Now, a growing segment of corporate renewable buyers — many with goals of achieving 100 percent clean energy — are aiming for even more sophisticated purchasing models.
Last week, Google announced a step forward in its 2030 goal to supply all of its annual electricity consumption, which now stands at 12.2 terawatt-hours, with carbon-free energy* at all times of day and night. The tech company will work with the nonprofit Midwest Renewable Energy Tracking System (M-RETS) to match renewable energy credits to its electricity consumption on an hourly basis, rather than the current monthly standard.
If expanded, the model could offer corporate renewables buyers the granular data required to decarbonize a greater percentage of their electricity load.
“A [renewable portfolio standard] is not a decarbonization strategy; it’s a renewable procurement strategy,” said Ben Gerber, CEO at M-RETS. “There is an important distinction between when generation happens and when it’s claimed.”
Currently, companies meet voluntary renewables targets by making purchases that offset annual electricity use, rather than the more complex feat of pairing those purchases with when electricity is consumed. The M-RETS partnership, and another Google has in the works in Denmark, produces a more granular picture of electricity consumption: matching renewable energy credits to the hour they’re produced.
That gives companies the ability to buy credits around the clock, rather than the more commonplace volumetric approach that lets buyers take advantage of cheaper RECs produced at any time to balance electricity use over a month or a year.
The announcement is a significant step forward for the possibilities of corporate decarbonization. But experts warn that factors including data availability, market structure and the voluntary nature of corporate climate targets could stand in the way of wider adoption.
Google’s "sustainability moonshot"
In September, Google announced what it called its “biggest sustainability moonshot yet,” pledging to increase the ambition of its existing clean energy targets to 24/7 carbon-free energy. (It had already been matching annual electricity use to renewables purchases.)
How the tech giant would get there wasn’t immediately clear.
Corporations with clean energy goals most commonly sign onto virtual power-purchase agreements, contracting with developers to build new renewables projects and buying the associated RECs. Under current tracking regimes, RECs are associated with 1 megawatt-hour of power and are tied to a specific month, year and location in which that unit of renewable energy is produced. Tracking systems throughout the world monitor the sale and trade of those assets; some are regional, some statewide. M-RETS is one of those systems, tracking RECs across the U.S. and part of Canada.
That structure allows companies to match electricity usage with renewables on an annual basis. Google wanted to get more specific.
“We’ve been very vocal about the need for more data transparency about our electricity grids. [...] If you want Google and others to make the right purchase to help with green decarbonization, we need to know where we’re starting from,” said Maud Texier, the company’s lead on carbon-free energy for data centers.
Rather than leaning on the standard REC concept, Google’s work with M-RETS relies on hourly time-based energy attribute certificates, called T-EACS. Gerber at M-RETS explained the concept using an analogy he attributed to Greg Miller, a doctoral student at the University of California, Davis: switching from a standard-definition TV to HD. Just like the sharpened image clarity gained with that switch, retiring RECs on an hourly basis versus the monthly standard adds greater detail to the data. For some, that level of detail is unnecessary. Others treasure it.
“We think that the traditional process of RECs is totally fine, and we want to be very clear that [we’re] not saying that the current market is deficient,” said Gerber. “But there’s a whole new level of data that we can incorporate and layer onto the existing framework.”
Attaching RECs to specific hours lets Google tie purchases to more specific time intervals. That will make the company's procurement strategy much more complex; the sun doesn’t shine at night, after all. But it also could inch the company closer to full decarbonization because it requires solutions to meet demand when renewable electricity isn’t available. In December, Google announced its first plans for energy storage backup at a data center, an “operational pilot” that will have to expand as it ties renewables to certain hours.
“Most corporates are willing to go with the bulk procurement approach to ‘offset,’ but the reality is far more complex. Other industries wouldn’t be able to get away with it — would you buy salmon from a fish market that was farm-raised if the market purchased ‘wild-caught salmon credits’? Probably not,” said Dan Finn-Foley, head of energy storage research at energy consultancy Wood Mackenzie. “It’s voluntarily making things more complicated because it actually encourages renewables to serve the load [Google has]. It gets closer to true decarbonized business.”
"This is not data rocket science"
In recent years, more companies have pledged to reach 100 percent renewable electricity. In 2019, RE100, an organization promoting that goal, passed the threshold of 200 members. In 2020 it surpassed 260.
Some companies have gone further than pure renewables commitments: Microsoft plans to reach carbon-negativity by 2030. When Google announced its 24/7 plan, the company said it had also purchased enough carbon offsets — a controversial climate tool — to neutralize its historic emissions. In terms of corporate renewable energy commitments, Google’s interest in hourly RECs puts it in a leadership role, according to Finn-Foley.
But if companies are to drill down enough to actually wring carbon from their current and future business, they will need new ways of analyzing electricity use.
“As we look at more innovative renewable projects…or thinking about how our load-management or load-shifting programs fit into our decarbonization goals, hourly RECs and hourly grid data is critical,” Holly Lahd, Target’s lead energy program manager, told Greentech Media. The retail giant has established a goal of 100 percent renewable electricity by 2030.
M-RETS' Gerber regards data as the foundational step in any corporate sustainability plan.
“Whether it’s supporting 24/7 or a more nuanced understanding of decarbonization, that first step is the same no matter what, which is just providing the data,” he said. New data standards are required to widen the impact of these efforts, he added.
According to Gerber, hourly data is available. But it’s not easy to acquire, and a lack of standardization makes it more difficult to process. REC registries don’t precisely overlap with the areas covered by independent system operators and regional transmission organizations. Federal authorities such as the Federal Energy Regulatory Commission could help change that.
“This is not data rocket science. It’s really about market structures that are preventing implementation,” he said. “Without a real data standard, proving hourly data won’t have an impact, especially if it’s just M-RETS doing it. We know that this needs to be something that is accessible to not just Google but [also] mom-and-pop shops and smaller companies.”
Thus far, Google’s partnership with M-RETS is limited to the Midwest, where the nonprofit has a data-sharing agreement with the Midcontinent Independent System Operator. M-RETS is also working with another regional transmission organization to gain access to hourly data.
In addition to making data more widely available, policy changes could also require voluntary corporate standards. Companies have wide latitude today in how they frame sustainability goals and report progress. President Joe Biden and Democrats in Congress are expected to implement requirements on climate risk disclosure to the Securities and Exchange Commission, though some corners of the business community are pushing back.
Reaching the more ambitious goals of companies such as Google will likely demand policy levers. Texier said that Google hopes to see engagement at the state and federal levels to help markets prepare for more renewables.
“We need to raise the bar on how we’re looking at clean energy procurement [and] what is the impact of these procurements,” she said. “We all recognize that what used to work 10 years ago doesn’t really work today.”
*Correction: this sentence originally stated Google is investing in 24/7 renewables. The company is targetting 24/7 carbon-free energy.