Michael Pariser is on the origination and power marketing team at EDF Renewables North America.
Many of the largest corporate electricity consumers in the U.S. have committed to reducing their carbon footprint by powering their operations with renewable energy. However, the renewable energy they purchase might be generated at times that don’t coincide with their actual energy use, and the facility might be located in a different part of the electrical grid.
For some, this diminishes the impact of the renewable energy purchase in terms of reducing carbon emissions, prompting forward-thinking corporations to seek ways to achieve a closer match between their electricity consumption and the renewable energy credits (RECs) they use to offset it.
Annual RECs: A good place to start, but...
Under the current paradigm, a customer that retires a quantity of wind or solar RECs equal to the number of megawatt-hours of electricity they use in a year can claim to have offset their electricity use with 100 percent carbon-free power. In some cases, this can be accomplished with onsite solar generation, but for corporate buyers with large energy needs, it is often achieved through the purchase of RECs from a generation facility located elsewhere.
For example, a customer might purchase RECs from a wind farm that produces most of its electricity during one part of the day, but the customer’s electricity usage might be highest at another time of day when coal and natural gas are the dominant source of power on the grid. If the wind farm is located in a different region of the country, the customer’s purchase isn’t impacting the energy mix of their local grid, exacerbating the mismatch.
As such, while REC purchases do reflect the delivery of renewable energy to the grid, they often fall short when it comes to real-time local impacts.
Corporate customers who are truly committed to reducing their carbon footprint haven’t had a way to resolve this disconnect — until now. To address this issue, EDF Renewables has conceptualized a new market instrument called a GTECH. It’s a product that we are beginning to offer, but the concept is generally applicable across the industry.
So what's a GTECH?
GTECH stands for "green technology energy credit hourly." “Green technology” here refers to any generation source that’s carbon-free, and “hourly” means that the credit is digitally time-stamped so buyers can purchase locally generated GTECHs that directly match up with their electricity consumption (on an hourly basis at first, with finer increments possible in the future).
GTECHs can offer customers an innovative solution to bridge the gap between generation and consumption, and increase the integrity of their renewable energy purchases. GTECHs create a unique digital ID for each and every megawatt-hour of renewable energy delivered to the grid, complete with information about the location and the hour in which the generation occurred.
This gives companies the ability to seek out green credits generated within a specified distance boundary and within timeframes that align precisely with their actual energy consumption, enabling them to validate and deepen their statements regarding the use of carbon-free electricity.
The role of GTECHs: Greening the gaps
Corporate renewable energy purchases have helped bring thousands of megawatts of clean energy online. As efforts to decarbonize our electricity grid continue, the additional rigor introduced by GTECHs can help reduce demand for fossil fuels and send market signals that will drive additional investment in new sources of zero-carbon generation.
As buyers seek to reduce their exposure to fossil fuels, increased demand for more carbon-free energy at more specific times during each 24-hour period will send powerful market signals that incentivize the expanded deployment of commercially mature renewable technologies, as well as providing market support for technologies that are less commercially mature.
GTECHs make it possible for corporate buyers to cover their actual energy consumption with electricity delivered to the local grid on a near-real-time basis. This important refinement gives buyers the ability to target their purchasing power and confidently state that their renewable energy procurement is in fact creating cleaner air and a decarbonized grid.
GTECHs are ideally suited to enhancing the carbon-reduction benefits associated with a traditional power-purchase agreement or a financially settled virtual PPA. For example, the clean energy generation profile associated with a wind PPA might cover approximately 70 percent of the hours during which the buyer consumes electricity. But what about the other 30 percent of the time?
GTECHs can be used to “green the gaps” and help get the buyer closer to a 24/7/365 match between their electricity consumption and the delivery of carbon-free electricity to the grid. They give customers the power to transform our nation’s generation portfolio and help shift the world to a low-carbon future.
Is 24/7/365 carbon-free electricity possible?
The generation mix in certain regions of the U.S., particularly those with significant hydroelectric resources, is already sufficiently diverse to support carbon-free energy matching at rates that approach 100 percent. GTECHs can help increase the amount of real-time energy use covered by renewable energy for almost all buyers.
Demand for increased availability of carbon-free electricity will be critical to driving the additional investment and technological innovations necessary to truly transform our nation’s generation portfolios and transition away from fossil fuel-based energy sources.
Companies that are unable to achieve a 100 percent match on a 24/7/365 basis have the option to pursue a lower percentage match on a 24/7/365 basis, and/or a 100 percent match on a 24/7 basis during specific time periods, months or seasons.
Companies pursuing a 24/7/365 match may also have the option of managing their demand, either by reducing it or by shaping it to coincide with periods of peak availability of carbon-free electricity. Both alternatives have the potential to create cost savings.
Getting started on the path to zero carbon
A PPA or virtual PPA for new and additional renewable energy is the first major step for companies interested in reducing the carbon emissions associated with their electricity supply — I like to characterize this as “Sustainability 1.0." Entering into a long-term contract for the purchase of electricity from a renewable energy project under development may seem daunting for first-time buyers, but working with an established, experienced partner can help ensure the process is straightforward and predictable.
Once a buyer has the bulk of their clean energy needs covered through a wind or solar PPA, an analysis of their electricity use patterns can reveal the gaps that represent the times when the buyer’s needs are out of sync with the clean energy generated by the renewable asset with which they’ve contracted. Based on the results of such an analysis, GTECHs can be procured to move the company closer to achieving a 24/7/365 match — or “Sustainability 2.0.”
The pursuit of sustainability will be critical to catalyzing the transformation of our nation’s electricity supply and supporting the transition to a low-carbon economy. GTECHs are a completely new market instrument that will harness buyer demand for 24/7/365 carbon-free electricity to drive investment in and finance the deployment of nascent technologies, as well as extend the commercial viability of existing renewable energy assets.