Calculating 100% Renewable Energy. Or More. Or Less.

At CAPOFX, a key factor that we use to determine total emissions from heavy power users such as data centers, food processors & heavy manufacturing is the amount of clean energy that’s independently produce.

The dynamics of the electric grid are such that it’s not intellectually honest to simply calculate a one-to-one relationship between clean energy produced and what the consumption of the given facilities is.

This principle stems from the fact that renewable energy (1) has a price (2) can be intermittent & (3) if produced in large quantities, has to be fed into the grid, turning it into commodity form.

We produced a robust methodology for calculating the % of renewable energy used by these companies in order to capture any emissions leakage or inversely, a net clean energy production.

The long and short of it is below.

  1. The demand sude loads vary every minute of the day depending on time of day (think everyone brewing coffee at 8am); weather (everyone cranking their AC) or day of the week (TGIF means no one is working).
  2. The supply is driven by this load & by the cost of production. Renewables, nuclear, hydro and coal generally cost less and depending on natural gas prices, the fossil fuels are high in cost. It is also worthy to note that nuclear plants rarely shut down and often provide low-cost, base power.
  3. Regional Transmission Organizations are mandated to balance the supply and demand and aim to refresh this balance every 5 to 15 minutes. As such, the price of power supply matching the load would vary over those intervals as well.
Example: Let’s assume a region at a certain time of day has 90 MW of power demand. The region also has 4 power plants supplying power (& at a price) as follows: A (10MW @ $5/MW); B (90MW @ $45/MW); C (200MW @ $60/MW) & D (5MW @ $2/MW).
The Regional Transmission Organization will supply the region in this order and in these amounts: D (5MW) >> A (10MW) >>B (75MW). This will be the least cost way to supply power. The power price for the overall will be $45/MW.
It is important to note this part because unless mandated, not all plants will be bid into the grid 100% of the time. This is especially true for renewable sources because the supply mechanics might actually be intermittent and in some cases, the sources might be expensive.

Upon understanding this dynamic, we assess how much contribution the individual sources contribute to the grid’s overall renewable sources. We then compare this ratio to that of the organization’s contribution to the load. Three things pan out:

  1. The organization in emissions neutral if the two ratios are equal
  2. The organization has emissions leakage if the renewable contribution ratio is less than the load contribution ratio
  3. The organization is a net producer of clean energy if the renewable contribution is greater than the load contribution ratio

Any questions, please comment or email [email protected]