The next era of corporate renewables procurement is here
Make room, additionality and locationality. Meet ‘proof of impact.’
By Doug Miller and Meerim Ruslanova
In the span of just about a decade, corporate renewable energy procurement went from a novelty to a dominant global force.
By 2015, corporations and other voluntary institutional buyers contracted for more wind energy than utilities in the U.S. By 2018, corporate renewable energy demand for wind and solar combined totaled nearly a quarter of new renewable energy capacity. New records were set again in 2019 for renewable energy procurement as many first-time buyers entered the field. Global corporate renewable energy procurement was up 44% over a record-setting 2018 and triple what the market saw in 2017.
We have entered a new era where more than 225 of the world’s largest corporations have committed publicly to 100% renewable energy procurement goals under the RE100 initiative.
Corporate renewable buyers are now influential — and highly educated — participants in global renewable energy markets. They are so educated, in fact, that they hold substantially different demands and expectations from clean energy markets compared to a decade ago.
New era, new expectations
In general, buyers want to more-directly target environmental and social impacts and — ultimately — prove their public claims. Buyers increasingly want to fulfill a growing list of impact criteria for renewable energy procurement, especially newer metrics like additionality (investments that get new renewable energy capacity built and added to the grid) and locationality (caring more about which grids the renewable energy comes from). It is no longer enough to simply stake a general claim to ‘green energy.’
We believe that corporate buyers’ endgame is proof-of-impact renewables procurement: they want to claim, prove, and communicate that they helped add specific new renewable energy projects to the same grids where they physically consume electricity based on their actual energy consumption in these locations.
If the entire market evolves in this direction, such proof-of-impact renewables procurement has the potential to drive significant progress toward meeting the world’s decarbonization targets. However, to make proof-of-impact procurement possible, we need digitalized, data-rich renewable procurement platforms. For our part, we at Energy Web (EW) believe that digital, decentralized, open-source software can help deliver.
In this piece, we explain how impact requirements of corporate renewable energy buyers have evolved over the past decade and the implications for procurement. We also explain how we at EW are accelerating the development of open-source digital solutions that support proof-of-impact renewable energy purchasing by 1) enabling direct procurement platforms that help buyers more easily make and prove renewable energy purchases across their global footprint and 2) future-proofing the tools we use for energy markets.
The march toward proof-of-impact renewables
Corporate renewable energy buyers — the multinational corporations that source their electricity from renewable energy to achieve their respective voluntary goals — want streamlined, low-cost solutions to better claim, prove, and communicate positive environmental and social impacts with a data-rich picture.
Energy attribute certificates (EACs) — including renewable energy certificates (RECs) in the U.S., guarantees of origin (GOs) in the EU, and international renewable energy certificates (I-RECs) elsewhere around the world — have served and will continue to serve as the required proof for legitimate claims for any megawatt-hour of renewably generated electricity.
Over roughly the past decade, corporate buyers have changed the impact criteria they look for in their renewable energy procurement beyond the standard criteria captured by EACs. These buyers are pushing for solutions that help them better convey their respective impacts.
The corporate march towards proof-of-impact renewables procurement:
Nevertheless, while there has been significant growth in renewable energy demand among buyers, we still need to increase market access and unlock demand from more buyers — including currently uncommitted corporates, small and medium enterprises (SMEs), households, and electric vehicles (EVs) — to scale demand beyond the existing supply of renewables projects and associated EACs. Efforts to remove various barriers to market entry should happen in parallel to efforts to help corporate buyers achieve their ambitious impact targets.
The corporate buyer’s endgame
Buyers increasingly want to fulfill a growing list of impact criteria for renewable energy procurement — namely, additionality, locationality, and 24/7 matching. But in the not-too-distant future, buyers will likely seek solutions that include additional environmental impact-related criteria, such as the following:
- Emissionality: finding and supporting projects that have the greatest avoided carbon potential, which may in various cases like this example clash with locationality goals;
- Renewably-powered fleets: powering all electric vehicle (EV) fleets with renewables and making the switch to sustainable biofuels where electrification isn’t possible;
- Renewably-powered supply chains: empowering suppliers to procure renewables and reporting procurement with sufficient verification and confidence; and
- Social impacts: capturing various social impacts of renewable energy projects like maximizing the number of jobs created, number of people that gain access to clean electricity in remote/off-grid locations, and peace implications in fragile regions.
The need for better digital procurement platforms for buyers
All of these proof-of-impact criteria require modernized digital procurement platforms. This is why EW is supporting members like PTT in Thailand and wider ASEAN, PJM EIS in the U.S., Foton in Turkey, and Mercados Eléctricos in Central America with building new digital platforms for buyers to address buyers’ needs and increase market accessibility.
These platforms are built using Energy Web Origin, a series of open-source software development toolkits that align with existing industry standards like The International REC Standard. They all aim to streamline the user experience for buyers and reduce the various costs associated with finding, buying, claiming, and reporting their procurement.
Importantly, they also leverage the Energy Web Decentralized Operating System (EW-DOS), an open-source software technology stack purpose-built to support new digital solutions for the clean energy transition. Some of the same software solutions that EW-DOS enables, like i) establishing a digital identity for a solar panel, wind turbine, or an electric vehicle, or ii) enabling EVs to charge with 100% green energy, or iii) allowing wind farms to generate EACs can also be used in other ways by grid operators, not just renewable energy markets. (More on that in a minute.)
These procurement platforms are also expected to support new business models and contractual arrangements to increase renewable energy demand and give suppliers a new backlog of unfulfilled demand. Examples of new business models and financial arrangements include “EAC futures agreements,” where buyers commit to procuring the EACs from specific future projects and automatically receive EACs from verified renewables generation after projects go live. EAC futures agreements will help project developers, particularly in regulated markets found in many developing countries and parts of the U.S., increase the bankability of their projects and offer buyers a simpler arrangement compared to power purchase agreements (PPAs).
Future-proofing the tools available for global energy markets to promote interoperability with grid operators’ systems
A new era of digital renewable energy procurement platforms can and should also support grid operators. Taking a look under the hood of new digital procurement platforms like those mentioned above, the core technical modules baked into these platforms — like public blockchain and decentralized digital identities for customers, devices, and market participation by customers and devices — can support new digital tools for both renewable energy buyers and grid operators.
Right now, a few companies — mainly tech giants like Google, Microsoft, and Facebook — are asking for solutions that provide ‘24/7 matching’ based on the hourly or even minute-by-minute measured consumption profile of a given company facility. These buyers want a more-granular view showing that their procurement matches their consumption precisely for claims they want to make about real-time renewables procurement. Consider Google’s strategy outlined here.
The often-discussed topic of 24/7 renewables procurement by corporations is also an important consideration for grid operators. Even though a select subset of buyers may want a 24/7 view on their renewables procurement, the actual impact of this in terms of increasing demand for new projects is debatable at best.
Most grid operators already or will soon find themselves in a position where they need new tools to manage increasingly complex grids. As we onboard an increasing number of renewables and distributed energy resources (DERs) with the help of corporate buyers, electric grid operators have more complex grids under management. Grid operators should consider emerging examples like Austrian Power Grid to better understand how decentralized technologies — namely, the combined use of public blockchain and digital identities — helps solve various pain points for managing the increasingly complex grids under their management and making trusted data about electricity customers and devices available for multiparty access for future, not-yet-built digital solutions.
The opportunity for utilities and energy companies to take a first-mover advantage by building modern digital solutions for buyers with EW-DOS
Numerous utilities, energy companies, and startups (like the examples mentioned earlier) are already building their own new commercial renewable energy procurement solutions for buyers using EW-DOS. The open-source EW-DOS technology stack includes the Energy Web Chain — the world’s first and currently only public, energy sector-specific blockchain — and tools to establish digital identities for customers and devices.
EW invites companies to use the publicly accessible EW-DOS to develop digital solutions that help buyers achieve their proof-of-impact endgame for renewables procurement. EW also invites corporate buyers to advise, build, test, and ultimately use these platforms to ensure they deliver the necessary proof-of-impact with a user-friendly experience.
Interested renewable energy procurement solution providers and corporate buyers should contact Doug Miller (doug.miller@energyweb.org) and Meerim Ruslanova (meerim.ruslanova@energyweb.org) to learn more about how to get involved.
