Maximising energy users’ role in net zero with carbon-free hourly matching [Promoted content]

A week ago at COP28 the United States Federal Government, the nation’s largest energy user, signed the UN 24/7 carbon free energy (CFE) compact committing to match every hour of power consumption with carbon-free energy on every grid globally. This is a new approach to energy sourcing known as 24/7 carbon free energy (CFE) whereby energy buyers can massively reduce their carbon footprint by matching their energy demand with clean and renewable power every hour of every day.

Marianne Karu, Business and Communication Director at Eurelectric.

The EU has been spearheading the adoption of hourly matching in the Renewable Energy Directive (RED) as part of the certification rules to qualify hydrogen as renewable. Following the EU example, the US is now considering similar rules for the clean hydrogen production tax credit created by the  Inflation Reduction Act.

Why is this big news?

24/7 CFE is the next level in corporates’ commitments to decarbonisation. Today, prevailing CO2 and renewable reporting systems used by large energy consumers do not account for the actual type of energy physically consumed at a specific time. Without local hourly matching, a big company in one location can take its assets’ average annual energy consumption, purchase that same volumetric amount with the help of renewable energy certificates and claim to be powered by “100% renewable energy” on paper. 

While achieving 100% annual renewable procurement is a valuable effort to add renewable capacity, this does not actually guarantee zero emissions. What is often ignored is that these renewables pledges are based on annual consumptions at different times and places from the actual time and place of consumption. 

With a 24/7 CFE approach, instead, corporates can match their energy use with certified clean and renewable power on an hourly or sub-hourly basis. Any big energy user ​can achieve their hourly match by procuring clean electricity on the same grid and generated at the same hour as where they consume power. 

To maximise hourly matching, corporates can add storage, demand response, and flexible technologies to their energy portfolio, complementing variable renewables. Granular energy certificates validated by meter and grid data with a time stamp of one hour or less guarantee this timely match. 

In this way, hourly matching enables corporates to maximise their emissions reduction while accelerating the decarbonisation of the electricity grid they feeds from. A study from Princeton University confirms that only a 100% hourly matching would ensure a fully decarbonised energy supply. On the contrary, 100% renewables pledges, based on annual certificates, are found to only cut corporate emissions by 40% to 70%. Even hourly matching percentages below 100% can increase decarbonisation more than 100% annual renewables pledges. 

Then, why isn’t everybody talking about it? 

As with any innovative approach trying to scale, awareness is key. Today, market players know little about the benefits that hourly matching can bring to their company and the overall society, so let’s start from there. 

More transparent carbon accounting

To label a procurement strategy as 24/7, energy certificates – known in Europe as Guarantees of Origin (GOs) – need to achieve a much higher granularity, ideally every hour or less. This is why issuing bodies must “time stamp” the GOs, stating the precise moment the underlying energy unit was produced. To avoid double counting, a confirmation framework must also be developed to ensure accuracy.

A voluntary system of Granular Certificates is emerging today, drawing from experience with voluntary schemes operated on a commercial non-legislative basis. The EU has just enabled this new certification type in the RED’s latest review, confirming its pioneering role in carbon accounting.

Boosted storage and digitalisation

Hourly matching also brings a clear incentive to develop new technologies for storage and flexibility necessary to complement variable wind and solar generation produced and consumed within the same hour. This includes the development of technologies such as long-duration storage.

Furthermore, guaranteeing hourly matching via time-stamped certificates requires smart meters at both the point of production and consumption. As more corporates move to hourly matching, this will propel grid digitalisation with better access to granular and standardised data.

Markets can thus more closely align with the physics and economics of the grid as well as the variability of supply and demand.

Improved Hedging 

A study from Eurelectric and Pexapark confirms that hourly matching can improve a corporate’s hedging strategy. 

Last year’s surging energy prices flagged the urgency for dependable energy solutions. Hedging acts as a protective measure against unpredictable energy shifts. One of the most common forms of hedging a certain volume of energy is via renewable power purchasing agreements (PPAs). 

A 24/7 CFE approach improves renewable PPAs’ effectiveness as a hedging tool against price volatility by ensuring higher price certainty and reduced exposure to spot markets thanks to the more granular match of energy supply and demand. In other words, if I de-risk my energy demand with an hourly matched PPA, I reduce the need to resort to volatile spot markets to source energy. To give an example, in 2022 a buyer located in Finland with a 10 megawatt (MW) constant electricity demand would have saved up to €14 million with a 90% hourly matching. 

The study confirmed that 90% hourly matching could be achieved by optimising a portfolio of wind, solar, and battery storage assets, and that reaching 100% is not necessary to achieve significant hedging benefits. The journey counts more than the destination. 

Embarking the 24/7 CFE journey 

Existing clean and renewable technologies are already enough to begin the 24/7 CFE journey. The first step is understanding your own percentage of hourly matching shows Eurelectric’s 24/7 buyers guide. There are different services available today to help companies collect their energy consumption data, assess gaps and develop tailor-made roadmaps towards 24/7 CFE. Eurelectric’s guide on how to integrate hourly matching into procurement contracts is the latest. 

As an early signatory of the UN 24/7 CFE Compact, Eurelectric is committed to bringing hourly matching from niche to mainstream with the 24/7 CFE hub which develops solutions for corporates to accelerate power system decarbonisation. Will you join us for the ride?