Corporate clean energy commitments have proliferated in recent years, driven by growing sustainability and decarbonization goals. For example, nearly 400 global corporations– including well-known brands like Starbucks, eBay, and General Mills – have pledged to achieve 100 percent renewable targets to offset their annual greenhouse gas (GHG) emissions from electricity consumption through their membership in the group RE100.
More recently, several large corporate electricity customers, such as Google, Microsoft, Iron Mountain, and others have started procuring “carbon-free energy” that more closely matches their corporate hourly electricity load profile on a 24/7 hourly basis. It’s a concept that has come to be known as 24/7 carbon-free energy (24/7 CFE).
This shift from procuring 100 percent renewable energy on an annual basis to 24/7 CFE on an hourly basis marks a potentially important evolution of corporate efforts to promote clean energy and increase the deployment of renewables and a broader range of “carbon-free” generation technologies. A recent EPRI white paper explores this growing interest in procuring and supplying 24/7 CFE.
Corporations are making significant clean energy investments. According to Bloomberg New Energy Finance (BNEF), corporations purchased a total of 36.7 gigawatts of clean energy worldwide in 2022, despite ongoing uncertainty in the direction of the global economy, continuing supply chain disruptions, and high inflation. The procurement of almost 37 gigawatts of clean energy through power purchase agreements (PPAs) in 2022 represented an increase of 18 percent over 2021.
Until recently, however, 100 percent renewable energy targets have been established and evaluated based on a company’s electricity consumption over an entire year. To achieve these targets, companies typically have used a mix of renewable power purchase agreements and renewable energy certificates (RECs) – one REC reflects one megawatt-hour of generation from a renewable source like wind or solar – to equal their annual consumption of electricity. Under the GHG Protocol Corporate Accounting and Reporting Standard that many corporations use to track and account for their scope 2 GHG emissions, a company can buy and use renewable energy and RECs to reduce to zero the GHG emissions associated with its consumption of grid-based electricity.
From Annual to Hourly Procurement
As described in the white paper, some corporations have altered their approach to procuring renewables and carbon-free electricity to more closely match the renewable energy they purchase to the actual electricity and GHG emissions associated with their hourly electricity consumption.
For example, since 2017, Google has matched 100 percent of its electricity consumption with renewable energy on an annual basis. However, Google reported that despite matching 100 percent of its global, annual electricity consumption with renewable energy in 2019, only 61 percent of all the electricity the company used that year was matched with regional, carbon-free sources on an hourly basis.
The reason: the electricity delivered to data centers and other company operations is undifferentiated grid power. Put simply, procurement of renewable energy sufficient to cover a company’s annual load doesn’t mean the electrons delivered are generated entirely by carbon-free sources. Recognizing this, in 2020 Google announced its current goal to match its operational electricity use with 24/7 CFE for “every hour of every day of the year” by 2030. Since then, other large corporations have started seeking to procure carbon-free energy to match their hourly consumption.
There are other indications momentum behind 24/7 CFE is accelerating. For example, there are 111 members of the 24/7 Carbon-free Energy Compact, which was launched at the United Nations High-level Dialogue on Energy in 2021. Signatories include energy suppliers, industry groups, investors, grid operators, and governments. In addition, Eurelectric, an organization representing more than 3,500 European utilities, recently helped launch the 24/7 CFE Academy. The academy provides online courses to help companies and other organizations move towards the continuous procurement of carbon-free energy.
In the U.S., President Biden signed Executive Order 14057 in 2021, requiring federal facilities to be powered by 50 percent carbon-free energy on a 24/7 hourly basis and 100 percent carbon-free on an annual basis by 2030. In February, PJM, America’s largest independent system operator, announced it was responding to requests from corporate customers seeking to achieve 24/7 CFE targets by facilitating trading in time-matched renewable energy certificates. U.S. utilities like Georgia Power, Nevada Energy, Entergy, and Xcel also are taking steps to meet demand for 24/7 CFE. For example, Georgia Power received regulatory approval for the Carbon Free-Energy Around the Clock program in its 2022 Integrated Resource Plan.
Accelerating Decarbonization, and an Opportunity for Energy Providers?
Advocates of 24/7 CFE procurement emphasize several potential benefits. One is that 24/7 CFE could result in deeper GHG emissions reductions than may be possible by matching annual load with clean energy. There may be other potential benefits of 24/7 CFE, including grid support that could come from increased deployment of storage and renewables designed to match hourly CFE demand. Energy companies may also benefit by developing new 24/7 CFE products that attract and retain customers.
Significant Challenges, and Questions to Answer
There are also significant and wide-ranging challenges to more widespread 24/7 CFE procurement. Overall corporate demand today is small, and its prospects are uncertain. Another potential hurdle is that some corporate clean energy buyers are focused on “emissionality” in their procurement decisions. This refers to the potential impact a new renewable power plant may have on marginal GHG emissions in a regional power grid. Prioritizing emissionality could reduce demand for 24/7 CFE.
The challenges go well beyond procurement criteria and include everything from inconsistent definitions of carbon-free energy and a lack of available resources to deliver CFE products, to potentially high procurement costs and insufficient availability of consistent hourly generation and load data. Because 24/7 CFE is so nascent, there are no standard contracts offered by suppliers, which can add cost and time to the procurement process.
The mix of challenges and opportunities underscores the importance of ongoing research and development. Some important questions to answer going forward are:
- What are the potential grid benefits of expanded 24/7 CFE? Proponents argue that better matching hourly loads with CFE will help grid operators manage increasing volumes of variable generation and storage. Research can investigate this potential and whether other products or operational changes may be more cost-effective.
- Can 24/7 CFE accelerate decarbonization? One recent study concluded that it could lead to greater decarbonization than 100 percent annually matched renewable energy, albeit at a significant cost. Additional research and modeling potentially could confirm this finding and more fully compare 24/7 CFE with potentially more cost-effective decarbonization strategies.
- What are the impacts of 24/7 CFE on regional power systems and reliability? The importance of grid reliability is growing as transportation, space conditioning, and other end uses are becoming increasingly powered by electricity. Understanding the potential reliability impacts of 24/7 CFE are important.