Why 24/7 clean energy beats carbon offsetting

Post COP26, more companies will feel the pressure to decarbonize operations and one increasingly popular claim is 100% renewable energy – but so is the word ‘greenwashing’. In this context, the term is used to describe branding that makes power generated by fossil fuel seem clean, normally via renewable energy certificates (RECs). Although RECs are a first step towards supporting clean energy generation, they allow companies to claim 100% renewable energy when some of the energy they use is actually being generated by fossil fuels. To overcome the risk of greenwashing, some companies have committed to around-the-clock carbon-free energy, also known as 24/7 clean energy.

24/7 clean energy fixes the mismatches of power supply-demand, the associated grid congestion, and inherent CO2 emissions (notably by peak demand being covered by fossil sources, such as coal, oil and gas). It matches electricity consumption with carbon-free energy generation on an hourly basis, from resources on the same local and regional grids. As a result, 24/7 clean energy shifts from offsetting energy emissions (mostly through RECs) to 'time-location' tracked energy procurement, thus maximising real-time, local impact. 24/7 energy is fundamentally about recognising that with renewable energy, it DOES matter where and when you consume that energy – and it puts in place the mechanisms to address that challenge.

Supporting companies

Several initiatives aim to accelerate the transition to 24/7 clean energy. More than 100 global companies have joined the EnergyTag initiative, including tech giants, and energy companies like Statkraft and Vattenfall. Through partnerships, Google and Microsoft have enabled their data centres to become more sustainable through hourly energy monitoring and matching with carbon-free sources from their clean-energy portfolios. Google's Time-based Energy Attribute Certificates (T-EACs), for example, has enabled data centres to be 90% carbon-free on an hourly basis, up from 61% in 2020. Their target is to achieve 100% 24/7 clean energy by 2030. Cities like Des Moines have also followed suit. With momentum gathering, more cities and companies will be encouraged to join the round-the-clock clean energy plan.

Benefits:

1. Effectively reduce or eliminate carbon emissions associated with electricity use by ensuring that hourly electricity consumption is being matched with clean energy generation. This solves for the ‘dirtiest’ hours of energy consumption, maximising emission reduction.

2. Encourages development of mechanisms and technologies to ensure 24/7 clean energy. When companies value hourly clean energy, mechanisms, standards and technologies are built to support that mission (such as real-time energy monitoring, energy storage and granular clean energy).

3. Supports further investment in clean energy assets on electric grids by providing incentives for suppliers to always make renewable energy available in locations where renewables would have a larger impact on grid decarbonisation.

4. Reduces market risk and increases ESG scores. By matching demand on an hourly basis, companies ensure that their renewable energy consumption claims are true, minimising the threat of greenwashing allegations. Higher ESG scores also provide access to cheaper capital in a financial market eager to greenify investment portfolios.

Potential challenges:

1. Complexity in consumption matching and traceability: Sometimes companies procure renewable energy certificates to 'clean' their energy use. However, this does not guarantee 100% renewable energy is powering operations. Often, consumption patterns do not perfectly correlate to the renewable generation profile, resulting in consumption of non-renewable sources during periods of low supply. Currently, no standardised system exists to match hourly clean energy consumption and demand to real-time production.

2. Scaling multi-technology, hybrid, intelligent power systems: 24/7 clean energy relies on complex multi-technology renewable hybrid energy systems, connecting generation assets and storage technologies to constantly match demand load on an hourly basis. Most technologies are not yet scalable but progress is being made via artificial intelligence (AI) and IoT to enable effective clean energy supply and demand.

3. Limited market mechanism to transact for 24/7 clean energy: Currently, renewable assets are distributed unequally as they tend to be aggregated in areas receiving strong winds and sunlight. Renewable assets and thus clean energy supply are not localised, resulting in a reliance on renewable power purchase agreements (PPAs). Yet these agreements do not provide around-the-clock access to clean energy. For instance, a wind PPA may only supply buyers with clean energy 70% of the time. Therefore, a complementary market mechanism is needed to drive investments in renewable deployments in new areas to improve the localisation of clean energy supplies. Widespread distribution of renewable assets will enhance the accessibility and flexibility of 24/7 clean energy supply, and will deter consumers from using fossil fuels.

The process of carbon-free energy consumption, matched with energy procurement, can be simplified through several technological solutions:

1. Artificial intelligence of things (AIoT) monitoring and analytics: AIoT monitoring can collect data from assets, presenting a real-time view of an organisation’s energy usage. By integrating with generation assets, AI can optimise how power consumption matches generation on an hourly basis, notably via flexible demand, power forecasting and energy storage. This enables organizations to identify the share of renewable consumption and pinpoint areas of improvement, thus optimising energy procurement activities to achieve 24/7 carbon-free consumption.

2. Energy trading platforms: Integral to 24/7 carbon-free energy is the targeted purchasing of renewable energy instruments such as time-based energy attribute certificates. Trading platforms can facilitate access to such instruments by connecting marketplaces to upstream renewable resources, increasing accessibility to certified renewable assets and improving traceability of RE origin. Such platforms will play a huge role in supporting the volume, velocity and variety of transactions required to support 24/7 clean energy.

3. Energy storage systems: Essential in addressing the intermittency issue from renewables, additional clean energy during peak generation can be stored and supplied to consumers during periods of heightened demand. Energy storage not only reduces strain on the grid, but also enables participation in electricity markets (demand response, ancillary services, etc), hence expediting payback of investments.

Achieving 24/7 carbon-free power offers substantial benefits such as expediting grid decarbonization and reducing emissions to fight climate change. These benefits do not come without challenges, from understanding and mitigating the intermittency of renewable assets to developing a nascent market for 24/7 clean energy. While profitable tech conglomerates can afford global renewable assets and ensure clean energy around the clock for self-consumption, not all companies have the resources to follow suit. AIoT technology can help reduce costs of 24/7 clean energy using the ability to track, verify and purchase real-time clean energy, whilst supporting companies to report emissions transparently and effectively. In a time when current decarbonisation commitments fall short from Paris 1.5^oC target, the world needs 24/7 clean energy.