I’m jotting this down because I made an abortive attempt to write a blog post about this property of 24/7 fossil free / carbon free energy a couple of months ago, and I was hunting around for the draft for quite a while before realising that I must have deleted it or lost it somewhere. I know my future self will want to come back to this later in the year, and I figure it might be useful to someone else as well. Off we go!
What is this 24/7 fossil-free matching anyway thing?
When I use this term, I’m referring to the concept that has been picked up in a number of energy and technology circles that basically advocate a better way of claiming to be running on clean energy, via the use of more granular, hourly certificates, instead of the current annual matching system used in most of the world.
At work, we’re updating our own verification process for the “green check” tooling and directory to reflect some of these changes, but:
- we expect it to be a long process
- we realise it’ll be new to a lot of people
So, we have our own request for feedback before making the changes – if this is of interest to you please check the post for more info.
Anyway, back to what’s wrong with the current annual matching system.
Solar panels at night
In short, the current, and most used system for counting energy as ‘clean’ is the GHG Protocol’s scope 2 methodology. This protocol is referenced in loads of laws, and broadly it lets you claim that energy is ‘clean’ using a process that involves certificates that guarantee energy produced has come from clean sources (these are almost always renewables of some form).
The claim works on the basis of looking at:
- the total volume of electricity that you use in a given year
- the total volume of clean energy certificates you have had allocated to match that your consumption.
If you can demonstrate matching amounts of consumptions and clean generation for a given year, then you can uses it as a basis for saying you are using clean / green / fossil free / carbon free energy.
Sounds ok, right?
Well, this means if you buy loads loads of clean energy certificates from solar generation, you can also use them to say that your energy consumption at night is “clean”, even though people are burning coal or methane gas to generate the power you are using.
This is obviously farcical (the sun doesn’t shine at night!), so after ten years, the whole way you can claim to be running on clean energy is changing, and the GHG Protocol has an open consultation about their new plans.
From annual matching to hourly matching
Under the newer rules, for most of the energy covered by the new system, you wouldn’t be able to get away with this any more. Instead, the matching will be tied to the hour of generation, so you if you wanted to say you’re running on clean energy for every hour of the year, then you’d need to be able demonstrate you have certificates for every hour of power that match the consumption you have at that time. If don’t have matching certificates for every hour of the year, you’d only get to claim to be using clean energy for the hours you have certificates.
So, in the solar example if you were only using solar as the basis with no batteries or other forms of clean generation, you’d only be able to claim something like 30-70% hourly matching, depending on where in the world you are, and how much sunshine it gets.
There is more to it than that, and there is a general tightening around how geographically close the generation and the consumption has to be as well, but broadly, the hourly shift feels like the biggest conceptual change for most people.
Okay, how does 24/7 matching help then?
You might ask yourself:
“Wow, this sounds complex and hard. Why is this a good idea again?“.
That’s understandable, because it’s not immediately obvious how this helps with the whole ‘clean up a grid’ thing, that green energy is supposed to help out.
This paper that I read a few months back, On the means, costs, and system-level impacts of 24/7 carbon-free energy procurement that highlights two relatively easy to understand effects that are key to a 24/7 approach, which are referred to as “profile“, and “volume“, and explains how this is intended to work at a systemic level.
It does require a good amount of prior domain experience though. Let’s start with a quote from the paper:
24/7 CFE procurement mitigates system-level CO2 emissions through two distinct mechanisms: “profile” and “volume”. The mechanisms origin from distinct aspects of the interplay between the 24/7 CFE procurement and the background electricity grids.
With that in mind, I’ll try to explain them in my own words – as much to check my own understanding as to help others get their head around it.
Effect one – “profile” – make your use match your consumption better
Here’s the quote from the paper:
First, a profile mechanism: participants doing 24/7 hourly matching procure clean energy resources that better match their demand patterns. As certain consumers align their demand with CFE supply on hourly basis, the need for dispatchable generation that can firm intermittent renewable supply is lower in the rest of the system. This mechanism can reduce the utilisation of fossil-based generators, such as OCGT power plants, which typically ramp up when wind and solar resources are scarce.
To put things another way, if you are using power at night in the example above, rather than just buying certificates from solar generation for the same year, you’d instead need to certificates for the night time hours too.
How would you do this thought?
You might invest in some kind of generation that works better at night, like wind in lots of parts of the world, or perhaps buy power from battery storage which has been filled up during the day when it’s sunny.
Because you’re getting your power from these two sources, you are no longer requiring people to run fossil generation like coal or gas to provide the power you’re consuming through the night, so it’s much more credible.
However, the credibility isn’t the only benefit, because in these cases here, wind and batteries provide other benefits that go beyond you getting to say they’re green.
Let’s assume you have these certificates because you have either invested i in these technologies yourself directly, or you’ve bought power on a tariff from retailer where they have done the investing for you. In both cases investing in the technology gets you the certificates, but crucially you’re actually buying real supply of real power too at that specific time.
Under the previous system, with annual certificates, even if you have ample green certificates for the year you still need to buy the the power from somewhere, and it’s very unlikely to be coming from the solar panels when it’s night time. A lot of the time, this likely means you’re buying fossil power from a wholesale energy market (or your energy retailer is on your behalf), where the price can be very very volatile. If lots of people want power at the same time as you it can be very expensive – either from you being directly exposed to the short term spike in prices, or from the retailer rising their prices over time.
Under the hourly system, because you’re actually matching your use of power to your generation, you’re not going out to the market to get what can be very expensive power – you’ve either shaped your consumption to avoid needing to buy power, of you have the power deliverable to you, from the batteries or wind that the certificates were coupled to. If you’re buying via a retailer, you might see more reasonable prices over time as they pass on their cost savings to you (or at least, though probably should…).
Effect two “volume” – Share what you don’t need for others to use
Here’s the second mechanism:
Second, a volume mechanism: even the cost-optimal procurement strategy for 24/7 hourly matching might include some amount of excess clean energy. If total CFE generation of assets procured by 24/7 participants exceeds demand in a given hour, the “excess CFE”is not counted towards a CFE target; however, it is clean electricity that can potentially be stored (using batteries or LDES), or sold to the regional grid. As for the latter, excess CFE might displace emitting grid generators or reduce the need to import electricity from neighbouring areas.
Let’s put this another way.
Basically, when your generation exceeds your own consumption, under this scenario, you’re able to make it available for others to use.
In slightly more technical terms, you are able to export it to the wider grid, which usually means you can sell it back to the wholesale energy markets we mentioned above.
Sharing the power back like this contributes to a temporary surplus of clean, cheap energy available the wider system. Other people can then buy this power to “bank” in their storage to use for later just like you might have done in the batteries example above.
There’s also an inverse of the example above where we shape our consumption to avoid the higher prices – in some cases, we might have shape our own consumption to take advantage of the lower prices instead, and use more energy when it’s cheap.
This is a bit like how people take advantage of special EV tariffs at home to charge an electric car when the cost of energy is cheapest, but for a wider set of uses of electricity.
The key takeaway
Ultimately 24/7 is about making the way you buy “greenness’ map more closely to how people buy power, to both get purchased with a single transaction, rather than it being two separate ones, where you might agree buy power up front, and then later on, buy a matching amount of clean energy certificates so you get to say it’s green. By linking them together more tightly, you’re tapping into budgets of the people responsible for buying power, who have a bigger budget than the people buying ‘greenness’ most of the time.
So really, the theory of change here is that it’s best to change how the bigger amount of money spent on energy is spent so it better reflects the qualities of the power being bought, in a single commercial agreement where one of these qualities is that it’s green, in addition to the other qualities, like the price hedging aspects and so on. While it’s plausible that someone selling hourly clean energy could unbundle the power they sell from certificates they sell, and research from the UK grid operator NESO suggests that at certain times, the certificates might be actually worth more than the power being sold, for the most part, hourly certificates seem to be being bundled with the power being bought.
This is quite a different theory of change to the approach where you’re relying on where someone buys power for the lowest price, then separately buys greenness in the form of unbundled annual certificates. If annual certificates are all worth the same, no matter what time of year it is, then you’re incentivised to buy the cheapest certificates you can get away with, and because there are no other benefits from buying them, it’s very hard for them to command a price that meaningfully helps fund new clean energy.
Sure, some companies do stuff like buying double, or triple the number of certificates they need to for the power they buy, like Green Geeks do, but that’s only to make up for the certificates being so cheap and the connection to the power they’re matching so weak – it’s folly to rely on people doing this out of the goodness of their own hearts outside of these isolated examples.
I hope this is helpful
Here’s the paper from Iegor Riepin, Tom Brown – who I now count as friends after they patiently explained this to me a good few times – On the means, costs, and system-level impacts of 24/7 carbon-free energy procurement.
The datasets and code it’s based on are freely available github, and permissively licensed, and they actually model the entire European energy grid, using an open source modelling tool, called PyPSA – Python Power Systems Analysis to help make the argument.
The paper itself is full of detailed modelling and further detail to explain these two mechanisms, as well as helpful figures for what this would actually cost under various pathways between now and 2030.
Hopefully this post gives the general idea – If it isn’t, please let me know and I’ll see what I can do to make it clearer, as this was a real aha movement for me when I finally got my head around it.
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