As we see a growing trend for 24/7 hourly matching, new questions arise about how it might reshape the energy attribute certificates (EACs) market as we know it today. Are all certificates created equally, or do some hold more value based on when and where they are generated? In this blog, we explore the ‘when’ factor to understand how the market may evolve in the near future.
We are also hosting an in-depth, interactive workshop on this topic in January – sign up here or scroll down to the bottom of this blog to read more.
What is 24/7 CFE or hourly matching, and why do we need it?
Traditionally, buyers procure a year’s worth of unbundled EACs, matching the volume of their annual consumption and claiming they are 100% renewable. The problem is these certificates might be generated when the company isn’t consuming energy or from markets unrelated to their own. This undermines the credibility of renewable energy claims, raising concerns of greenwashing.
Regulators have also recognised this risk. New guidelines are emerging, with current GHG Scope 2 carbon accounting practices under review. For example;
- In the EU, hourly matching is now mandated for renewable fuels of non-biological origin (RFNBO). Starting in 2030, renewable hydrogen production will need to match renewable electricity generation on an hourly basis.
- In the UK, the Financial Conduct Authority (FCA) is also rolling out anti-greenwashing guidance aimed at protecting consumers from misleading renewable energy claims.
Hourly matching differs from other clean energy procurement methods by aligning demand with generation on an hourly basis. To guarantee a match, corporations procure energy certificates with an hourly time stamp directly from renewable generators, usually validated by metre and grid data. This enables buyers to prove that their energy consumption is met with actual renewable generation, hour by hour.
But how will this affect EAC pricing as we see it today?
Insights from energy markets
Energy is a commodity that is already traded and priced at hourly intervals. Electricity dispatch models are the system commonly used in liberalised energy markets for price setting. This system attempts to ensure a balance between supply and demand in the most cost effective way for consumers, for each and every hour of the day.
The system operator ‘dispatches’ the cheapest energy sources to meet the forecasted energy needs for each hour, up to the total demand for that period. The last source dispatched sets the price for that hour. The bid from the marginal generator – the most expensive plant needed to balance the market – becomes the clearing price, which all generators receive. Under this system, the market receives direct pricing signals and has a clear understanding of times when energy is scarce or over-supplied.
On the other hand, EACs — REGOs in the UK, GOs in Europe, and RECs in North America — are traded at an annual price only. Participants can see price differences between various markets and technologies, but the timing aspect is generally limited to the year the EAC was generated.
"While the market values electricity with high-resolution supply and demand principles, it currently fails to value the renewable aspect of the energy produced."
– Paul Hill, Head of Energy Markets at Renewabl
The need for price signals in EAC markets
As the market for hourly matched renewable certificates gains traction, buying trends for EACs are expected to change. A buyer aiming for 80% hourly matched renewables will need to assess their current position and target specific technologies or hours to improve their Carbon-Free Energy (CFE) score.
Consider a buyer with a corporate PPA from a solar farm covering half of their energy needs. This agreement provides green energy mainly during daylight hours, with peak output in the spring and summer when sunlight is strongest. However, they will face a natural CFE 'short' during non-daytime hours and get less energy in autumn and winter when days are shorter, sunlight is weaker, and solar conditions are less favourable.
To address this shortfall and improve their CFE score, this buyer would need to complement their solar PPA with other sources that could balance out their supply. In this example, wind would be a good complimentary supply and it would improve their CFE score.
Scaling this scenario up, we see a large number of consumers looking for specific renewable profiles to improve their CFE score, targeting a supply that meets their hourly short position. We can anticipate higher demand for certificates during times when renewable generation is scarce (e.g., winter nights) and lower demand when supply is plentiful (e.g., sunny afternoons in solar-rich areas).
Under an hourly time-stamped system, not all EACs will hold the same value.
– Paul Hill, Head of Energy Markets at Renewabl
Not all EACs are created equal
The conclusion, based on supply and demand, is that under an hourly time-stamped system, not all EACs will hold the same value. Sellers will start recognising the higher value of EACs generated during hours of low renewable output and will charge a premium. For example, during the 'shoulder periods' when solar ramps up in the morning and down in the evening — times that typically align with peak electricity demand.
We are also likely to see periods where EAC supply is abundant. For instance, summer solar EACs from markets with high solar penetration — these will still be valuable for buyers focused on annual EAC volumes to meet their Scope 2 targets. However, as more companies adopt 24/7 CFE and as regulations push for more detailed Scope 2 carbon accounting, the demand for targeted, time-stamped EACs is expected to grow.
The role of flexibility providers
Already, in markets oversaturated with certain renewable technologies, we see the effect of price cannibalisation. This occurs when all generation aligns—solar plants producing when it's sunny, wind farms generating when it's windy. This synchronisation leads to oversupplied periods, pushing hourly electricity prices down. In markets with high renewable penetration, it can even result in negative hourly electricity prices.
Flexibility providers play a crucial role in the clean energy transition.
– Paul Hill, Head of Energy Markets at Renewabl
IEA projects global energy storage capacity to grow from 250 GW in 2023 to 1,500 GW by 2030. For these providers, price cannibalisation is an opportunity. Utility-scale storage operators can capitalise on this by charging storage during low-price periods and discharging when prices are higher. This helps to ‘flatten’ the energy price curve by adding demand during oversupply and supplying power when the market is short.
Storage providers could benefit not only from energy price arbitrage but also from creating more valuable, time-stamped EACs at the point of discharge. This would make investment in storage more attractive and could speed up capacity expansion.
Currently, regulations do not allow storage to claim EACs, but with platforms like Renewabl that can track and create transparent, hourly-stamped EACs in parallel accounting systems, there is hope that regulators will adapt. Energy Tag, the non-profit that developed initial industry standards for hourly renewable accounting, also acknowledges the value of EAC arbitrage for storage providers and is working to establish a suitable framework.
Buyers can also flex
Demand response programs can have a significant positive impact on energy grids. These initiatives encourage users to lower consumption during specific hours to help balance demand and enhance grid reliability and security.
Time-of-use tariffs also motivate users to shift their energy use from peak demand periods to times when supply is more abundant. This is done through price signals that incentivise changes in consumption behaviour.
It follows then that a shift to dynamic pricing of EACs could further financially incentivise buyers to move energy-intensive processes to times with higher renewable generation. To achieve this, the market would need clear price signals to better understand trends in periods of over- and under-supplied renewable energy.
A new age of dynamic pricing?
So how will sellers set their pricing when a single annual price point could shift to 8,760 hourly price points in a year? Given the role of renewables in electricity pricing, there may be a case for linking hourly EAC prices with hourly electricity spot market pricing. High electricity prices often result from low renewable generation during specific hours, requiring more expensive sources (e.g., gas peakers) to fill the gap. Low renewable generation also means fewer available EACs in that hour, so sellers might use spot market pricing as a benchmark for setting EAC prices.
Another pricing approach could be the creation of pricing blocks, such as solar and non-solar periods, also adjusted across months/seasons. This might be a simpler way for sellers to set their pricing as it can be implemented across a longer period of hours in a uniform way.
As with any other traded commodity, it will be sellers and buyers that will set pricing for hourly EACs moving forward, and will determine which methodology of pricing will become most prevalent.
Driving innovation in EAC pricing and procurement
At Renewabl, our role is to equip sellers and buyers with the pricing insights needed for informed procurement decisions. We are developing tools to support the setting of hourly pricing using the different methodologies mentioned above.
"Our goal is to be the benchmark index for hourly pricing and the leading facilitator for EAC procurement."
– Paul Hill, Head of Energy Markets at Renewabl
We achieve this by offering buyers and sellers a data-rich and cost-effective trading environment, along with robust portfolio management software to aid in decision-making.
If you're a renewable energy seller, join our workshop on January 21st to help shape the future of GO pricing models.
By joining this group, you'll have the opportunity to:
- Share your perspectives on current pricing challenges
- Collaborate with industry peers and stakeholders
- Influence the development of dynamic pricing frameworks that reflect real-time market conditions
- Help create flexible pricing strategies that maximise value for both suppliers and buyers
Don't miss this opportunity to play a role in defining fair, transparent, and future-ready renewable energy trading.
