For years, it’s worked. If a company couldn’t source enough renewable energy in its local area, procurement could buy certificates and ‘match’ the megawatt hours they represented to actual consumption. The fees would help fund the broader transition to renewables.
"The challenge is to find certificates that address factors like the desired percentage of renewable energy, preferred type of generation, geographic location, or the times of day when demand tends to rise or fall." – Gabriel Umana, Renewabl
Today we know the match was rarely perfect. Certificates have been generated on an annual basis, forcing companies to try and link their real and green consumption retrospectively — a gargantuan undertaking when you factor in variables like wind and solar intermittency. It either results in undercounting the actual renewable energy used, or accidentally over-stating it.
Certificates have also had a limited impact on additionality, hemmed in by the wider market environment and each generator’s ability to attract enough investment for new builds.
For certificates to deliver on their promise, something has to change.
Enter hourly matching
The imminent arrival of 24/7 carbon free energy (CFE) or ‘hourly’ matching is a big step forward. It enables companies to buy certificates on an hourly basis and match a given volume of clean energy demand with an equal volume of clean energy generation — on or about the time the electricity was used.
That strengthens the business case for certificates, even if there are understandable concerns about greater complexity and the potential for higher costs.
Some worry, for example, that hourly-matching means replacing 100% matching annually with 100% matching at every hour of the day. Adding ‘24/7’ to the description might also suggest that actual consumption must be correlated to clean energy certificates hour by hour, every day of the week.
Happily these are both untrue. It's also worth noting that hourly matching is different from carbon offsets, a mechanism that enables greenhouse-gas emitting organisations to subsidise another entity that emits less.
Let’s try and clear up any confusion.
How does it work?
Hourly matching differs from other clean energy procurement methods by matching demand to consumption on an hourly (and eventually sub-hourly) basis. To guarantee a match, corporations acquire energy certificates with a time stamp of one hour from renewable generators, usually validated by meter and grid data.
In the UK, clean energy certificates are called Renewable Energy Guarantees of Origin (REGOs) and issued by the Office of Gas and Electricity Markets (Ofgem). In the European Union they’re called Guarantees of Origin (GOs) and are issued by a number of EU accredited national bodies.
Generators apply for REGOs or GOs to be issued and sell them to energy consumers. They function as a commodity, so can be traded like power on the over-the-counter (OTC) market.
Why is hourly matching important?
Hourly matching will become a priority for corporate energy buyers very soon. Coming regulation around sustainability disclosures will essentially make it a requirement for compliant ESG reporting.
In nutshell, any claims a company makes about its renewable energy consumption will need to be backed by detailed data. Short of having major onsite capacity, a renewable generation plant nearby, or PPAs that cover 100% of your needs, corporates will have gaps to fill.
Regulators want more detail
How they’re filled will need to be quantified at a level of detail that only hourly matching can deliver. It will be vital for avoiding accusations of greenwashing and the penalties that will soon be attached.
There are also voluntary disclosures to consider. Organizations like RE100 make committing to 100% renewable electricity consumption a requirement for membership. The commitment must be supported by either net-zero self-generation or electricity purchased from net-zero sources, including green energy certificates.
To stay in step with the latest mandatory disclosure rules, in the very near future we can expect voluntary disclosures to be based on hourly matching too.
"Renewabl’s online marketplace enables you to search for clean energy certificates using all these variables and more, then purchase them in the volumes you need." – Gabriel Umana, Renewabl
Clarity and transparency
Annual matching leaves energy buyers open to greenwashing accusations because transparency is harder to achieve. Every organisation has a unique consumption profile that blends multiple generation sources. With annualised certificates, green generation could theoretically be matched with consumption across a 12-month window, day or night — something likely to raise eyebrows if solar is in the mix.
Addressing intermittency
Moving to hourly matching could also help overcome the intermittency problem. Using annual certificates, a corporate buyer could stick with the firm’s traditional load profile while claiming to be 100% powered by renewables. Though accurate on paper, it would ignore the reality of fluctuating carbon-free electricity on the grid during periods when renewables aren’t abundant and prices tend to be higher.
Stoking internal demand
There is also hope that reporting a company’s level of hourly matching will create internal pressure to push whatever fossil fuel generation remains out of the consumption profile. As the percentage of hourly matching increases, demand for more flexible net-zero production and demand response will grow too, helping overcome a key barrier to the renewables transition.
What are the challenges of moving to hourly matching?
Perceived complexity
Buyers need to understand the mechanics of obtaining hourly certificates, adopt best practices to ensure the price and choice of supplier is optimised, and then apply the certificates strategically to support net zero goals.
The need to determine the organisation's electricity consumption mix
To benefit from hourly matching you first need to gather your current consumption data and create a consumption profile.
It will answer important questions like:
- What proportion of your power comes from renewables, non-renewables, self-generation from on-site solar arrays, or via PPAs?
- To what extent is intermittency a factor in energy supply?
- Does the local grid have reliable sources of green energy?
Most of the consumption data is readily available through smart metres, your PPA agreements and any certificates you own currently. The answers will show you where hourly matching can help fill the gaps.
Getting hold of the certificates you need
While Ofgem issues a wide variety of hourly certificates, finding certificates that fit your company’s consumption profile can be challenging.
How do you get started?
1. Measure
Calculate the overall level of matching between your consumption and clean energy generation on an hourly or sub-hourly basis to generate a carbon free energy (CFE) score.
2. Monitor
Many organisations start by aiming for renewable energy matching of 60-70%. If that’s enough then hourly matching may not be necessary, but if you’re on a path to net-zero the goal should be 80-90%. The final 10-20% can be addressed when certificates are issued in increments of 30 minutes or less, something likely coming next year.
3. Buy
Purchase certificates directly from renewable energy generators, brokers or on a specialist trading platform. Visit the Renewabl to run a tender specifically for your needs. Execute the transaction.
4. Measure again
When your hourly matching programme is in place, re-calculate your CFE score. You’ll be able to report hourly-matched green energy consumption to regulators with confidence.
How can Renewabl help?
Many organisations still consume a proportion of electricity from plants that burn fossil fuels, making it harder to achieve corporate net zero commitments. REGOs and GOs have been a useful tool for compensating carbon-intensive grids while providing a level of funding for new renewable capacity, but their effectiveness has hit a ceiling. Coming regulation will soon render annualised green energy certificates impractical as a way to source clean energy. Hourly matching is coming.
In order to take advantage of hourly matching, energy buyers can now purchase certificates on an hourly basis. The challenge is to find certificates that address factors like the desired percentage of renewable energy, preferred type of generation, geographic location, or the times of day when demand tends to rise or fall.
Renewabl’s platform enables you to search or run a tender for clean energy certificates using all these variables and more, then purchase them in the volumes you need.
Want to find out more?
FAQs
What are renewable energy certificates?
A renewable energy certificate provides proof that a quantity of energy has been generated from a renewable source like wind, solar, or hydroelectric.
What is hourly matching?
Hourly matching enables companies to buy renewable energy certificates on an hourly basis and match them to a volume of clean energy.
How is it different from annual matching?
In the past, certificates were issued on an annual basis and had to be applied retrospectively, making it difficult to match the amount of clean energy purchased to actual energy consumption.
What’s a PPA?
A power purchase agreement or PPA is a contract between a corporate energy buyer and a clean energy seller. The buyer agrees to buy an agreed volume of renewable energy over a specific time frame.
– With files from Renewabl contributor Mark de Wolf.