The type of clean energy strategy a company adopts directly influences its impact on emissions.
Strategies which seek to match the global electricity consumption of the company with renewable generation from anywhere in the world may result in renewables deployment on completely different grids from where the electricity is consumed. This raises some points to consider.
The first is that the rate of emissions on the grid where procurement and consumption takes place may differ, which leads to discrepancies between the corporate electricity-based emissions vs the emissions reduction resulting from renewables production. If the load is situated on a high-emitting grid but the generation is from a cleaner system where perhaps renewables resources are more abundant and lower cost, then the actual reduced emissions may be much less than the emissions caused by the company’s demand.
Second, since it is much easier to obtain low-cost PPAs in some regions than others, matching electricity consumption on a global basis could produce a concentration of corporate PPAs in regions where development is most accessible. As a result, regions with more challenging development conditions, where the benefit of these investments would be greater, will tend to benefit less.
The period of time over which the company matches its load with clean electricity production significantly impacts the size of the resulting emissions reduction. In annual matching strategies, the company will produce excess renewables in some hours and depend on grid electricity during other hours. In systems with significant amounts of variable renewables, the hours in which new projects generate electricity will tend to correspond with the hours when the average emissions of the system are lowest, since this tends to be when other renewables generators are producing, particularly for solar. In contrast, the hours in which the new project has low generation and the company needs to ‘import’ from the grid will also tend to coincide with higher average grid emissions, since other renewables production will also tend to be lower.
This principle is driving an increasing interest in locational and time-based matching for corporate procurement. It should be recognised that annual-based matching such as the RE100 initiative loses its value as the variable renewables share increases.
