Category: White Paper

Policy Brief: Assessing the Impact of Voluntary Actions on the Grid

Posted on May 22, 2024 by REsurety - Blog, White Paper

A Consensus Paper from ZEROgrid’s Impact Advisory Initiative, published by RMI and ZEROgrid

Assessing the Impact of Voluntary Actions on the Grid

Executive Summary

Over the past 10 years, voluntary procurement of clean energy by corporations has been a tremendous driver of renewable energy development. Since 2014, large companies have signed procurement contracts supporting the development of over 70 gigawatts of renewable energy in the United States,¹ in addition to purchasing renewable energy certificates (RECs), providing tax equity financing, and advocating regionally and nationally for more clean energy deployment. These voluntary procurement trends are continuing to scale and expand into other markets such as Japan, South Korea, and Taiwan.²

The urgency of the climate crisis is prompting many large energy consumers to consider how they can assess the impact of various actions on grid decarbonization and reliability. Such an assessment can be best made using consequential emissions impact analysis, which employs various approaches to estimate the difference between total global emissions in different possible states of the world.

Although many authors have published on consequential emissions impact analysis, there have been different views and until now no joint statement from differing authors on areas of consensus and how to resolve discrepant conclusions.

To provide greater clarity to corporate actors, ZEROgrid created the Impact Advisory Initiative, or IAI. The IAI comprises a group of expert practitioners from the National Renewable Energy Laboratory (NREL), Princeton University, REsurety, RMI, and WattTime who collectively identified key points of consensus as well as areas requiring further research.ⁱ

This paper provides an overview of the IAI’s findings regarding emerging areas of consensus about consequential emissions impact analysis, its implications, and areas where further research is required.

Areas of Consensus:

Defining Impact. The true impact of any voluntary corporate action (or any action) is the difference in total emissions between a world where the action was taken versus one in which it was not taken.
Components of impact. This impact is the sum of several different contributing effects, which must include the effects over the lifetime of the intervention — how an intervention changes the short-run operations of power plants, and structural change, i.e., how it changes the total supply of different power plants in the long run — to fully capture the impact of an action.
Estimates versus true values. The field has a number of ways to produce estimates of total emissions impact and its components. Although there is agreement regarding how changes to short-run operations can be quantified, the field currently lacks — and indeed may always lack — any generally accepted way to empirically verify estimates of structural change. Therefore, any approach that seeks to measure total impact has (potentially significant levels of) uncertainty.

ⁱ _{The ZEROgrid initiative brings together a group of corporate actors, including Akamai, General Motors, HASI, Meta, Prologis, Salesforce, and Walmart, seeking to drive deep decarbonization alongside increased power grid reliability and affordability, working in collaboration with emissions and reliability experts. Additional information is available at https://zerogrid.org/.}

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White Paper: Charging Towards Zero

Posted on August 7, 2023 by REsurety - Blog, White Paper

Harnessing Batteries and Carbon Contracts to Accelerate Grid Decarbonization, authored by Tierra Climate in partnership with REsurety

This paper examines the economic carbon impact of compensating batteries for carbon reduction using detailed electricity emissions data and a carbon contract. Carbon contracts with grid-scale batteries might provide corporations with an elegant solution to meet sustainability targets and decarbonize the electricity grid, which cannot be accomplished through renewable energy purchases alone.

In partnership with REsurety, the paper leverages REsurety’s Locational Marginal Emissions dataset as part of the calculating mechanism.

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White Paper: Emissions Implications for Clean Hydrogen Accounting Methods

Posted on July 13, 2023 by REsurety - Blog, Resources, White Paper

Authored by Carl Ostridge and Devon Lukas

Executive Summary

REsurety uses Locational Marginal Emissions (LMEs) data to analyze the effectiveness of the three carbon accounting methods proposed for compliance with new production tax credits available for clean hydrogen under the Inflation Reduction Act (IRA). This analysis considers 32 electrolyzer-renewable project pairs across 3 different grid regions (ERCOT, PJM, and CAISO) using hourly emissions and generation data from 2022. Seen in Table 1 below, the results show that, due to the difference in carbon intensities on the grid based on location and timing, determining “clean” hydrogen using Annual Energy Matching often results in significant increases in emissions despite the procurement of an equivalent quantity of energy from offsite clean energy to match the electrolyzer’s consumption. Further, Table 1 shows that while Local Hourly Energy Matching can help reduce net emissions in some locations, the impact of local transmission constraints often results in significant increases in net emissions even after energy is “matched” by hour. Finally, the Annual Carbon Matching method, using LME data, can ensure low or zero net emissions and qualification for the clean hydrogen production tax credit. The Annual Carbon Matching method also helps to incentivize development of electrolyzers in locations with cleaner grids with lower existing marginal emissions and the procurement of renewable energy in locations with dirtier grids and higher existing marginal emissions, therefore maximizing the ‘greening of the grid’ impact of the IRA legislation.

**Table 1:** Net emissions ranges for the three proposed accounting methods.

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White Paper: Paths to Carbon Neutrality

Posted on April 23, 2023 by REsurety - Blog, White Paper

Paths to Carbon Neutrality - A Comparison of Strategies for Tackling Corporate Scope II Carbon Emissions

A Comparison of Strategies for Tackling Corporate Scope II Carbon Emissions, published by Tabors Caramanis Rudkevich

The purpose of this paper is to provide a comprehensive, comparative study covering a variety of factors impacting the cost and implementation of corporate clean energy procurement strategies.

EXECUTIVE SUMMARY

FULL REPORT

Read the excerpt below to learn more.

Global climate change has pushed carbon emissions to the forefront of public scrutiny and scientific inquiry. Striving to reduce their net carbon footprint, large energy consumers have increasingly turned to renewable energy resources. These energy consumers have pioneered different approaches toward clean energy procurement, such as the RE100 initiative, Google’s 24/7 Carbon-Free Energy, Microsoft’s 100/100/0 vision, and the Emissions First partnership led by Meta and Amazon. This white paper examines different clean energy procurement strategies in terms of overall cost and effectiveness in carbon emissions reduction.

Using locational marginal emission rate (LMERs), we quantify the cost and carbon emissions impact of clean energy procurement strategies for corporate energy consumers with varying load shapes and within a variety of balancing authorities. We compare energy matching strategies against a strategy that directly accounts for carbon emissions, which we call carbon matching, for two different types of large electricity consumers in 5 different balancing authorities. Balancing authorities ranged from large ISO/RTOs (PJM and CAISO) to vertically integrated utility regions covering a regional (Duke Energy Carolinas) or municipal area (Los Angeles Department of Water and Power and Portland General Electric).

The results show the following:

Carbon matching, a strategy that directly accounts for carbon emissions using LMERs and ensures that avoided emissions are equal or greater than emissions attributable to load, is more cost-effective than any of energy matching strategies analyzed;
Energy matching does not guarantee reaching carbon neutrality;
Localized energy matching decreases carbon displacement efficiency;
Local energy matching may not be practical in certain regions, which could deter participation;
Hourly energy matching is the least efficient strategy at displacing carbon emissions, and its cost varies greatly depending on location

If you’d like to learn more about REsurety’s Location Marginal Emissions (LMEs) offerings, please contact us.

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White Paper: Carbon Confidence in Climate Finance, as published by HASI

Posted on April 10, 2023 by REsurety - Blog, White Paper

“LME is an important tool in assessing individual projects because seemingly identical renewable energy projects can have drastically different impacts on avoided carbon emissions.”

CarbonCount is a decision tool that evaluates investments in U.S.-based renewable energy, energy efficiency, and climate resilience projects to determine how efficiently they reduce CO₂ equivalent (CO₂e) emissions per $1,000 of investment. CarbonCount produces a quantitative impact assessment for investments’ carbon avoidance by integrating forward-looking project assumptions, emissions factors, and capital investment.

This white paper explains why CarbonCount matters, why it’s being updated, the methodology behind it, and use cases. REsurety’s Locational Marginal Emissions (LME) data is also featured in the paper.

Learn more here, or download the full white paper below.

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White Paper: Making It Count

Posted on April 13, 2024 by REsurety - Blog, White Paper

Updating Scope 2 accounting to drive the next phase of decarbonization

EXCERPT: Corporations are increasingly focused on reducing their carbon footprints by decarbonizing the electric grid. While solar and wind energy development have rightly been a mainstay of these efforts, there is growing consensus that producing more clean energy alone isn’t enough. To maximize grid decarbonization, clean generation needs to occur at times and locations where its output displaces the highest-emitting resources. Consumption timing and location should be adjusted to minimize its carbon emissions via siting decisions, demand flexibility measures, and energy efficiency. And energy storage is needed to manage grid congestion and mismatches between clean supply and demand.

Effective carbon accounting frameworks can help coordinate these complex mitigation strategies by allocating emissions among the entities responsible for producing them. These accounting frameworks attempt to ensure that activities with more impact on actual emissions have more impact on carbon accounts. Given the large and increasing interest of investors, customers, regulators, and governments in corporate decarbonization initiatives, effective carbon accounting frameworks can encourage corporations to maximize their actual carbon reductions.

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Friends Don’t Let Friends Use 8760s …at least not for revenue modeling

Posted on April 24, 2023 by REsurety - White Paper

Authored by Jennifer Newman, Vice President of Atmospheric Science Research, REsurety

White Paper Executive Summary

An “8760” (sometimes known as a “typical meteorological year,” or “TMY”) is a year-long hourly time series of expected generation for a wind or solar project. As the name implies, an 8760 contains generation values for all 8,760 hours of a year (non-leap year) and captures the typical seasonal and diurnal generation patterns at the site. Despite their widespread use in the renewable energy industry, there are two particular use cases of 8760s that can lead to significant errors in revenue estimation: 1) the pairing of an 8760 with a non-concurrent price time series and 2) the use of an 8760 as an input to a forward-looking price model.

The first, pairing an 8760 with non-concurrent prices, misses the impact of hourly wind and solar generation on market price, which can be particularly significant in markets with high renewable penetration. For example, Figure 1 demonstrates that pairing an 8760 with non-concurrent ERCOT power prices results in annual wind project revenue overestimates that can exceed 30%.

Graph showing the revenue estimation that can occur in renewable energy projects due to inefficient use of 8760s.

The second use case, using an 8760 generation profile as an input to a pricing model, does allow the user to capture the impact of hourly renewable generation on market price, if modeled correctly; however, the resulting distribution of forecasted prices will only represent the impact of a single, “normal” weather year. In reality, renewable energy projects will experience a variety of weather conditions, with non-typical weather years having an asymmetric and sometimes extreme impact on the price of power.

In this paper, we use observed and modeled data to quantify the impact of using an 8760 for renewable energy project value estimation, with a primary focus on wind generation. We demonstrate that pairing an 8760 with non-concurrent prices results in consistent wind project value overestimates in markets with significant wind penetration. We also show that using an 8760 to drive a forward-looking price model leads to a condensed price distribution that misses extremes and is not representative of historical price distributions.

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White paper: Locational Marginal Emissions

Posted on April 12, 2024 by REsurety - White Paper

A Force Multiplier for the Carbon Impact of Clean Energy Programs

EXCERPT: While the impressive growth in clean energy development is an encouraging signal that we can tackle the harms of greenhouse gases and climate change, we should remember that clean energy deployment itself is not the ultimate goal. Tracking environmental goals in traditional units of MWh of clean energy is an outdated and imprecise approach that does not measure the carbon emissions reductions actually achieved. For example, clean resources in locations where high-emitting fossil plants cannot be retired for reliability reasons have high carbon abatement value, as do clean resources whose output aligns with times of high emissions intensity on the grid. Batteries and hybrid resources that can shape clean energy injection to maximize carbon abatement can also provide decarbonization benefits that are ignored by traditional MWh-based accounting.

There is a better way to measure and incentivize clean energy resources. We propose that customers, markets, and policymakers embrace the concept of Locational Marginal Emissions (LMEs) as a force multiplier for directing their clean energy program dollars to maximize carbon impact. In our 2-year analysis of renewable energy projects across Texas, we found that directing clean energy deployment to the highest-value renewable projects has the potential to double the carbon impact as compared to a more traditional annual energy matching approach. Setting goals and measuring performance using carbon-based metrics can help organizations select generation technologies, make siting decisions, and operate resources to minimize their carbon footprint.

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Risk Mitigation for Corporate Renewable PPAs

Posted on March 30, 2020 by REsurety - White Paper

REsurety contributes a chapter on how to manage risk in virtual PPAs through Volume Firming Agreements in this new report by RE-Source, a joint platform of WindEurope, SolarPower Europe, the RE100, and the World Business Council for Sustainable Development.

EXCERPT:

Corporates have a variety of different drivers for looking to source power from renewables, but the possibility to lower and fix electricity costs is a major part of the rationale for these deals. A recent survey of 1,200 companies across six countries showed that, of those sourcing renewables, 92% of them are doing so in order to reduce energy costs. Although decarbonization commitments often provide the initial driver to consider renewable corporate sourcing, the ability for a PPA to reduce energy cost volatility and generate savings on energy bills over the long term is cited by
most corporates as providing the main business case.

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Cover of Risk Mitigation for Corporate Renewable PPAs report

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Accounting Primer for C&I Renewable Energy Buyers

Posted on October 18, 2019 by REsurety - White Paper

For C&I Buyers looking to mitigate risks in their PPAs, CohnReznick provides new accounting guidance on Volume Firming Agreements and Settlement Guarantee Agreements in a whitepaper co-published with REsurety.

EXCERPT

An important consideration for Buyers is how these contracts, or group of contracts, will be assessed for accounting purposes. Like a traditional vPPA, contracts like the SGA and VFA can require complex accounting analysis. The application of the appropriate financial accounting requires not only a clear understanding of the nature of the transaction and the rights and obligations of the parties to such agreements, but also the ability to appropriately navigate through the various Topics, Subtopics, Sections, and Subsections of the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”).

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Accounting Primer for C&I Renewable Energy Buyers

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