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The recent Renewable Energy Market conference in San Francisco was the largest ever, indicating the ever increasing interest in this rapidly growing market. Companies including Biogen and BNY Mellon were rewarded for their action with Green Power Leadership Awards from the Environmental Protection Agency (EPA) recognising “Excellence in Green Power Use”. But with the statistics on growth, focus on international markets and discussion about the future of Power Purchase Agreements (PPAs), the conference demonstrated that there is still much more to come.
2015 was a stellar year for the voluntary renewable energy markets in North America, again delivering double digit growth. The market climbed 10 percent to 78 TWh, with more than 4.3 million customers participating in the green power markets. Despite all the focus and discussion on PPAs, the standout growth category was unbundled RECs, which posted 18 percent growth over 2014, with 70,000 customers purchasing more than 42 TWh. Unbundled RECs represented more than half of the voluntary market, demonstrating the efficiency and flexibility they offer to corporates to deliver on their renewable energy targets.
The international perspective
As the corporate demand for renewable energy increases, so too does the interest in international markets which offer multi-nationals the ability to meet targets across their global operations. At over 400 TWh, the European voluntary market is more than five times the size of North America. In addition, the entire European Guarantee of Origin (GO) market is registry transacted which is a critical factor in ensuring a credible market and enabling the necessary information flow to calculate residual mix grid factors. The residual mix is the grid attribute average that is not allocated to a specific end-consumer. If a consumer uses grid electricity without the cancellation of a GO (or other reliable tracking mechanism) then they are obliged to use the residual mix when calculating their Scope 2 footprint. Residual mix accounting is a key object of the GHG Protocol Scope 2 Guidance, and the European system is well placed to deliver, offering lessons for future developments in North America, which does not yet offer a consistent residual mix solution.
Another key distinction in Europe is that each country has a renewable energy production target. The GO system is designed to exclusively track which customers consume the renewable electricity produced, keeping it separate from production accounting, enabling consumer choice and supporting renewable electricity consumption claims. This means that the same MWh gets reported within the national production inventory and by the consumer purchasing and cancelling the GO against their corporate inventory. But crucially, there is only ever a single consumption claim evidenced by the GO, which is a fundamental requirement of all contractual instrument systems that support renewable electricity claims.
The future of PPAs
Google, the world’s largest corporate purchaser of renewable energy, presented at REM2016 and continues to execute PPAs and direct investments at an unprecedented scale. Importantly, much of the conversation was about how companies not buying 100 MW and not named Google can approach PPAs. Simplifying the complexity of PPAs is seen as key to unlocking the market for mid-sized companies. Though the solution is not yet available, through the work of organisations such as the Rocky Mountain Institute's Business Renewables Center (BRC), we expect to see more options for mid-sized companies in 2017.
There is also room for growth in the geographic scope of PPAs, which are currently concentrated across a handful of states in North America. Tracking systems, as used by renewable energy instruments, are a fundamental enabler of corporate PPAs to ensure the renewable attributes are allocated to the buyer. Through organisations such as the International REC (I-REC) Standard new tracking systems are being activated in markets including Uganda, Brazil and Israel. Once established, these I-REC markets will underpin the success of corporate PPA transactions enabling them to align with a broad range of operational locations.
With all these developments, and the number of people participating in the discussion at markets like REM, all indications are that the renewable energy wave is only going to get bigger.
To learn more about the EPA's Green Power Leadership Awards, visit their website.
To continue the conversation that started in San Francisco and to discuss the benefits of purchasing renewable electricity, please contact firstname.lastname@example.org for Europe and email@example.com for North America.