Can 24/7 carbon-free energy become a global standard?

Over the past few years, corporations and cities wanting to up their game in the effort to combat climate change have pledged to run on 24/7 carbon-free energy. That means matching every hour of energy they use with carbon-free megawatts generated in the same hour instead of just buying enough clean energy to cover their energy consumption averaged out over a year’s time.

But for these kinds of pledges to become reality, 24/7 carbon-free energy requires something that so far has been lacking: a commonly accepted standard for how to track and confirm those hour-by-hour carbon-free energy trades.

The EnergyTag initiative wants to change that. On Thursday, the nonprofit group released what it hopes will become an international standard for taking 24/7 carbon-free energy credits mainstream.

The proposal lays out standards and guidelines for what EnergyTag dubs ​“Granular Certificates.” Currently, energy attribute certificates are used to track clean energy purchases on an annual basis. Those annual clean energy certificates, which include ​“renewable energy certificates” in North America and ​“guarantees of origin” in Europe, are the standard mechanism for companies, cities and other clean energy buyers to achieve 100 percent clean energy and be able to back up their claims.

The new Granular Certificates would ​“take that existing framework and modify it slightly to add a time stamp [showing] the hour or the half-hour in which the electricity was produced,” EnergyTag founder Toby Ferenczi said in an interview. ​“Consumers can then use that instrument to say where their energy came from in a specific hour or half-hour period.”

Back when renewable energy was scarce, averaging out clean energy purchases over a year’s time made sense, Ferenczi said, since no matter what, renewables ​“were always replacing fossil fuels.” But as renewables have grown to make up a significant share of some power grids, ​“timing becomes a massive factor because you have times when you have overproduction of renewables and other times when you don’t have any,” he said.

That’s why companies such as Google and Microsoft and cities including Los Angeles and Des Moines, Iowa are committing to 24/7 carbon-free energy. Doing so allows them to direct investments toward clean energy projects that can cover the dirtiest hours of a grid’s generation mix with cleaner power, pay for energy storage that can store clean power for use when it’s scarce, and take steps to shift when they use power to better match the available supply of clean energy.

In short, in the words of the United Nations’ 24/7 Carbon-free Energy Compact, an international consortium of energy providers, buyers and governments, the concept is ​“both the end state of a fully decarbonized electricity system, and a transformative approach to energy procurement, supply, and policy design that is critical to accelerating its arrival.”

But without common standards for how to collect, track and verify the data that goes into these hourly measurements, there’s no way for everyday energy buyers and sellers to create the same kind of mass market for 24/7 carbon-free energy credits that now exists for annual renewable energy certificates and guarantees of origin. Large and sophisticated energy buyers such as Google and Microsoft have been forced to crunch the data, sign long-term energy contracts and operate their data centers in a way that optimizes their 24/7 clean energy usage on their own.

That creates a risk that ​“everybody is going to create their own certificates and their own systems,” Maud Texier, carbon-free energy lead for Google, said in an interview. Google has developed its own version of 24/7 carbon-free energy credits, which it has dubbed Time-based Energy Attribute Certificates (T-EACs), and it has been using them in energy trading pilot projects with North American registry M-RETS and Danish transmission grid operator Energinet, among others.

But ​“we want to make sure there’s consistency in the data they’re tracking, and also interoperability,” Texier said. That’s why Google has joined scores of companies, utilities, transmission grid operators and technology providers that have been working with EnergyTag on its standards development.

“We have critical mass from all the utilities in Europe, big corporates and governmental supporters,” Ferenczi said. Other EnergyTag backers include Microsoft, clean-energy developers Acciona, Enel, Engie and Quinbrook Infrastructure Partners, major energy traders such as Centrica, Constellation, SSE and Vattenfall, and energy storage and management technology providers Fluence Energy, Hitachi, Itron, Mitsubishi and Stem.

That list also includes key energy certification entities such as the Association of Issuing Bodies in Europe, M-RETS in North America and the International REC Standard Foundation, which works in other parts of the world. That degree of buy-in affords EnergyTag the confidence to call its Granular Certificates standard ​“the internationally recognized standard for hourly” renewable energy certificates, Ferenczi said.

“This is about harnessing consumer demand to send the sharpest price signal possible to make the maximum impact possible,” he said. ​“That’s why it’s important to have this as a robust, tradable instrument,” one that EnergyTag and its partners hope to put into use in its earliest forms by the end of this year.

A standard for trading clean energy by the hour

EnergyTag chair Phil Moody knows a lot about how existing schemes operate and just how much work lies ahead for the EnergyTag consortium. From 2001 to 2020, Moody served as secretary general of the Association of Issuing Bodies, the entity that developed the standards for the European Energy Certificate System, which governs the ​“guarantees of origin” that are the European equivalent of renewable energy certificates.

That structure now manages the issuance, transfer and cancellation or retirement of more than 700 million megawatt-hours of clean energy trades per year across the European Union, from major corporate power-purchase agreements to consumer-based clean energy products.

But to reach that scale ​“requires a standard,” Moody said. Most importantly for EnergyTag’s Granular Certificates (GCs), that standard must combine the data needed to track the physical delivery of energy with the certificate itself, such as ​“how you create Granular Certificates, how you move them from person to person, and how you cancel or expire them.”

The chart below describes that chain of custody, which is overseen by an ​“issuer,” such as the entities that register RECs in North America or GOs in Europe. It also involves energy producers such as wind or solar farm operators, energy traders that connect those resources with buyers, and the buyers that cancel the certificate, thus securing its claim to having consumed the energy in the same hour it was produced. 

“A key part of the standardization process is bringing everybody together to say, ​‘These are the things that you put on your certificate,’” said Killian Daly, EnergyTag’s operations manager. That includes definitions of the data collected from the meters that measure energy output from producers and consumption from end users.

“Without a formal standard, interoperability becomes very difficult,” Daly pointed out. ​“We’re also standardizing APIs,” the application programming interfaces that allow machine-to-machine data exchange, ​“so all the registries can talk to each other.”

The GC standard also sets rules to ensure participants aren’t engaging in any shady dealings, he said. ​“How do you know a wind turbine isn’t selling the same amount of energy on four different systems? That’s double-counting, and that’s the worst possible thing you can do in these systems.”

Complicating this double-counting issue is the fact that hourly GCs will need to be traded alongside annual energy attribute certificates (EACs) for quite some time, Daly said. That will require coordination by registries to ensure that the underlying energy being tracked is properly categorized, as the chart below demonstrates. 

Ferenczi noted that the EnergyTag standard doesn’t specify the technologies to be used to share these common data sets. Instead, ​“the traditional [renewable energy certificates] registries are starting to become capable of adding the missing data field — the missing time stamp” that differentiates GCs from annual energy attribute certificates, and then tracking that data in central data repositories.

Along with that work, ​“there are some startups that are creating bolt-on” technologies, such as distributed ledger or blockchain systems, that could manage the secure and verifiable data transfers involved.

Some of these technology combinations are already being tested in the 10 demonstration projects EnergyTag and its partners are running. European power market operator Nord Pool is working with startup Granular and U.K. transmission grid operator National Grid ESO to develop trading mechanisms for GCs. Microsoft has been tracking hourly wind energy from Vattenfall for its data centers in Sweden and from Eneco’s offshore wind farms for a data center in Amsterdam.

Maud Texier highlighted Google’s work with software provider FlexiDAO, which is also working with Microsoft and Eneco, to simplify data access and aggregation for its data centers in Denmark, Ireland and the Netherlands. ​“That is important for registration bodies to register these certificates — they need access to that user data, that generator data,” she said.

Energy storage, green hydrogen, carbon accounting and other next-stage applications 

Other use cases for EnergyTag’s GCs are not yet as clearly defined, Moody said. ​“We realized there are other things we need to think about. How do you deal with carbon? How do you deal with storage? That’s what we still need to work on.”

EnergyTag uses the term ​“guidelines” to refer to these next-stage applications, he said. Those include some important factors, including the issue of ​“geographical matching.” 

Any system that purports to measure the hour-by-hour exchange of energy from where it’s generated to where it’s consumed must determine whether the power grid infrastructure connecting those two points is capable of carrying the energy that is being accounted for, Moody said. But that’s not as simple as it sounds. Electricity doesn’t flow from point A to point B in an easily determined fashion; instead, it energizes a networked grid that’s constantly undergoing complex and shifting power flow conditions.

Moody cited some obvious examples of a disconnect between physical electricity delivery and the credits that track it, such as European power consumers claiming credits for carbon-free power generated in Iceland, an island with no grid connections to the mainland. But how to determine the ​“deliverability” of energy being tracked by GCs will depend on how transmission grid operators, energy market regulators and other key parties choose to define these terms, he said.

Another complex issue is measuring the hourly carbon-free energy value that can be provided by energy storage, Ferenczi said. Energy storage systems today tend to store energy when it’s cheap and discharge it when it’s expensive, he noted. But those energy prices don’t necessarily align with when the grid energy mix is cleaner or dirtier.

GCs could provide those missing measurements ​“to create a price signal that drives investment in technologies needed to decarbonize the grid,” he said. But for now, the EnergyTag consortium is still working out the best methods for achieving that.

Tricky aspects include the fact that every form of energy storage loses at least a small amount of the electricity coming into it via energy conversion losses and the energy needed to keep the storage system running, which will need rules to account for, as this schematic indicates.

EnergyTag’s Daly, who previously served as energy strategy manager for industrial-gas giant Air Liquide, cited green-hydrogen production as another key use case. Europe’s 2030 green-hydrogen production targets would require as much electricity as the total amount generated in France per year if they’re reached, he pointed out.

“EU regulators are aware of this, and they really want to make sure that the electricity used to power those electrolyzers is clean,” Daly said. But without some structure to verify that on an hourly basis, hydrogen producers could end up using electricity generated by fossil-gas-fired power plants, a process that has a carbon footprint that’s actually worse than today’s standard method of converting methane to hydrogen, he added.

Air Liquide is working with Energinet and U.K.-based utility Centrica on a pilot project matching wind power to an electrolyzer, in anticipation of European mandates, Daly said. ​“If there’s a regulation that…[requires] temporal matching, then GCs are an obvious way to do that.”

Eventually, hourly GCs could become part of the structure used to account for corporate and governmental greenhouse gas reductions, Ferenczi said. In particular, ​“traditional [renewable energy certificates] can be used in Scope 2 carbon accounting” — the scope that accounts for the carbon emissions of energy used — ​“and it’s likely that Scope 2 will be updated at some point from annual to hourly.”

That’s one of the longer-term applications for GCs since it would require consensus among the members of the Greenhouse Gas Protocol, a global multi-stakeholder group that sets the rules for how different levels of emissions from energy purchases are calculated.

But as Daly pointed out, ​“now that there will be a standardized instrument, it opens the door. […] If companies have to set targets based on carbon accounting, that could create a use for these instruments that is very, very large. You’re moving from a state where [guarantees of origin] and [renewable energy certificates] are fine to a state where you need an hourly instrument.”

That’s one realm where international standards will be absolutely critical, said Shuli Goodman, executive director of LF Energy. As the energy-related initiative of the Linux Foundation, an international open-source technology consortium, LF Energy is working on a number of standards-development activities, including the Carbon Data Specification Consortium, which is aimed at enabling energy data access for measuring, quantifying and tracking carbon emissions from energy production and consumption.

“Up until now, all power systems have been driven by a combination of physics and markets,” Goodman said in an interview. ​“We need to add a new leg to this stool, which is called ​‘environment.’” That concept includes the standardized tracking of greenhouse emissions impact of energy trades, she said, from large-scale corporate purchases to local exchanges between solar panels, batteries, electric vehicles and other types of electricity-powered equipment.

“If we do it well, then it will be relatively transparent to most individuals, but it will have a very profound effect on how efficient carbon markets can be in driving decarbonization,” Goodman said. ​“I want to standardize this as quickly as possible — and I want to remind people that we can’t make stuff up.”