How corporates’ renewables procurement strategies aid grid decarbonisation

The Rocky Mountain Institute (RMI) in partnership with technology company Microsoft has released a new report exploring corporates’ renewable energy procurement strategies and the role these strategies can play in the decarbonisation of the grid.

The report Clean Power by the Hour provides buyers, policymakers, and other industry participants with recommendations on how they can maximize renewable energy procurement to meet decarbonisation goals.

Key findings from the study include:

  1. As the level of hourly matching is increased, costs for hourly load matching rise, in three distinct stages. These typically rise to well above costs for meeting annual procurement targets.
  2. Near-term emissions reductions from hourly load matching depend on the regional grid mix and how storage resources are operated.
  3. Hourly procurement strategies can create demand for emerging technologies needed to fully decarbonize the grid.

The release of the study comes at a time corporates’ renewable energy efforts have played an increasingly important role in expanding the global portfolio of clean energy resources. In 2019 alone, corporates accounted for 10% of the total renewable energy procured. In the US, corporates account for 24% of the country’s renewable energy market.

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However, with the right procurement strategies in place, corporates have the potential to help further accelerate the transition to net-zero.

RMI urges corporates’ strategies to include hourly load-matching. However, these strategies should be carefully tailored to region-specific grid dynamics to maximize emissions reductions over the next decade, according to the report.

To do so, the report urges corporates to:

  1. Match hourly procurement strategies to grid dynamics.
  2. Expand wholesale market access to scale the benefits of hourly procurement strategies.
  3. To integrate renewable energy programmes with emerging technologies to fully decarbonize the grid and operations.
  4. Balance hourly procurement goals against the science-based imperative to reduce emissions as fast as possible in the near term.

The report states that by adopting hourly carbon-free electricity (CFE) procurement strategies, corporates are able to address various challenges associated with traditional power purchase agreements since hourly-based procurement will enable companies to:

  • Mitigate shape risk: Optimizing the timing of procured energy as it relates to both system prices and hourly facility load in a given region can hedge against volatile wholesale market prices and existing PPA positions.
  • Incentivize new technologies. The fluctuating nature of renewables will open doors for corporates to adopt other emerging technologies such as energy management and storage.
  • Demonstrate models for carbon-free grid balancing: The adoption of emerging technologies to optimise renewable energy would help corporates to provide data or lessons learnt for use in developing future models and standards.

“To take meaningful steps towards grid decarbonization, it’s imperative that these procurement strategies align with science-based targets that reflect the need to decarbonize 50% by 2030,” said Mark Dyson, Principal at RMI.

Find out more about the report.