Author: 3Degrees Staff

At 3Degrees, we make it possible for businesses and their customers to take urgent action on climate change— providing renewable energy and carbon offset solutions to Fortune 500 companies, utilities, universities, green building firms and other organizations that are working to make their operations more sustainable. And as a certified B Corporation and eight-time winner of the EPA Green Power Supplier of the Year award, we’re primed to deliver custom clean power solutions that will help each organization make an environmental impact. Founded in 2007, 3Degrees is headquartered in San Francisco, California, with offices across the United States.

Why my work matters: Ryan Pawling

ryan-pawling

Ryan is a Senior Business Manager at 3Degrees.
wind energy

Some of my favorite projects:

  • Worked with toy company Hasbro to develop an international portfolio of environmental products that helped the company meet its goal of 100% renewable energy and carbon neutrality.
  • Helped a long-term manufacturing client leverage its internal resources and deepen its commitment to sustainability with its first ever virtual power purchase agreement.
  • Advised a top 10, global supermarket chain on how to operationalize its climate goals and become a sustainability leader in its industry.
  • Worked with the City of Portland, Oregon to break down internal and external barriers to achieving its goal of 100% renewable energy

 

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I like working in renewable energy because this is where the action is on climate change.

 Special skills & expertise

purchase-agreement create-and-design  global teams
Fostering long-term, trusted relationships with his clients Building business cases that unlock hidden value Navigating the complex world of international renewable energy and carbon offsets Superpower:
Mobilizing resources from across 3Degrees to serve his clients

 

Watch Ryan’s video:

3Degrees Commits to Blockchain Investment, Signs on as Affiliate to Energy Web Foundation

energy-web-blockchain

3Degrees announced today that it has become an Affiliate of the Energy Web Foundation (EWF), a global non-profit organization focused on accelerating blockchain technology across the energy sector. With this commitment, 3Degrees joins more than 90 other leading companies as Affiliates of EWF and has access to strategic R&D investment in blockchain technology in the energy sector.

“We have been studying blockchain closely over the past year and felt the time was right to join forces with EWF, an organization pioneering the way the energy industry will intersect with blockchain-enabled platforms,” said Steve McDougal, CEO of 3Degrees. “3Degrees is committed to being a credible, trustworthy partner to our customers as they navigate this emerging technology. We believe blockchain offers enormous potential for the energy and environmental commodity markets, the grid edge, electric vehicles, demand response, and beyond. However, it’s critical that we approach this new technology intelligently and with stringent regulation. 3Degrees became an Affiliate of EWF because we align with their approach to the intersection of blockchain and the energy markets.”

Co-founded by Rocky Mountain Institute and Grid Singularity, EWF’s core focus is building an open-source, scalable blockchain platform specifically designed for the energy sector’s regulatory, operational, and market needs. It serves as a foundational, shared, digital infrastructure for the energy and blockchain community to build and run their solutions. As an Affiliate of EWF, 3Degrees will have privileged access to research, technology, education efforts, and the organization’s ecosystem.

“3Degrees is a leading renewable energy and environmental commodities market player that is committed to operating with transparency and integrity,” said Hervé Touati, CEO of Energy Web Foundation. “Blockchain technology holds much promise across their focus areas, including renewable energy certificates and renewable energy procurement. We’re excited for 3Degrees to add their respected perspective to the evolution of the Energy Web Chain.”


About Energy Web Foundation

Energy Web Foundation (EWF) is a global nonprofit unleashing blockchain’s potential to accelerate the transition to a decentralized, democratized, decarbonized, and resilient energy system. EWF is building the shared, digital infrastructure—an open-source, scalable blockchain platform—specifically designed for the energy sector’s regulatory, operational, and market needs. Co-founded by Rocky Mountain Institute and Grid Singularity, and with a worldwide network of more than 90 affiliates and growing, EWF is the largest energy blockchain ecosystem and the industry’s leading choice as the foundational blockchain base layer, providing the digital DNA building blocks powering the world’s energy future. For more, visit http://www.energyweb.org.

Energy Web Foundation (EWF)
Peter Bronski
+1.201.575.5545
peter.bronski@energyweb.org

The Anatomy of a REC & Carbon Offset Purchase

customer-journey

Need help thinking through your organization’s REC or carbon offset purchase?  Here is a step-by-step guide designed to give you a better understanding of the process, so you can feel confident moving forward to reduce your company’s carbon footprint.

Want more information? Take a look at our RECs and Global Equivalents and our Carbon Offset Services Pages, or Contact us.

 

REC vs Offset? Which One and Why?

recs-vs-offsets

When making your decision to invest in renewable energy certificates, carbon offsets, or both,  there are some critical questions you’ll need to first answer. The graphic below provides a snapshot of things to consider when making your investment choices.

Want more information? Take a look at our RECs and Global Equivalents and our Carbon Offset Services Pages, or Contact us.

 

Reflections from Renewable Energy Markets 2018

REM 2018 renewable energy markets

Co-Authored by:  Amanda Mortlock, VP of Utility Partnerships, and Scott Eidson, VP of Environmental Markets

The annual Renewable Energy Markets conference was held recently in Houston, TX.  As usual, 3Degrees made a strong showing, with four of our team members participating on panels this year and several more in attendance.  REM always delivers an action-packed agenda filled with updates on industry trends and innovative programs from both the utility and corporate leaders in the room, as well as a fantastic opportunity to catch up with colleagues from across the country – and this year was no different.

REM covers a wide variety of interesting content in the two-day conference and it’s impossible to attend every session or provide a comprehensive recap. But our team divided and conquered throughout the event and then collected a few of our top takeaways. Here are the 3Degrees’ highlights:

The landscape in utility-offered voluntary renewable energy programs is shifting and igniting much discussion about how to grow and increase the relevance of these programs.

  • In states with high or increasing Renewable Portfolio Standards (RPS), utilities and regulators are wondering what a more renewable basic service means for voluntary renewable energy programs but customer preference is clear: customers want a voluntary means of driving demand for high-quality renewable energy.  Silicon Valley Power led an excellent roundtable talking about how they leveraged market research to make minor changes to their green power program as they moved their residential product to a 100% carbon free offering.
  • Utilities who are maximizing the value of their renewables programs are focused on both product design and successful marketing strategies.  Products are increasingly more complex in part to take into account the unique needs of each customer segment or even individual customers. Xcel Energy shared insights from their product design efforts, which led to one of the most successful and accessible green tariffs in the country, RenewableConnect.  Presenters at the Utility of the Future is Here session discussed trends in program marketing and customer acquisition ranging from digital channels and online marketplaces to new methods of leveraging call centers and strategies for small business outreach.  The bottom line: successful programs require good foundations and regular evolutions when it comes to both product design and marketing.

A few key emerging trends in corporate renewable energy procurement are helping to drive expansion across a range of sizes of customers.

  • At the top of the discussion list:  aggregation. The market is showing an increased appetite for aggregation, such as the deal that 3Degrees recently facilitated in the PJM energy market. There is a lot of enthusiasm for this model since it can help bring buyers with smaller energy loads into the mix; however, aggregation is still very new and there is a lot of room for refinement and simplification of the process.
  • In addition to aggregation, PPAs, VPPAs and RECs all very much play a continued role in corporate buyers’ renewable energy strategies. 

In the fight against climate change, Scope 1 emissions are increasingly in focus with opportunities for both electric & gas utilities, as well as corporates looking to address their fleet emissions.

  • With the success and growth of renewables leading the way, many utilities, companies, and consumers are now considering how they can have a meaningful impact on their scope 1 emissions — enter electric vehicles and renewable natural gas.   Both are compelling in terms of potential climate benefits and each offers an opportunity for electric or gas utilities to create new and impactful offerings for customers that align with the utility’s long-term interests as well.

What’s the role of policy and voluntary markets?

  • As policies for renewable energy increase and carbon policies are introduced, states need to think carefully about how to ensure these policies do not constrain private investments in renewable energy.
  • Companies continue to be driven by desires to support renewable energy faster than state policies are increasing.

While these are the discussion trends that stood out to our team the most this year, there were so many other interesting topics explored during the conference – it was hard to pick just a few!  And the hands-down winner of REM this year? Houston Mayor Sylvester Turner, talking about his Green Houston initiative, his involvement with the Climate Mayors, and the very personal way climate change has impacted his beloved city.  He was absolutely fantastic.

Thanks for a great time, Houston – and we’ll look forward to seeing all of our REM colleagues in San Diego next year!

Why my work matters: Brooke Malik

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Brooke Malik is a portfolio manager at the 3Degrees.single-wind-turbine-stars

Some of my favorite recent projects:

  • Working to develop new renewable energy products that address our clients’ desire for impact while at the same time minimizing their exposure to market risk.
  • For a renewable energy project developer piloting an innovative new technology, matched them with a corporate buyer that was interested in supporting the construction of this project that aids rural communities.
  • Uncovered new wind renewables – including small scale residential wind – for a utility customer in a state with few wind resources.

 

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I love bringing new renewable energy projects online.

 Special skills & expertise

excellence  us-projects  forest-and-trees wind-icon
4 years of experience in buying and selling renewable energy Deep knowledge of renewable portfolio standards across the U.S. Both big picture and detail oriented: Sees the forest and the trees Superpower:
Finding unique renewable energy projects to meet client needs

Watch Brooke’s video:

FAQs: PPA and VPPA

solar panels representing PPAs and VPPAs

Answers to your PPA and VPPA FAQs

Get your most questions about PPAs and VPPAs answered here. Check back frequently for updates. Have a question that you need answered? Contact us.

Frequently Asked Questions:

  1. Why are so many companies signing power purchase agreements (PPAs)?
  2. What is a power purchase agreement (PPA) and how does a PPA work?
  3. What is a virtual power purchase agreement (VPPA) and how does a VPPA work?

Q: Why are so many companies signing power purchase agreements (PPAs)?

A: Over the last 3 years, corporations have signed approximately 7 GW of either virtual or physical PPAs in order to offset their scope 2 emissions, support a de-carbonized grid, take advantage of all-time low costs of renewable energy and capture the value of declining tax benefits.  Most of these early movers used a well-proven structure (called a “contract for differences”) to enable them to gain economies of scale by signing large volumes from wind or solar projects in a financially optimal part of the country and then using those RECs to offset their load elsewhere. These long-term corporate contracts were directly responsible for enabling the financing of these renewable energy assets, thus also giving corporates the ability to prove their commitment to tackling climate change.  

Q: What is a power purchase agreement (PPA)? How does a physical PPA work?

A: A power purchase agreement (PPA) is a contract between two parties where one party (usually a renewable energy project developer) sells both electricity and renewable energy certificates (RECs) to another party (the buyer, sometimes called the offtaker). PPAs are a good mechanism for companies to make a long-term commitment to purchasing renewable energy.

Traditionally, the most common type of PPA has been the physical PPA. This type of contract is used most often by utilities for their energy procurement but a few experienced companies have also utilized this structure.

A physical PPA is structured as follows:

  • In order to participate in a physical PPA, both the buyer and the seller must obtain a license through the Federal Energy Regulatory Commission (FERC).
  • The seller (e.g. the project developer) builds, owns and operates the renewable energy project and sells the project generation and corresponding RECs as the revenue source  to finance the construction of the project.
  • The buyer purchases the energy and RECs as they are generated by the project.
  • The buyer takes legal title to the energy and the RECs at a delivery point agreed upon by the parties, either the project busbar or a nearby trading hub.
  • After the buyer takes title to the energy, it is responsible for the management of the energy – moving and scheduling the energy to its load or selling it into the wholesale power market. In addition to the aforementioned FERC license, this also requires forecasting of the project generation, the company’s load and scheduling experience. Some companies elect to use a third-party service provider for scheduling.

Companies that have elected to pursue physical PPAs typically are highly experienced energy buyers and have large, geographically-consolidated electricity load. They prefer to actively manage their energy supply and demand in parallel with meeting their renewable energy goals.

For more information on how PPAs and VPPAs work, see our article Renewable Energy Power Purchase Agreements

Q: What is a virtual power purchase agreement (VPPA)? How does a VPPA work?

A: A VPPA is a specific type of a PPA contract, used to procure long-term renewable energy. Unlike a physical PPA, with a VPPA the buyer does not receive, nor take legal title to the energy and thus the “virtual” moniker. The buyer continues to receive physical power from its utility or retail provider, allowing the buyer to utilize a VPPA in a different region than where it uses electricity.

In a VPPA (also sometimes called a “contract for differences”), a buyer pays a fixed price to the seller for the project’s generation and associated RECs. Instead of taking title to the power from the facility, which requires a FERC license and scheduling expertise, the energy is liquidated into the wholesale power market by the seller. When the energy is sold into the wholesale power market, it receives the corresponding floating market price and this revenue is passed through to the buyer.

More specifically, a VPPA is structured as follows:

  • Similar to a physical PPA, the seller in a VPPA is typically a renewable energy project developer who builds, owns and operates the project. The fixed PPA price it receives from the buyer under the VPPA is the revenue source used to finance the construction of the project.
  • The buyer agrees to pay the seller a fixed price for every MWh renewable energy generated by the project. This fixed PPA price is the guaranteed price the developer will receive for its project.
  • The project developer (or its agent) is responsible for selling the project output into the wholesale power market, receiving a market price on the agreed upon delivery point – either the project node or a nearby trading hub.
  • The “contract for differences” settlement is a comparison between the fixed price and the floating market price. When the market price exceeds the fixed VPPA price, the developer passes the positive difference to the buyer. When the converse is true – the market price is below the fixed VPPA price ‒ the buyer pays the developer the difference.
  • The buyer retains all of the RECs associated with the generated energy purchased under the VPPA.

For more information on how PPAs and VPPAs work, see our article Renewable Energy Power Purchase Agreements.

Lyft combats climate change with every ride

Lyft-Carbon-Offsets

Funding emission reduction projects and catalyzing change in transportation

lyft-logolyfts-goalsLyft, the global ride-hailing service, cares deeply about their impact on the environment and the communities they serve. In 2017, Lyft announced their 2025 climate impact goals, which include moving to autonomous electric vehicles powered by renewable energy and reducing overall CO2 emissions in the transportation sector.  As part of delivering on their Green Cities Initiative in support of these goals, Lyft partnered with 3Degrees to look for both near-term and longer-term opportunities to reduce their environmental impact.

Key challenges

Emissions from the transportation sector are a stubborn problem. Petroleum-based fuels like gasoline are deeply embedded in our vehicle and fuel distribution infrastructure, resulting in large quantities of carbon dioxide and other tailpipe emissions. Lyft’s vision for addressing this is an all-electric vehicle fleet powered by 100% renewable electricity – an ambitious goal that will take time to accomplish. In the meantime, Lyft sought to take immediate steps to address its environmental impact in a relevant and meaningful way.

Lyft set an aggressive goal – to offset emissions from all Lyft rides worldwide.

And the company wanted to be intentional about the projects in which they invested, placing a high priority on projects in the transportation sector, near their major markets or in some other way relevant to Lyft’s business.

How we helped

our-approach-for-lyft

In collaboration with Lyft’s sustainability team, 3Degrees designed a program that would meet the above goals and have the flexibility to evolve and grow with Lyft’s business. The program uses carbon offsets as a tool to fund emission reduction projects that result in tangible changes in the way parts of the transportation sector operate. The program is also funding projects that help address other environmental impacts from vehicle use, such as water and non-climate air emissions.

The key elements of the Lyft program designed by 3Degrees are:

  • Environmental integrity is the most important aspect of the program design and a core element of every carbon offset sold by 3Degrees. Environmental integrity can generally be broken down into two main components: (a) “additionality,” the notion that the emission reductions would not have been achieved without the promise of funding from carbon offset sales, and (b) rigorous and conservative quantification of the actual emission reductions achieved. All 3Degrees projects are registered under internationally recognized standards maintained by not-for-profit environmental organizations, including the American Carbon Registry (ACR), Climate Action Reserve (CAR), and Verified Carbon Standard (VCS). These standards require that project emission reductions are monitored and quantified on a regular basis and that this quantification and project additionality are independently verified by accredited third parties.
  • Reductions in transportation sector emissions play a major role in the project portfolio. Initially, this includes emission reduction projects in automotive manufacturing and waste oil recycling, and in the medium term could include newer project types like vehicle electrification. Projects like these have a direct connection to the automotive supply chain (and Lyft’s Scope 3 emissions). Offset funding acts as an incentive or catalyst for actors in these industry segments to implement practice changes that are cleaner and more sustainable.
  • Positive impacts on Lyft communities take the form of social and environmental co-benefits (apart from climate benefits) in and around the markets that Lyft serves. For example, land use projects like forestry offer important air and water quality benefits that are more localized in nature than greenhouse gas benefits. Similarly, renewable power projects like wind energy help displace coal-fired power generation, which in addition to CO2 also emit mercury into the air and ultimately the regional water supply.

Leveraging 3Degrees’ experience in transportation and our proprietary project portfolio, the majority of Lyft’s initial investment is being used to support one-of-a-kind projects in the transportation sector that have a demonstrated impact and the potential for scalability . This enables Lyft to fund immediate emission reductions, like the Meridian magnesium automotive manufacturing project (see project spotlight below), while paving the way for new projects that leverage this experience.

This portfolio is intended to evolve as part of Lyft’s overall sustainability journey towards their 2025 climate impact goals, including electrification of their fleet. In the early years of the program, most of the offsets will come from existing projects. Such projects will gradually be supplemented by new projects custom-built for Lyft and the communities it serves. In the long run, new development will be concentrated in the renewable electricity sector to support Lyft’s transition to an all-electric fleet.

“3Degrees’ ability to develop unique emission reduction projects with a high level of environmental integrity made them a natural fit for us. Their depth of experience, analytical rigor, and creativity helped us craft a program that can change over time and as our needs evolve. ” 

–Sam Arons, director of sustainability at Lyft

Results

  • Starting in 2018, Lyft is offsetting the emissions from all rides across the globe. This includes emissions created while a passenger is in the vehicle and also those created while a driver is en-route to pick up a passenger.
  • Lyft’s voluntary offset program is one of the largest in the U.S. and among the top 10 in the world .
  • All offset projects are located in the U.S. and have local social and environmental benefits in or near Lyft’s U.S. markets.
  • More than 75% of Lyft’s initial investment is funding emission reductions in the transportation sector from projects that are catalyzing change in the industry.

Lyft-results

 


 Project Spotlight

Carbon offsets lead to real change in automotive manufacturing process

The Meridian Magnesium project is the largest component of Lyft’s initial portfolio. Located just outside of one of Lyft’s major markets, Meridian manufactures automotive parts that help lightweight vehicles and improve vehicle fuel efficiency.

Lyft is funding emission reductions at Meridian’s Michigan manufacturing facility. This project required an upfront capital investment by Meridian as well as a change in Meridian’s manufacturing process that, while reducing greenhouse gas emissions, is more expensive and less efficient than the previous process. Carbon offset sales are the only source of revenue for this project. Without it, Meridian would have no motivation to operate this project.

Meridian was the first magnesium auto parts manufacturer to undertake this change and helped establish a new offset methodology that could be used by all magnesium part manufacturers. The project was just successfully re-validated by NSF International under the Verified Carbon Standard, affirming the scale and scope of the project’s real and permanent climate impact.

Now, based on Meridian’s demonstrated ability to implement this change and fund it with proceeds from offset sales, 3Degrees is discussing similar projects with two other magnesium producers that have not yet made the switch.

More on 3Degrees Carbon Offsets

3Degrees announces request for proposals for equity audit

equity audit3Degrees is seeking a third-party group to work with our diversity & inclusion committee, executive team, HR, and individual employees across the company to conduct an equity assessment/audit at the beginning of 2018, and provide recommendations to be incorporated into early 2018 goals. The full request for proposal, including instructions for submission and deadlines, can be downloaded here.

Background

At the end of 2016, we formed an employee-led diversity & inclusion committee and began forming company-wide goals for improvements in equity focused policies, processes and culture. We also created and submitted several goals to align with the BCorp Inclusion Challenge.

One of these goals centers specifically around completing an equity audit. Our hope is that this will include an assessment of our current efforts to create an equitable work environment for current and future employees as well as identify how to improve our recruitment practices to ensure maximum inclusion and build policies to better support equity through our partnerships with suppliers and vendors.

Although we’ve already implemented several diversity & inclusion trainings for employees, we recognize how important it is to establish an understanding of where we are at as a company. We’re confident that an equity audit will inform our goals and efforts moving forward.