Month: October 2022

Making RE100 technical criteria changes work for your company

, October 27, 2022

Recent revisions to the RE100 technical criteria, published October 24, 2022, present new opportunities for current and prospective corporate members to align renewable electricity procurement with global grid decarbonization. To help members respond effectively, we’ve outlined the major changes, why they were made, and how to address remaining procurement limitations.

HELPING CORPORATIONS ACHIEVE 100% RENEWABLE ELECTRICITY USAGE

To support global grid decarbonization, the RE100 initiative brings together more than 370 companies committed to achieving 100% renewable electricity across their global operations. Led by Climate Group, in partnership with CDP, RE100’s mission is to drive change toward 100% renewable grids, both through members’ direct investments and by leveraging the advocacy of businesses to drive policymakers to accelerate the transition to a decarbonized economy. To ensure the credibility of its initiative, RE100 requires members to set an ambitious RE100 target to achieve 100% renewable electricity by 2040—with specific criteria for doing so—and to report annually on progress toward their goal.

RE100 provides a platform for corporations to demonstrate leadership and commitment to renewable electricity procurement as well as insight into remaining policy and market barriers. Based on member feedback from a growing number of geographies, RE100 periodically evolves its technical criteria to drive progress globally.

UPDATES TO RE100 TECHNICAL CRITERIA

In its October 2022 technical criteria update, RE100 announced two changes designed to meet the needs of the growing market and encourage more impactful procurement actions from all members: market boundary alignment and a 15-year commissioning date. RE100 member procurements will be assessed against these updated requirements for the first reporting period that begins on or after January 1, 2024; for companies reporting on a calendar year basis, this will be the 2025 disclosure cycle.

Aligning EU Market Boundary Criteria

RE100’s updated technical criteria revised the single market boundary in Europe to Association of Issuing Bodies (AIB) member countries that are grid-connected and part of the EU single market, thereby aligning with CDP’s market boundary provisions. Exceptions are made for jurisdictions that import most of their electricity from countries meeting these criteria, such as Andorra, Monaco, and Vatican City. All other European countries now represent individual markets for renewable electricity. Legacy exemptions are allowed for contracts with operational commencement dates before January 1, 2024.

This update has several benefits. Importantly, the revision introduces a principle-based approach to defining market boundaries that can be applied globally: markets must have shared regulation and accounting as well as physical grid interconnectedness. The revision also ensures that a single certificate system (EECS) and a single governing body (AIB) are assessing certificate systems in Europe. This change is expected to encourage more countries to join the system.

For companies reporting to both RE100 and CDP, this update aligns reporting guidance to eliminate conflicting market boundary definitions. For others, this market boundary change may introduce a new restriction: RE100 reporting from 2022 indicates that at least 46 companies procured renewable electricity that would no longer be eligible under these updated rules.

15-year Limit on Commissioning and Repowering Dates

RE100 also introduced a 15-year commissioning and repowering date limit on the facilities members may procure from to meet 85% of their RE100 targets. This requirement does not apply to self-generation, on-site power purchase agreements (PPAs), or those from which there is a direct line connection or long-term project-specific contracts for which the buyer is the original offtaker. Contracts with operational commencement before January 1, 2024, are also exempt. RE100 members will be required to disclose commissioning or repowering dates beginning in the 2023 disclosure cycle.

This change aligns RE100’s technical criteria with the initiative’s mandate to accelerate progress toward zero-carbon grids. While certain exceptions are included to accommodate long-term commitments, data accessibility concerns, and unique procurement goals, this update encourages members to demonstrate leadership by investing in projects that drive new renewable electricity.

ADDRESSING REMAINING MARKET BARRIERS

For some RE100 members, these changes do not address the significant policy and market barriers that still exist in certain countries and regions. RE100’s 2021 Annual Disclosure Report highlighted some of the most significant barriers corporations face. These include lack of credible procurement options and limited renewable electricity supply.

In addition to publicizing procurement barriers in its annual report, RE100 brings together geography-specific working groups to inform policy engagement. It also continues to study opportunities for credible cross-market procurement. The June 2022 technical criteria consultation initially proposed criteria for credible cross-market procurement, but RE100 chose not to move forward with this revision. After extensive consultation, it found that no credible cross-border procurement options currently exist, and that introducing strict criteria now would potentially limit development of such options.

When a lack of credible procurement options results in a company’s inability to meet its target, RE100 instructs companies take complementary actions in line with the campaign’s overall goal of accelerating the transition to zero-carbon grids. These include:

  • Transparently report on barriers to procurement. Transparent reporting helps RE100, policymakers and regulators, corporations, and other key stakeholders understand where market and policy limitations exist and helps enable collaborative discussions to drive solutions. If a company is unable to reach its target because the criteria for a credible renewable electricity claim cannot be met in a market, this represents a true lack of opportunities to contribute to grid decarbonization. Often, these jurisdictions require policy action to address non-financial barriers before supply-demand dynamics can drive renewable energy development. Shining a light on these market realities presents an opportunity for businesses to increase their impact and use their influence in combination with other organizations to advocate for market change.

“Members’ announcements should transparently acknowledge if RE100’s technical criteria were not met, and ideally where they were not met. This is not to penalize members: it is essential for amplifying calls for urgent policy change where RE100’s technical criteria cannot be met.”
—“How RE100 members are held to account”

  • Engage in policy advocacy work, either through RE100’s focus areas or through other trade associations. Policymakers and regulators must understand the market and policy barriers companies face when trying to procure renewables in their country and why addressing those challenges is important to businesses. Sharing individual stories and challenges is critical, but there is often value in combining voices to show demand and drive action. Companies can participate in RE100’s policy work or advocacy efforts to engage with relevant stakeholders and propose market solutions.
  • Increase the impact of procurements in markets with increased options. Companies can also communicate how they are demonstrating leadership in other areas. For example, in markets where procurement is more accessible, companies can focus on high-impact procurement methods—such as procurement from new projects through long-term, direct, or project-specific contracts—or showcase innovative procurement strategies.

All current and prospective members should remember that RE100’s goal is to encourage renewable electricity adoption and support. That’s why it requires transparent reporting but does not emphasize penalties. The latest technical criteria changes should be seen as part of a larger effort to advance corporations’ adoption of renewable resources.

If you have any questions on the changes to the RE100 technical criteria or the initiative in general, please reach out.

RESOURCES

Learn Best Practices to Implement a Successful Voluntary Gas Program (webinar)

, October 20, 2022

On October 19, 2022, 3Degrees’ Associate Director of Product Innovation, Andrea DeWees, shared what our decades of experience have taught us about the foundational best practices for voluntary programs. She outlined how gas utilities can demonstrate climate action to their stakeholders by applying these with confidence in order to build, launch, and grow a successful voluntary program.

Catch up on the event below.

RNG certificates are used in a number of voluntary and compliance frameworks to substantiate claims of consuming renewable energy fuel from a common carrier pipeline. As a relatively new commodity compared to electricity-derived energy attribute certificates, reporting requirements are still under development for some corporate sustainability initiatives.
 

In Setting Corporate Climate Goals, Credibility is Key (webinar)

, October 17, 2022

On October 11, 2022, Terese Decker, Director, Energy & Climate Practice, discussed the growing urgency around corporations setting credible climate goals. She then takes us through the four steps your organization can follow to develop credible, actionable climate goals in this webinar: In Setting Corporate Climate Goals, Credibility is Key.

Catch up on on the event.

Faster Deployment of Renewables in Times of Uncertainty: RE-Source Recap

, October 13, 2022

During the first week of October, some of my European colleagues and I had the pleasure of attending RE-Source in Amsterdam. Over 1,000 key energy players and businesses, including more than 200 buyers, gathered to discuss and enhance their direct renewable energy sourcing and mitigate their risks.

Given the uncertainty of the current energy and political landscape, the event’s timing could not have been more appropriate. How can businesses advance their sustainability efforts amidst the ongoing challenges? What should be changed in our approach to sourcing? Which are the key drivers in moving forward?

AN EVOLVING LANDSCAPE

Senior Director, Energy & Climate Practice, Tyler Espinoza, speaking at RE-Source 2022 session “Going further: Using procurement to maximise system sustainability.” Image courtesy by RE-Source.

 

During the multiple sessions, panels and roundtables, different market experts shared their views and highlighted the challenges that need to be addressed. 

The first challenge is the market dynamics. We live in unprecedented times with the energy crisis and extremely high prices that increase uncertainty in almost all aspects of the market. These extraordinary times call for a commitment to energy transition goals, an acceleration of actions taken, and innovative solutions.

The regulatory changes are a cause of hesitancy for developers and buyers. This was addressed in the opening session of RE-Source where several market players stressed the need to be more practical about timing new regulatory changes and keep simplicity in the implementation procedures.

Just last month, the European Commission proposed a price cap of 180€/MWh for non-gas fuelled generators, and the implementation would be left to the individual Member States. 

The second challenge is the slow permitting procedures. The need to speed up the deployment of renewable energy is key to tackling the energy crisis, and faster permitting for wind and solar projects is a crucial facilitator. 

The third piece was both a highlight and a challenge, with increased innovation and enhanced technology. New technologies and commodities are expected to enter the market, e.g., hydrogen, prosumers, and flexible assets. Existing mechanisms will be further enhanced, e.g., 24/7 CFE matching. The need for a sound and functioning market design and a reliable interconnected grid on transmission and distribution levels were highlighted in the discussions, particularly in the session on “Grid development to foster RES and PPAs.”

CHANGING APPROACH TO PPAs

Considering the above-mentioned challenges, changes to the PPA market are inevitable. A common remark from attendees was that the dynamics have shifted towards a seller’s market over the past years. However, both sides of the transaction are affected by uncertainty in price forecasts, permitting, supply chain risks, and more. Ultimately, pricing is important, but the focus on the Commercial Operation Date (COD) and its flexibility is continuously increasing.

Therefore, when seeking internal permission for a power purchase agreement, early engagement of all stakeholders is essential to establish a good understanding of what it means to enter into long-term agreements. Moreover, it’s crucial to keep a spirit of partnership in the negotiations between sellers and buyers and start considering creative solutions and products. 

ROLE OF CORPORATE SOURCING WITHIN THE ESG FRAMEWORK 

In the session: “Going further: Using procurement to maximise system sustainability,” our Senior Director, Energy & Climate Practice, Tyler Espinoza, made a critical remark: “PPAs just aren’t good enough anymore. Corporate sourcing represents a significant opportunity to decarbonise, but it’s just one aspect of ESG.” 

Corporate buyers can leverage their PPA procurements to advance other ESG initiatives in a meaningful way. He explained more ways to help clients advance their initiative:

From the environmental side, Choose PPA markets that have comparatively high carbon intensity (e.g., Poland) to maximise carbon benefit. Ensure projects are sited in a way that minimises negative impacts on land, habitats, and wildlife. Confirm that developers’ end-of-life plans involve clear internal protocols in terms of recycling. From the societal perspective, Inquire about material sourcing practices in order to avoid equipment manufactured using forced labour, which may violate laws and company policies. Engage communities in a meaningful way beyond just confirming no local opposition. Funding local organisations or community needs can go a long way. Choose developer partners that have proactively implemented diversity, equity and inclusion, and other sustainability initiatives.From the environmental side, Choose PPA markets that have comparatively high carbon intensity (e.g., Poland) to maximise carbon benefit. Ensure projects are sited in a way that minimises negative impacts on land, habitats, and wildlife. Confirm that developers’ end-of-life plans involve clear internal protocols in terms of recycling. From the societal perspective, Inquire about material sourcing practices in order to avoid equipment manufactured using forced labour, which may violate laws and company policies. Engage communities in a meaningful way beyond just confirming no local opposition. Funding local organisations or community needs can go a long way. Choose developer partners that have proactively implemented diversity, equity and inclusion, and other sustainability initiatives.

All in all, standards play a pivotal role in advancing the net zero journey.

HEADING INTO THE FUTURE AT FULL SPEED

One of the main takeaways of RE-Source was that the current uncertainty should not act as a “pause” button, but rather as motivation for the future. Most attendees agreed that the faster deployment of renewables plays a pivotal role in reducing Europe’s dependency on fossil fuels and in meeting the climate goals. That’s why a “wait-and-see” attitude should be replaced by a “decide-and-do” one.

3Degrees supports clients worldwide in their sustainability and decarbonisation journey, so if you’re interested, don’t hesitate to get in touch.

Renewable energy procurement & impact (video)

, October 25, 2022

3Degrees’ Senior Business Manager, Jennifer Cohn, discusses how organizations can prioritize a deeper impact with their renewable energy procurement when working toward their larger decarbonization goals. These project impacts could include social and community co-benefits such as ensuring energy access for vulnerable communities or preparing the next generation with STEM/STEAM educational opportunities.

Learn more below.

WATCH THE VIDEO

Reflections from the 2022 Renewable Energy Markets Conference

, October 19, 2022

Last month, 3Degrees showed up in full force at the annual Renewable Energy Markets Conference, one of the industry’s most important clean energy events. The event focuses on the states, businesses, organizations and households that choose clean electricity. Each year, industry professionals gather for REM to understand emerging policy trends, exchange market best practices, and gain new tools to excel in retail renewable energy markets.

The Center For Resource Solutions (CRS) hosted this year’s conference, in which themes like green hydrogen, the Inflation Reduction Act, 24/7 carbon-free energy (CFE) procurement, and more were discussed. A personal highlight was participating in a panel discussion on the impact of corporate renewable energy procurement and the various pathways to achieve certain goals alongside other panelists from T-Mobile and the Clean Energy Buyers Association (CEBA).

Participants on the “Power Table” panel joined in a lively and informative conversation about the highly dynamic landscape for renewable energy markets and market growth opportunities.

With two jam-packed days of expansive content, it was nearly impossible to attend every session, but our team made a concerted effort to spread out and cover a variety of topics and we’ve collected our key takeaways below.

Innovative Approches to Procurement

My dialogue with CEBA and T-Mobile on the panel “Impact of Corporate Renewable Energy Procurement: Different Pathways to Achieving Goals,” focused on how corporations are approaching their renewable energy purchasing decisions in terms of impact. The dialogue touched on the diverse types of buyers pursuing these goals (in terms of MWh needs, level of internal expertise, etc.), the pros and cons of certain procurement options, and future trends. A few points discussed during the panel included:

  • Understanding the types of actions companies can take to drive more impactful procurement decisions, while remaining consistent with GHG accounting rules and RE 100 compliance. 
  • Focusing overall on efforts that accelerate grid decarbonization, such as prioritizing procurement at a more localized level where a company has load and where renewable penetration is low. 
  • Aiming to advance a 24/7 CFE grid by moving toward more granular geographic matching to procure clean energy at the places where consumption occurs. 
  • Procuring on behalf of others in your supply chain—knowing how and when you can procure EACs to address your scope 3 emissions and collaborating with suppliers to ensure correct data is gathered.

Realizing the Full Potential of 24/7 Carbon Free Energy

The concept of 24/7 CFE is still relatively new, but the approach comes from the urgency to do more than just purchase clean energy, but to transform electricity systems. The current system of Renewable Energy Certificates (RECs) is based on an annual matching basis—matching a customer’s annual electricity consumption with RECs generated in the same calendar year. 

We heard about a number of organizations that are developing new transactional paths for buying clean energy around the clock, matching RECs on an hourly or even minute-to-minute basis. Proponents of the CFE approach argue that this will better align with actual energy demand curves and promote additional decarbonization impacts. Leading companies, like Google, are focused on creating monitoring systems that can match real-time energy use with clean energy supply.

3Degrees was well-represented at REM ’22 in Minneapolis.

Ensuring clean energy is available where and when it is needed all day and every day is a major challenge and there are ongoing efforts to address it—like organizations promoting solutions for managing energy demand, supporting cutting-edge clean energy technologies in the market, and advocating for policies that advance the power sector. 

Other Key Takeaways

REM featured many other dialogues on developing policies, industry best practices, and emerging trends. Some notable highlights include:

Understanding the Carbon Intensity of RE and Low Carbon Fuels–This presentation focused on the in-depth process and calculations that go into calculating the carbon intensity (CI) of renewable and low carbon fuels. Clean fuel standards across North America are strengthening the CI requirements for fuel types, and providing guidance for how to lower the CI of each fuel type. California’s Low Carbon Fuel Standard (LCFS) has created a demand for low CI fuels in the state and has acted as a market catalyst. The approach of focusing on the CI of a fuel, as opposed to the volumetric quantity that the National Renewable Fuel Standard focuses on, was an innovative approach that is proving successful. Policy makers in other states have taken notice and begun the process to develop similar programs. New policy and market approaches to lowering carbon emissions like these programs will continue to incentivize cleaner fuels in the US and accelerate deep decarbonization areas of the transport sector with hard-to-abate emissions. 

Addressing Equity and Environmental Justice–Another takeaway stemmed from the notion that the power sector has the most significant combination of capital investment opportunities paired with the potential for social and economic progress. This nexus of socioeconomic change was explored on the final day of REM, as the World Resources Institute (WRI) led a case study discussion about how renewable energy programs can improve outcomes for communities.

Major opportunities here included: 

  • Reducing energy burden
  • Expanding clean energy access 
  • Broadening access to low-cost capital
  • Proliferating energy democracy
  • Strengthening energy resilience
  • And multiplying green energy jobs and training

Although there is growing demand for renewable energy, limits to the full expansion of clean energy still exist. Policy barriers, housing, capacity limitation, and lack of customer awareness are important obstacles to address. The discussion generated some implementable solutions, including understanding the needs of target groups, designing programs for specific market segments, leveraging existing energy policies, leading with the financial benefits (instead of environmental) when creating customer-facing marketing materials, and extending information to non-native English speakers. 

While these are the conversations that stood out to our commercial team the most, the conference covered countless other important topics, including discussions on voluntary gas led by a member of our Utility team, Andrea DeWees, Associate Director, Product Innovation. I feel honored to have joined other climate leaders at REM 2022, and look forward to the opportunity to discuss more emerging trends and topics at next year’s conference in Washington D.C. Please connect with us to learn about our work on some of these topics.

Shaping corporate sustainability, starting with scope 3 (video)

, October 28, 2022

Maureen Bray, Senior Director, Energy & Climate Practice – EMEA, sat down with Sustainability Magazine to highlight 3Degrees’ mission and sustainability work with clients,  with a focus on Scope 3. 

Read more in the November issue of Sustainability Magazine and watch the video below.

Watch the Video