This is the fourth article in our six-part series about 24/7 Carbon-free Energy. Here, we outline the steps you may take to execute a 24/7 CFE strategy. This article can serve as a practical guide for corporate energy buyers, CSOs, and anyone interested in pursuing 24/7 CFE for their business.
Whereas this journey will vary from company to company, what we outline below has resulted from several years of research, experience, and iterative feedback from our partners and clients worldwide. In practice, these steps will need to be tailored to your specific needs, and FlexiDAO can guide you along the way.
It's important to remember that all companies purchasing renewable energy are already on the path to consuming 24/7 carbon-free electricity. Adopting a CFE strategy is about something other than getting to 100% 24/7 Carbon-free Energy today; nobody is expecting that of you. Instead, the 24/7 CFE journey is about using the incredible power of data to make smarter procurement decisions in the future and to begin reducing the carbon intensity of your contracted electricity every hour of the day. Regardless of their current progress, all businesses can start applying this methodology to benefit from better oversight of the carbon content of their energy supply.
Step 1 - Education & Unlocking resources
The first action you will need to take is simply to learn more about 24/7 CFE. You will need to know the following:
What is 24/7 CFE, and why is it important?
The first three blogs in this series (1,2,3) can be a useful starting point for familiarising yourself with 24/7 CFE. Eurelectric has also recently launched its European 24/7 hub, which provides more information on the what and why of 24/7.
What is the market context and business case for 24/7 CFE?
You will need to understand the benefits of 24/7 CFE for your business and why it is so important to adopt a CFE strategy in the current market context.
There are clear signs that carbon reporting will become a mandatory practice for businesses. Several regulatory bodies (like the U.S. Securities and Exchange Commission, the International Sustainability Standards Board, and the EU) have now proposed standards for climate-related disclosures. The common denominator in each of these proposals is that they have been informed by the GHG protocol, which is currently under review for additional guidance to be added. By already working towards the complete decarbonisation of your energy procurement strategy, you are futureproofing your business against stricter carbon reporting requirements that may occur in this shifting energy and sustainability reporting landscape.
Adopting a 24/7 CFE strategy can also place you in a robust, sustainable leadership position as you gain more accuracy and insight into the real carbon content of your energy supply. Showing the market that you are eager to spearhead the energy transition by adopting the latest best practice in energy procurement can increase the confidence of ESG investors. Similarly, a carbon-aware energy strategy such as 24/7 CFE can help attract and retain talent to your business. Ultimately, 24/7 CFE can help you harness the growing customer demand for sustainable products.
There are more perks included in the business case for 24/7 CFE. We will soon launch our 24/7 CFE Academy Online, where you will find on-demand content on this topic.
b) Unlocking Resources
You may also need to build a business case for 24/7 CFE to pitch it to your leadership team and unlock the necessary resources to implement a 24/7 CFE strategy. 24/7 CFE can interest different departments across your company, including finance, operations, procurement, sustainability management, and sales & marketing.
Some of the key messages of the business case for 24/7 CFE are:
- Your company can start by understanding the hourly emissions factors of your current energy procurement strategy and your risk exposure (step 2 of this journey) at no extra energy cost to your business.
- You can increase your load's hourly match with low-cost, carbon-free energy products. Even if you don’t reach more than 80% of hourly CFE, your carbon reduction will be more than with a regular 100% annual RE contract. Research shows that energy costs can be kept flat or even drive cost savings in some regions when reaching 70-80% hourly CFE.
- You do not need to prioritise reaching 100% hourly CFE today if your company is cost sensitive. The last mile of hourly matching can still be expensive due to reliance on RE technologies that haven’t fully matured.
Your business case can also include external case studies of other businesses on their journey towards 100% 24/7 CFE (like Google), a cost-benefit analysis, and a proof of concept, which can focus on one country you operate in. You can develop a proof of concept by using our CFEscore tool to estimate how carbon-free your current energy procurement strategy is in one country using annual data you should already have available. This proof of concept will help illustrate visually to your leadership team why “100% renewable energy” does not equate to “24/7 Carbon-free Energy.”.
Step 2 - Baselining
Now that you understand more about 24/7 CFE and have support from your company to start exploring it further, the next thing to do is assess where you are on the journey to 100% 24/7 CFE right now. This is called baselining, and it is important to remember: if you are already procuring renewable energy for your business, you will already have a baseline and be on your way to 100% 24/7 CFE. Looking at the global benchmark, 60-70% carbon-free energy can already be considered a good result and enable confident climate communication; it is just a matter of understanding exactly where you are starting from.
Baselining can provide you with your current CFE score (the current carbon-free percentage of your energy usage on an hourly basis) in all the countries where you operate. Having a general overview of your global carbon profile is extremely helpful so you can begin identifying which countries you should implement a CFE strategy in first and where the “quick wins” are.
You can begin baselining by using our CFE score tool. The data you will need for this is information your company should already have readily available (e.g., in your ERP system) and use in other company reporting. This includes:
- The countries you operate in (currently, FlexiDAO has energy data access to countries and states in the EU and US. If you operate in other countries, please reach out so we can discuss this).
- Your annual energy consumption in these countries.
- Your renewable contracts (e.g., unbundled EACs, PPAs, green tariffs) per country.
Our CFE score calculator will provide an overview of the following:
- What percentage of the electricity you consume is carbon-free from the mix on your local energy grid and your contracted energy.
- A comparison of your estimated CO2 emissions yearly vs. hourly.
- A breakdown of how the renewable energy you procure and the renewable energy on the grid match your energy consumption over 24 hours. This allows you to identify the times of the day you are currently not being powered by renewable energy.
Step 3 - CFE strategy
The ultimate aim of all this data gathering and analysis is to include the "24/7 mindset" in your current procurement strategy, enabling you to assess new supply contracts based on price and real decarbonization impact.
You may decide to adopt a 24/7 CFE target (a percentage to work towards of how carbon-free you want your total energy supply to be on an hourly basis by a given date, e.g., 90% CFE across all our sites in Germany by 2030), this can be a helpful benchmark but is not necessary for adopting a “24/7 mindset” in your procurement and reporting. A target like this can be made public or remain internal.
You may want to start by adopting a 24/7 CFE strategy in the countries where you can have the highest impact on your CFE score. To work out where these countries are, you can complete regional feasibility reports of all the countries you operate in. Regional feasibility reports can provide a comparative overview of how easy and achievable it is to improve your CFE score in different markets. You will need to consider how prepared the local energy market is for 24/7 CFE products and what hourly renewable energy products and technology are already available in that market. FlexiDAO has deep expertise in data collection and can help with this step. Scenario planning will also help assess what procurement options can improve your CFE score at the best price in each region, depending on the availability of offers.
Step 4. a- Digitalization
You will need to monitor your carbon-free energy journey on an ongoing basis to understand how you are performing so you can improve and report on your progress. This can be helpful for both annual or hourly reporting of renewables and Scope 2 emissions. Live data collection is key, and automating it can help you save time, avoiding a headache regarding your company bookkeeping. You will need to collect the following data streams:
- Hourly consumption data for all sites under the company’s control, including the hourly fuel mix of grid electricity used.
- Hourly energy production data from various sources, depending on the electricity product your company is currently purchasing (e.g., PPA’s, bundled or unbundled EACs). This sub-step may present different challenges depending on how accessible your data is; at FlexiDAO, we wrote a helpful white paper on metering data collection in Europe to help companies get their granular electricity data.
- Hourly CO2 factors from the grid mix - key for accurate location-based emission calculations
Software solutions such as FlexiDAO’s RESpringⓒ can help you automate the sourcing of all your energy-related data, thanks to its integrations with third parties, without needing hardware devices. RESpring also helps you to visualise and analyse this data, enabling KPIs and relevant insights for procurement and sustainability teams.
There are many benefits to digitally monitoring your energy procurement, not just related to 24/7 CFE. For instance, it allows you to consolidate all your sites' consumption data (either annual or granular), EACs, and supply contracts into one global, unified platform to save time in your annual Scope 2 monitoring and reporting process. Reach out to our customer success team if you want to know more about how our REspring platform can help your business with this step.
Step 4.b - Procurement
With the detailed knowledge you now have of your starting point along the CFE journey and the target you want to hit, your team can work towards finding the best renewable energy products to improve your CFE score. Renewable energy procurement decisions can be tailored to better match your hourly consumption patterns.
There are currently three main energy products you may want to consider:
- Hourly matched PPAs - You can procure PPAs with bundled EACs from an asset within the same grid region (or bidding zone) that provides access to hourly production data, so this can be matched to your consumption.
- An hourly matched PPA contract generally doesn't require any cost premium for your business. Eventually, costs could increase if more expensive technologies are included.
- A challenge with this product is that your grid operator and/or supplier might encounter barriers when sending over hourly production data.
- Supply contract with hourly matched EACs - Signing an electricity supply contract from a supplier (retail tariffs or wholesale market prices) bundled with granular production data and EACs from one or more specific carbon-free energy asset(s).
- With this product, the energy buyer leverages the supplier's access to a comprehensive energy portfolio to increase their CFE score.
- However, the energy supplier might charge an extra premium for assigning EACs from a specific asset and at a specific time.
- Unbundled Granular Certificates - With this product, you procure forward or historically unbundled EAC contracts from specific origination asset(s) to be able to perform hourly matching (no power included).
- Some barriers to overcome with this product are that your EAC broker must be able to assign Granular Certificates from a specific renewable asset, and energy producers might not be willing to share hourly production data given the novelty of the product.
With any of these products, FlexiDAO can provide insights into how the generation of the product matches on an hourly basis to your energy usage. Our 24/7 Academy will go into more detail about each one, exploring their various benefits and challenges.
It will be important to stay aware of the current trends in renewable energy procurement. For example, as new energy storage solutions reduce cost in the coming years, they could offer a cost-effective way to improve your CFEscore whilst also providing value to local grids.
Step 5 - Certification
As the market for 24/7 CFE evolves, granular certificates (GCs) will likely become a widely adopted market instrument. GCs are an evolution of current energy attribute certificate (EACs) schemes widely used worldwide. In the same way that EACs are needed to make credible claims on renewable energy consumption, GCs are needed to make sure there is no double counting of the origin of energy on an hourly basis. They include location, granular time stamps, granular CO2 emissions, and type of technology so buyers can simultaneously match the energy they consume hourly with electricity produced on the same grid. EnergyTag recently launched its first Granular Certificate Scheme standard - a set of criteria those implementing Granular Certificate Schemes need to meet.
Companies worldwide are already trialing GCs as a new instrument for exchanging energy, and issuing bodies have been involved in these pilots, including our project with Microsoft, Eneco, and CertiQ, highlighting a growing interest from within the energy sector in GCs as a new market mechanism.
What’s more, after the public endorsement from the European Association for the cooperation of transmission system operators for electricity (ENTSO-E), voluntary GCs have been adopted in the European Parliament's position for RED III. This represents a huge step forward in policy favouring GCs and enabling corporate energy buyers to adopt even more ambitious decarbonisation strategies.
It may become a necessary future requirement in sustainability reports to certify how your renewable energy usage is time-matched with renewable generation on an hourly basis using GCs.
As you can see, the journey towards 24/7 CFE is a case of evolving your current energy procurement strategy rather than disrupting it. Nobody expects you to reach 100% CFE now, but by peeking under the hood of your existing 100% RE target and using data to quantify how carbon-free your electricity supply is, you can start towards a new procurement strategy that is much better for your business and the planet. FlexiDAO and our partners have solutions and expertise to help guide you through each step of the 24/7 CFE journey. If you want to learn more about how we can help you, don’t hesitate to book a meeting with one of our experts.
You can begin your journey today by reading more of our blogs on 24/7 CFE and finding out the CFE score for at least one of the countries you operate in. Our soon-to-be-launched 24/7 CFE Academy will provide more detail on the steps you have read about today. What are you waiting for?