PPAs & the state of the grid-mix

It’s late on a Thursday afternoon, the sun is streaming through my office window & I’m dreaming about lazy summer days past. My computer is sitting mostly idle, sipping away on power supplied by the national grid, and my mind meanders back to a conversation I’ve been unwrapping over the past week. Namely, How does renewable-energy accounting actually work? Who owns what, who gets to claim what, and how do we avoid double counting of renewables?

I would like to give a shout-out to climateaction.tech who have proven an invaluable font of knowledge.

Back to business, I’ve been writing a report on (scope 2) energy-consumption for a corporate with globally distributed servers running professional data-centres. My first instinct when hearing this was; “that sounds easy”, all we need to do is get measurements of the servers in question, find the energy-mix for each data-centre and bob’s your uncle. If only that were the case. Firstly, this corporate, for a number of reasons, is unable to disclose which data-centres it is operating in. Okay, no problem, we can use a pessimistic number, the average grid-mix of the respective country. And it isn’t an issue, This data is easy to find and fairly reputable. But it got me thinking… Doesn’t the grid get power from a mix of both renewable and non-renewable sources? And don’t energy-consumers use Purchase Power Agreements (PPAs) to match their consumption with equivalent inputs into the national grid. Yes, that’s exactly right! Well… almost. Because the grid-mix doesn’t take this into account! A national grid-mix is only a real-time overview of the inputs & outputs of the network, ignoring PPAs. Hmm, that’s weird… Does that mean it’s possible for all renewable energy to be allocated via PPAs, while other companies can claim they’re running on some percentage of renewable energy? Yes, yes it does. If you’re thinking, “This doesn’t make sense, This is clearly double-counting!”, well, you would be right.

But the fun doesn’t stop there! Let’s take the example of Iceland who run on 100% renewable energy, a beacon of light in this quagmire…

Now may be a good time to include our 3rd act surprise appearance, Renewable Energy Contracts (RECs). No, PPAs aren’t the only player in the game. But what we’re most interested in are ‘Unbundled RECs’. What is particularly strange about them is that there isn’t a requirement for a direct grid connection between the supplier and the consumer. Re-enter Iceland, what did we say about them running on 100% renewable energy? Oh yes, they’re selling certificates of it internationally! Now, I don’t know about you, but to me this sounds a lot like the carbon credit market! Carbon emitted in the UK is the same as carbon sequestered in South Africa right? right?? I mean, it’s only the planet that’s at stake…

So have we recreated the same issue with RECs that we already have with carbon credits? I’ll let you decide.

Clearly this needs to be resolved, because there is so much scope for shenanigans! And I wouldn’t put it past anyone to leverage these shenanigan-enabling systems.

Let’s take a breath now, and set aside our pitchforks for a second. Because let’s be honest, I’m not the first one to have noticed this. I’m actually pretty far down on that list. So let’s see what’s being done about this. First, there are cries of ‘greenwashing’ starting to rise from the grandstand! I wholeheartedly support this! We should be pushing for more accountability & transparency in this market. There is also another initiative, RE100, who are trying to account for these RECs, because Iceland shouldn’t be able to claim that they’re running on green energy, and who knows maybe they aren’t! (I’ll admit, I didn’t do that much research on Icelandic energy… They were a convenient example).

So in summary, what have we learned? There’s a whole lot to energy, more than you or I even know! It’s critical we get a handle on our power consumption as a planet if we want to stand a chance against the impending… well, you get it.

I am in no uncertain terms not an expert! treat the above article as such, and please please please reach out to me if you want to discuss the finer points of the above. I would love to educate (& learn) more about it.

If you want to shout obscenities at me, I have a special email address just for you /dev/null.

Sorry Iceland, we love you.