An introduction to energy's hottest new trend: 24/7 carbon-free electricity

When a company or city claims to be “100 percent powered by clean
energy,” what it typically means is that it has tallied up its
electricity consumption, purchased an equal amount of carbon-free
energy (CFE), and called it even.


That’s fine, as far as it goes. But now, the next horizon of
voluntary climate action has come into view: a brave few
companies and cities aspire, not just to offset their consumption
with CFE on a yearly basis, but to match their consumption with
CFE production every hour of every day, all year long. Running on
clean energy 24/7 — that’s new hotness.


The list of entities in the US that have committed to 24/7 CFE is
short: Peninsula Clean Energy (a community choice aggregator in
California) has committed to it by 2025; Google, Microsoft, and
the Sacramento Municipal Utility District have targeted 2030; the
Los Angeles Department of Water and Power and, somewhat
anomalously for this California-heavy list, the city of Des
Moines, Iowa, have targeted 2035. Ithaca, New York, is rumored to
be contemplating something similar.


That’s it for now. But the idea is catching on quickly and
drawing tons of attention. In September, a broad international
group of more than 40 energy suppliers, buyers, and governments
launched the 24/7 Carbon-free Energy Compact, “a set of
principles and actions that stakeholders across the energy
ecosystem can commit to in order to drive systemic change.”


Biden’s original American Jobs Plan contained a promise to pursue
“24/7 clean power for federal buildings.” That language has
fallen out of the Build Back Better budget reconciliation bill in
Congress, but rumor has it Biden may issue an executive order on
the subject soon.


There are already efforts afoot to standardize hourly tracking of
clean energy and build it into markets, as well as numerous
active discussions about how to update markets and policy to
accommodate it.


Anyway, it’s getting to be a big deal. It’s time to wrap our
heads around what’s going on. Happily, it turns out to be a
fascinating story with all kinds of twists and turns. Let’s dive
in!


A history of “powered by clean energy”


To understand what “100 percent powered by clean electricity” has
meant to date, you have to understand at least the basics of
renewable energy certificates, or RECs.


Originally, RECs were a mechanism that utilities used to comply
with statutory requirements for deploying renewable energy. A
wind or solar farm that generated 1 megawatt-hour of renewable
energy also generated 1 REC, which was submitted to regulators as
proof of compliance.


Then voluntary REC markets came along. In a voluntary REC market,
a power generator can “unbundle” its REC from the megawatt-hour
of energy it generates and sell it into a market where it could
be traded numerous times before being retired, or taken off the
market. (For accounting purposes, whoever retires the REC gets to
claim the environmental benefits.) Corporate, institutional, and
government entities could purchase, trade, and retire RECS.


The idea was that the ability to sell RECs as a second income
stream would induce developers to build more clean energy
projects. And it worked for a while, as long as solar and wind
came at a cost premium and RECS were relatively expensive.


But then, wind and solar started getting super-cheap: the cost of
an unbundled REC went from $5 in 2008 to under $1 in 2010 (where
it stayed through 2019, though it has risen back up to $3-$5 in
the last couple years). Voluntary REC markets became quite robust
but it became clear at a certain point that all these unbundled
RECs were not actually driving many new renewable energy
projects. A 2013 study found that “the investment decisions of
wind power project developers in the United States are unlikely
to have been altered by the voluntary REC market.”


To their credit, corporate and industrial (C&I) buyers took
notice. In 2014, Walmart stated that it would no longer offset
its energy use with unbundled RECs, and many other buyers
followed suit. The market began to trend toward long-term
contracts — power purchase agreements (PPAs) — through which a
buyer pledged to buy both the energy and the RECs (“bundled”
RECs) from a prospective project for 10 to 25 years.


That gave developers more confidence and has prompted a surge of
building of clean energy projects. In 2020 alone, C&I buyers
in the US procured 10.6 gigawatts of renewable energy, which
represents a third of all renewables capacity added in the
country. Voluntary procurement by the C&I sector has become a
major driver of the energy transition.


There are still plenty of entities buying cheap unbundled RECs
and claiming carbon neutrality, but the leaders in the space are
generally bundling them under PPAs.


But there is still a problem with RECs, even the good ones.


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The problem with RECS


When a C&I buyer purchases a REC, whether bundled or
unbundled, it knows how much renewable energy was generated (a
megawatt-hour), but not when it was generated. But it turns out
that, when it comes to energy sources that come and go with the
weather like wind and solar, the timing of generation matters
quite a bit.


If participants in voluntary REC markets continue to buy the
cheapest wind and solar RECs, sooner or later, the grid will
become imbalanced. During periods of high sunlight or heavy wind,
there will be too much renewable energy, pushing prices down.


But in periods when the sun is down or the wind flags, there
isn’t enough renewable energy, so demand must be covered by
expensive natural gas peaker plants. Prices and supplies swing
wildly. Markets don’t like it. And more wind and solar only
exacerbate the effect.


What’s needed is CFE that’s available when sun and wind fall
short. A megawatt-hour of additional CFE is much more valuable
during those times than it is during times of high solar and wind
output. The timing matters.


But right now, RECs contain no information about the time of
generation. It is impossible for buyers to know if any particular
generator covered or will cover any particular hour of
consumption. Buyers have no way of buying CFE specifically in the
hours that they most need it.


Think of a monthly REC as an extremely low-resolution image of
renewable energy production. In temporal terms, it’s one giant
month-sized pixel. C&I buyers purchase these low-resolution
images, overlay them on their consumption, and hope for the best.


But when you look at a higher resolution image of renewable
energy production, one with hour-sized pixels, you see that it
does not overlap perfectly with consumption. Not even close.


The mismatch between “100% CFE” and “100% CFE 24/7”


Google broke ground in this area with a 2018 white paper called
“The Internet is 24x7. Carbon-free energy should be too.” (See
also this 2020 white paper and this April blog post from Google
CEO Sundar Pichai.) It has produced some visuals that allow us to
clearly see the mismatch between renewable energy supply and
demand.


Google has dozens of data centers. It tracks energy supply and
demand by the hour and gives each data center a CFE score: how
many hours of its operations were powered, in real time, by
renewable energy.


A quick word about how the CFE score is calculated. For each
hour, the baseline CFE score is the grid mix. So if the data
center is drawing on a grid with 20 percent CFE (wind, solar,
nuclear, whatever) and 80 percent fossil, it begins with a CFE
score of 20 percent for that hour.


Google then adds any energy being produced during that hour by
projects with which it has signed PPAs on the same grid. That can
push the CFE score up, theoretically to 100 percent.


Anyway, with that in mind, let’s check out some data centers and
their CFE scores. The first is from the company’s data center in
Iowa.


Google buys more than enough wind power in Iowa to offset the
data center’s consumption in volumetric terms. But is the data
center actually running on wind power, from hour to hour? Not
entirely. To be precise, 74 percent of its demand was matched, on
an hourly basis, by CFE. It has a CFE score of 74.


Below is a stripe representing the data center’s consumption for
every hour of the year. Each column is a day (there are 365).
Each row is an hour, beginning with midnight at the top. The
shade of the square represents the amount of CFE powering it
during that hour.


In most hours, there’s enough Google-contracted wind power coming
onto the Iowa grid to cover the data center’s consumption.
However, for a period in late summer, wind speeds decline, wind
power drops, and fossil fuels step in to provide the power.


How can Google get this data center’s CFE score up to 100
percent?


The first thing to note is that it can not simply buy more Iowa
wind power. It is already getting all it can get out of wind. It
doesn’t matter how many wind farms it has contracted with if the
wind isn’t blowing in a given hour. In Iowa, Google is going to
have to procure something else — something that can fill in the
gaps left by wind.


One way to do that is by buying both wind and solar, which tend
to have complementary profiles. Below is a similar stripe
representing Google’s Netherlands data center. On July 1, a bunch
of new Google-contracted solar came online; from that point on,
the middle of the stripe — daytime — is much greener. Solar fills
in some of the gaps left by wind.


Unfortunately, solar leaves gaps too. It doesn’t matter how many
solar farms you’ve contracted with if the sun is behind clouds
or, you know, down. In the Netherlands, Google is going to have
to procure something else — something to fill the remaining gaps
left by solar and wind.


In some sense, these are nice problems to have. Here’s the Taiwan
data center:


Oof. What little CFE there is on Taiwan’s grid comes from nuclear
power plants — when they go out, it’s all fossils.


Google has given all of its data centers CFE scores (which was no
mean feat, since in many cases this data was not easily
available). Here they are:


These graphics help illustrate Google’s 24/7 CFE challenge, which
isn’t just one challenge but a slightly different challenge in
each of the dozens of grids in which it operates.


At each of those data centers (except maybe Oklahoma and Oregon)
it needs to buy a bunch more wind and solar. But it will also
need to buy something else — something to fill the gaps.


What might that something else be?


The technology needed to fill the gaps


Part of the great promise of the movement to 24/7 CFE is it will
draw attention and investment to all those things needed to
balance out cheap wind and solar.


For big consumers like Google, there are, roughly speaking, three
ways to smooth out the fluctuations in wind and solar and
maintain a steady hourly supply of CFE. They are, from least to
most expensive: demand management, energy storage, and clean-firm
generation.


Demand management


Demand management begins with load reduction through efficiency.
Google has aggressively pursued energy efficiency at its data
centers, with dramatic results: “Compared with five years ago,”
the company said in 2018, “we now deliver more than 3.5 times as
much computing power with the same amount of electrical power.”


After load reduction comes load shaping — managing daily
operations to push more consumption into high-CFE hours — and
load shifting, which refers to moving consumption around in
smaller increments, responding to hour-to-hour fluctuations in
CFE.


“We got our start by looking out over a 24-hour period, getting a
forecast of what the grid CFE would be, and then shifting compute
loads back in time during that period, things like feature
upgrades or backups,” Michael Terrell, Google’s director of
energy (and the author of the 2018 white paper), told me. “Now
what we started doing is shifting loads spatially, from one data
center to the other. Theoretically you could envision compute
following the sun [around the globe], if you took it all the
way.”


Adapting demand to supply rather than vice versa — load
reduction, shaping, and shifting — is almost always the least
expensive way of accommodating variable renewables. There is
still a ton of innovation to come in this area. “It's a space
where we haven't even really gotten started,” Terrell says.


Energy storage


Storage, currently dominated by lithium-ion batteries, is great
for smoothing out the day-to-day supply curve, taking some excess
wind from windy hours and saving it for lulls, or saving excess
solar from the daytime for nighttime.


However, while batteries are a good balance for renewables’
variability, their hour-to-hour fluctuations, they aren’t as good
for balancing its intermittency, the occasional days, weeks,
months, even years of unusually low wind or sunlight. Germans
call a period like this a Dunkelflaute. It is extremely difficult
and expensive to cover one with only batteries to supplement wind
and solar.


Clean-firm generation


The third option is “clean firm” generation, i.e., energy sources
that can be turned on at will and run for days or weeks on end,
but emit no carbon. The two big conventional examples here are
hydro and nuclear power, but there isn’t a ton of new hydro
available to most buyers and new nuclear (at least in the absence
of next-gen nuclear tech) is prohibitively expensive.


There’s also geothermal, which (as I wrote here) is getting a lot
of interest and active development. The first bit of clean-firm
that Google plans to acquire is geothermal, from a company called
Fervo. For now, affordable geothermal is only available in
certain areas of the country, but technological advances are
close to changing that.


Other clean-firm sources include:


* long-duration energy storage, which is technically a form of
storage, but competes directly with other clean-firm sources;


* advanced nuclear, which has been just over the horizon for
years but might finally be getting close;


* biomass, some versions of which may qualify as zero-carbon;


* power plants running on hydrogen (or hydrogen-based fuels),
which are currently being tested in the UK and elsewhere; and


* natural gas plants with carbon capture and sequestration (CCS),
which are currently both nonexistent and wildly expensive, but
may (with the help of a boosted 45Q tax rebate in the Build Back
Better bill) become more cost-effective soon.


One reason energy nerds are excited about the 24/7 trend is that
it’s going to pull forward in time a bunch of questions (and
investment decisions) that were going to face grids trying to
reach 100 percent CFE anyway. Perhaps the biggest and most
important of those questions is: how far will we be able to get
with demand response and batteries? How much clean-firm will we
need in the end?


With a bunch of companies and cities competing to reach 24/7 CFE,
we’ll find out sooner than we otherwise would have. And the
clean-firm sources that are necessary will receive much-needed
investment, bringing their costs down and benefiting other
decarbonizing grids across the world.


The market products needed to fill the gaps


If companies and cities want to fill in their hourly gaps, they
need access to time-stamped CFE. As previously mentioned, current
RECs only come in low-resolution form, in chunks of a month or
year. They aren’t precise enough to target specific hours.


The answer — simple to propose but devilishly difficult in
practice — is to supplement and eventually replace current RECs
with some kind of hourly RECs. As it happens, there’s a bunch of
work going on to figure out how that would work. If you’re
interested, the place to begin exploring is this white paper from
M-RETS, a nonprofit organization devoted to the tracking and
trading of renewable energy.


Working with Google, M-RETS is pioneering and testing a product
called Time-based Energy Attribute Certificates (T-EACs), which
are effectively hourly RECs. One monthly REC would be replaced
(for a 31-day month) with 744 T-EACs, each representing one hour
of the month, each encoding exactly how much CFE was generated in
that hour.


For now, in the Midwest, T-EACs are being offered alongside RECs
and Google is buying and retiring them. But there’s a long way to
go between that test and a fundamental restructuring of REC
markets. Says Google:


For T-EACs to be adopted worldwide, we’ll need to standardize the
certificates and integrate them into existing tracking systems
and carbon accounting programs. Also, grid operators will need to
enable customers to access and understand their hourly energy
data. That’s why we support policies that mandate publication of
grid data, and why we serve on the Advisory Board for EnergyTag,
an independent non-profit pioneering a global tracking standard
for T-EACs.


This is a big task, which amounts to rebuilding a rather large
plane (REC markets) while it is in flight. But the information
necessary to do it exists.


That’s phase one of M-RETS’ plan: make hourly RECS available and
reliable. Phase two is a little trickier.


Measuring the carbon impact of renewable energy procurement is
vexed but vital


Phase two is to integrate carbon information and accounting into
T-EACs, to reveal precisely how much carbon was avoided by the
clean energy. This information can help buyers prioritize the
T-EACs likely to displace the most emissions. It can also allow
companies to more precisely track their scope 2 emissions.


For those who don’t remember this bit of jargon: scope 1
emissions are from direct, on-site combustion of fossil fuels;
scope 2 are the off-site emissions represented by on-site
consumption of electricity; scope 3 (a much broader category) are
all the emissions caused by a company’s supply chain and
products.


To date, companies have been able to offset their scope 2
emissions with REC purchases. But as we’ve seen, RECs are almost
always mismatched to actual hourly consumption, and a company
that relies on RECs to offset its scope 2 emissions is likely
exaggerating its actual reductions.


Hourly carbon-emissions data attached to T-EACs would allow a
company to precisely measure the amount of emissions it reduces
through its contracts and thus precisely offset its scope 2
emissions.


There are technical issues around how to properly measure avoided
carbon, but we’re going to pass those by for now. There’s a ton
of work going on in this area: for companies trying to provide
reliable hourly emissions data, see Singularity Energy,
electricityMap (formerly Tomorrow), WattTime, and Kevala. In
partnership with several energy companies, Kevala recently
released a white paper proposing “a methodology for measuring
carbon intensity on the electric grid.”


In addition, there are organizations working to develop standards
and common definitions, including the aforementioned EnergyTag,
“an independent, non-profit, industry-led initiative to define
and build a market for hourly electricity certificates that
enables energy users to verify the source of their electricity
and carbon emissions in real-time,” and LF Energy (the energy
division of the Linux Foundation).


The ultimate vision: electricity markets in which each hour of
CFE is available as a discrete product, with reliable carbon data
attached to it. Within such markets, any buyer — a building, a
data center, a city — would be able to know precisely what its
real-world carbon footprint is and exactly how much progress it
has made in reducing it.


Is 24/7 CFE the next step in carbon commitments … or a
distraction?


Let’s be honest: governments ought to be doing this, through
policy. The federal government should pass a clean energy
standard (or, ahem, a CEPP) targeting a net-zero electricity
sector by 2035, like Biden wanted. On some level, all of this
voluntary stuff is a suboptimal response to government failure.


Nonetheless, the C&I sector deserves credit for pushing
things forward even when governments won’t. It is responsible for
enormous amounts of new renewable energy on the grid over the
last decade.


Now it is trying to focus attention on filling the gaps left by
wind and solar, to achieve full, around-the-clock clean energy.
This is a challenge every decarbonizing grid will face
eventually. Google et al. are effectively volunteering to explore
and chart it in advance.


Nevertheless, there are real questions about whether this is the
best climate strategy. A company procuring CFE to raise its own
24/7 CFE score is not necessarily going to procure in a way that
maximizes carbon reductions; those two goals rarely overlap
perfectly. Critics of the 24/7 trend say that companies ought to
be focused on reducing the most carbon possible as quickly as
possible, and that hourly T-EACs are in some ways a return to
unbundled RECs, with all the same risks that accounting gimmicks
will substitute for real emission reductions.


These are complicated disputes that are worth spending some time
on. And this post has already gone on for too long! So for now, I
will leave it here, with the introduction I promised.


In my next post, I’ll get into the questions around whether 24/7
is the right goal and how it might actually affect emissions. It
only gets nerdier from here on out, y’all!


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