If you’ve started down the path to clean energy procurement you’ll have heard something about 24/7 or hourly matching, where renewable energy certificates track actual energy consumption — hour by hour, day by day.
It's a leap forward in the drive to build transparency into corporate sustainability claims, but how do you apply it in real life? Here are the basics behind integrating hourly matching into your net zero procurement strategy.
What is hourly matching?
Hourly matching is the practice of using renewable energy certificates to link actual clean energy consumption with clean energy production on an hourly basis.
Sometimes called granular matching, it makes certificates more credible as a route for achieving sustainability targets. Companies that use it can gain a recognized score that captures the true percentage of overall consumption covered by carbon free generation.
A study by Google and Princeton University found that a shift to hourly matching by just 10 percent of commercial and industrial energy consumers could lead to a 60% reduction in emissions compared to traditional 'annual' matching – which is often imprecise, sometimes based on estimates, and can lead to over-procurement.
Firms can end up buying more renewable energy certificate volume than they need to ensure that expected annual consumption is fully covered. Given the price volatility we’ve seen in recent years, simply stockpiling certificates could prove to be an expensive approach.
How do renewable energy certificates work?
When renewable generation plants produce a megawatt hour (MWh) of clean energy, they can apply for a certificate that proves it comes from a carbon-free generation source. It states how, when, and where that one-hour unit of energy was generated. This is called a REC (renewable energy certificate) in the US, a REGO (renewable energy guarantee of origin) in the UK, or a GO (guarantee of origin) in the EU.
Corporate energy buyers purchase RECs to substantiate clean energy consumption claims and provide-backup for any mandated sustainability reporting. The certificates are ‘cancelled’ (redeemed) against an equivalent amount of power consumed. A company’s certificate cancellations constitute a trade, and each is tracked in an electronic registry.
In the EU, GOs can be traded across national borders under the rules of the single energy market. Standardization through Europe’s Association of Issuing Bodies (AIB) enables corporate energy users to know the origin of energy and ensure compliance with EU sustainability reporting mandates.
Hourly matching certificates: how to start the journey
Purchasing a renewable energy certificate is easy enough. You get them directly from your clean energy producer or use an online marketplace to find the best fit and price. But once you have them, how do you apply them and know you’re getting full business value?
Follow these steps to help you get started.
Know your consumption profile
Calculate the overall level of matching between your consumption and clean energy generation on an hourly or sub-hourly basis. Begin by collecting consumption data from each of your company’s sites and use it to create an aggregated energy consumption profile. Request hourly resolved generation data from your renewable energy suppliers, including PPAs
- Measure consumption at each site or location separately
- Look at existing onsite and offsite generation
- Capture the hourly load profile for patterns in peak and lowest consumption
- Consider any future operational changes that could reduce or increase energy needs
Set a target CFE score
For transparency in reporting and measurement, the next step is to set an achievable carbon free energy (CFE) score. This measures the percentage of matched renewables in your overall energy consumption.
More than three quarters of Fortune 100 companies publish their CFE targets and progress reaching them. Globally the benchmark varies:
- The White House has mandated that federal government operations hit a 100% CFE target by 2030
- Google entered into an agreement with ENGIE to hit 80% carbon-free energy on an hourly basis in Germany starting in 2022 (blog.google)
- EDF plans to have 40% of its electricity production from renewable sources by 2030 (Clean Energy Wire)
Hourly-matching supports different CFE objectives by allowing energy consumption to be met simultaneously by renewable generation at every hour in the day. For regulators and other stakeholders, this ensures that Scope 2 emissions match the target by time of day rather than simply being offset by volume.
Pro tip: Many organizations start by aiming for renewable energy matching of 60-70%. If you’re on a path to net-zero the goal should be 80-90%. The final 10-20% will be easier to address when certificates are eventually issued in increments of 30 minutes or less.
Develop a roadmap
Variables include the availability of GOs and REGOs that closely match your consumption profile. Moving to hourly matching will also need buy-in from other stakeholders. Develop a communication plan for staff, shareholders, suppliers, partners, and customers to explain its business benefits.
After engaging with stakeholders you’ll be better able to gauge the level of support you can expect and identify any process barriers.
Choose a REGO or GO supplier
With a roadmap ready you can move to shortlisting your supplier options. There are three categories to choose from:
- Brokers or traders: They contact suppliers and handle the purchase on your behalf. However, you won't get full transparency on pricing, and you'll need to know what exactly to ask for
- Consultants or advisers: Expensive but offer tailored advice
- Purchase certificates directly from a renewable energy generator: Less common as it’s hard to align one generator with an aggregated global consumption profile
- Online platforms: Convenient and fast. Look for one that provides full traceability of suppliers
Buy certificates. Measure impact
Now you should be ready to buy. Purchase certificates directly, through third parties, or via a specialist trading platform. To ensure compliance with regulatory mandates and keep stakeholders informed on progress, you’ll need a reliable reporting capability that captures hourly matching outcomes and allows you to recalculate your CFE score with actual data.
Pro tip: be clear about the organization’s risk appetite when it comes to securing the best price for GOs or REGOs. Set team responsibilities for collecting and analysing data for consumption, generation, and emissions reduction – plus any financial benefits directly attributable to the switch to hourly matching.
Avoiding accusations of greenwashing
Renewable energy certificates have been criticized in the past for being not ‘truly renewable’ or having limited integrity as a proof point for net zero claims due to their limited traceability. Used correctly, the arrival of hourly certificates addresses those concerns. So much so that the regulations around sustainability disclosures are being changed in ways that make hourly matching a basic requirement.
The European Union’s Green Claims Directive, for example, mandates that any claims a company makes about its renewable energy consumption must be backed by detailed data. Short of having major onsite capacity, a renewable generation plant nearby, or PPAs that cover 100% of your needs, corporates will have gaps to fill.
How they’re filled will need to be quantified at a level of detail that only hourly matching can provide. It will be vital for avoiding accusations of greenwashing and the penalties that will follow. Corporate communications teams will be able to publicise net zero commitments — and progress made toward them in any given period – with full confidence.
By implementing hourly certificates correctly, you can future-proof your clean energy procurement approach, preparing for upcoming regulations and reducing the financial risks that often come with longer-term commitments like PPAs.
Reduce exposure to certificate price volatility
Sustainability goals will guide your hourly matching strategy, but maximizing business impact isn't always straightforward. Certificate pricing can be volatile and subject to multiple pressures. GO prices, for example, experienced sharp rises in 2022 and went through a period of instability in early 2023 before settling out again.
Extreme weather, regulatory changes, and geopolitical events can all impact the price of renewable energy certificates. To hedge against price swings while you progress towards net zero goals, research the different marketplace options to find certificates that fit your consumption profile — and optimise your costs.