How corporate procurement can advance renewable energy deployment

The transition to a decarbonized energy system requires vital investments in clear power technology, transmission, and storage. Nonetheless, securing that funding capital is a key problem.

For instance, many energy methods fashions focus solely on prices and overlook a important issue: threat publicity to buyers. If unaccounted for, this might finally result in an overestimate of the particular deployment of renewable power wanted in our energy system.

Alongside compliance consumers corresponding to utilities, company buyers—referred to as “offtakers”—are more and more shopping for the electrical energy from renewables instantly as a part of a “voluntary market,” providing the kind of worth certainty to renewables initiatives that’s wanted for his or her preliminary capital funding.

This quickly rising position of corporates in renewables procurement brings new analysis questions, together with how voluntary market exercise drives renewables deployment and the way a variety of voluntary market approaches (corresponding to hourly matching and emissions matching) impacts energy methods operations.

To deal with these analysis gaps, the Nationwide Renewable Power Laboratory (NREL) is partnering with Meta, one of many largest company consumers of renewable power globally. Collectively, NREL and Meta are collaborating on a collection of experiences that can enable better perception into company renewables procurement and the enabling situations for clear power funding.

In a primary analysis venture, NREL—in collaboration with analysis consultancy Aquilo Power GmbH—will examine the widespread traits of company consumers and their future position in renewables procurement.

“We hope to inform corporate buyers and regulators about the characteristics of renewables procurement and its impacts in today’s power markets,” analysis accomplice Philipp Beiter from Aquilo Power GmbH mentioned. “As corporations’ roles as offtakers grows, a greater body of research can explore their exact role in mitigating power price risks and the interaction of corporations’ long-term contracts with other power market features.”

Why company offtake issues

NREL has led analysis on U.S. company procurement with its yearly revealed market report Status and Trends in the U.S. Voluntary Green Power Market. Moreover, a 2023 perspectives article in Nature Power confirmed that long-term contracts (so known as “contracts for difference”) established between energy producers and offtakers are needed for renewables financing as a result of they provide a degree of worth stability that’s largely absent in wholesale electrical energy markets.

Slightly than constituting a subsidy, these long-term contracts—whether or not provided by utilities, governments, or companies—serve the aim of threat administration and have gotten lasting and basic market options.

The 2023 views article was meant to stimulate a well timed dialogue concerning the influence of better long-term contract diffusion on electrical energy market mechanisms and threat allocation, which this analysis effort between Meta and NREL builds upon.

“De-risking renewable generation revenue is critical for securing financing for the construction of renewable projects,” mentioned Jenny Heeter, NREL’s principal investigator on the venture. “We hope to explore how corporations manage these risks and whether that could limit future renewable energy deployment.”

By means of this work, the NREL researchers purpose to elucidate that even when renewable power prices are aggressive with fossil fuelslong-term offtake agreements are sometimes nonetheless wanted for his or her deployment.

Recognizing this dynamic is essential for coverage and energy methods planning, which frequently overstates renewable power demand and underappreciates the significance of company procurement in driving renewable power deployment.