Navigating the Complexities of Renewable Energy Procurement
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At Anthesis, we are committed to supporting our clients on their net-zero journeys, helping them navigate the complexities of renewable energy procurement with innovative solutions. Our clients have made significant strides in reducing Scope 2 emissions by using Renewable Energy Attribute Certificates (EACs)- GoOs in Europe, REGOS in UK, RECs in US- a critical tool in demonstrating their use of renewable energy.
This article delves into the role of EACs in different regions, their contribution to the global renewable energy market, and how they enable companies to claim one megawatt hour of green energy added to the grid.
Unbundled EACs: Common Practice but Limited Impact?
Currently, over 300,000 companies purchase unbundled RECs in the US each year, and while specific global numbers are not consistently tracked across all regions, it’s evident that millions of EACs are traded worldwide each year, covering North America, Europe, Asia and various emerging markets. As interest in higher-impact alternatives grows, including Power Purchase Agreements (PPAs) or more specific additionality-driven EACs, this number is expected to rise further in 2025.
These certificates, purchased separately from energy, allow companies to claim renewable energy use, even if the energy itself comes from cleaner grids like Texas or California. To date, EACs have played a pivotal role to the explosive growth of renewables, although their evolving role and potential for greater impact is now attracting more focused attention. While VPPAs and PPAs are seen as gold standards for impact, they may not be suitable for companies with smaller energy loads or limited resources. So, what are the alternatives?
Exploring High-Impact Alternatives: Additionality, Emissionality, and Local EACs
We recommend three alternative approaches to purchasing:
Additionality EACs
Additionality EACs are ideal for companies looking to invest in new renewable energy projects. These investments typically focus on projects which are less than five years old or involve 5- to 10-year purchase agreements, also known as offtakes. By supporting new projects, buyers help developers secure financing, as the future revenue from these EACs can be factored into financial projections for investors and banks. This type of contract offers a long-term commitment without the complexity or upfront risks of more intensive agreements like Virtual Power Purchase Agreements (VPPAs) or traditional Power Purchase Agreements (PPAs). Typically, payment is only required when the EACs are delivered each year, providing added flexibility.
Although additionality can be a challenging concept, the key is determining whether the purchase directly leads to new renewable energy development. Similar to carbon credits, a baseline (business as usual) must be established: did the purchase actually enable the renewable project to go ahead? This financing link is a crucial factor that we consider when advising clients on additionality-driven projects.
Higher Emissionality EACs
Some companies prefer to purchase EACs from renewable projects located in carbon-intensive sub-grids, such as those in South Carolina, rather than cleaner grids like Texas or California. This strategy displaces a higher amount of carbon per megawatt-hour, making it more impactful in terms of reducing carbon emissions. For companies focused on emissions-based Scope 2 reductions, rather than just matching renewable energy megawatts annually, this approach can be more appealing. There is often an overlap between emissionality and additionality EACs, as many customers prefer to support new renewable projects located in carbon-intensive grids to maximize their impact.
Local Project Solutions
Other companies choose to invest in renewable energy projects within their local grid. This not only strengthens their claim to the associated environmental benefits but also demonstrates a commitment to supporting local communities. Investing locally can provide added value in terms of community engagement and a clearer connection to the renewable energy being sourced.
Looking Ahead: What’s Next?
As regulatory bodies begin to consider the concepts of additionality and emissionality more seriously, we anticipate a shift in market demand. Companies looking to make more impactful energy purchases should evaluate these alternatives and consider new projects.
If you’re interested in exploring these options, Anthesis can guide you through the process.
If you’d like to discuss the best options for your company’s renewable energy strategy, reach out to us today.
