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Advancing Corporate Procurement of Zero-Carbon Electricity in the United States: Moving from RE100 to ZC100
Reports by Melissa Lott & Bruce Phillips • December 08, 2021
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Advancing Corporate Procurement of Zero-Carbon Electricity in the United States: Moving from RE100 to ZC100
Reports by Melissa Lott & Bruce Phillips • December 08, 2021
This report represents the research and views of the author. It does not necessarily represent the views of the Center on Global Energy Policy. The piece may be subject to further revision. Contributions to SIPA for the benefit of CGEP are general use gifts, which gives the Center discretion in how it allocates these funds. More information is available at Our Partners. Rare cases of sponsored projects are clearly indicated. For a full list of financial supporters of the Center on Global Energy Policy at Columbia University SIPA, please visit our website at Our Partners. See below a list of members that are currently in CGEP’s Visionary Annual Circle.
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CGEP’s Visionary Annual Circle
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(This list is updated periodically)
Air Products
Anonymous
Jay Bernstein
Breakthrough Energy LLC
Children’s Investment Fund Foundation (CIFF)
Executive Summary
Corporate pledges to purchase renewable electricity have led to significant new solar and wind capacity investments and driven down the carbon intensity of the power sector in the United States. Participating companies have increasingly procured this power, many with a goal of procuring quantities that are equal or proportional to the amount of electricity that they consume at their facilities on an annual basis.[1] Corporate buyers can reap many benefits from renewables procurement, including hedging against power price fluctuations and enjoying positive brand association, helping them meet shareholder demands around climate or other environmental, social, and governance (ESG) goals. However, the reality is that commitments to buy 100 percent renewable electricity may not equate to a company actually reducing its power carbon footprint to zero.
This report from Columbia University’s Center on Global Energy Policy quantifies the mismatch between companies’ contracted variable renewable electricity (VRE) and their actual use of electricity to highlight the degree to which these companies still rely on a partially fossil-fueled power grid to bridge the gap. A modeling exercise and analysis done in collaboration with The NorthBridge Group reveals a significant shortfall between electricity demand and VRE supply, leaving companies that contract for 100 percent renewables to in fact draw between 20 percent and 50 percent[2] of their annual electricity from the regional electric grid, depending on their location, demand profile, and mix of contracted renewable supplies.
This disparity presents a number of challenges to corporations that wish to achieve deep decarbonization and are unable to curtail operations to match renewable energy supplies. There are several approaches to get closer to a true zero-carbon power footprint. Installing storage capacity either on-site or at the power plant to provide stored electricity when renewables are not sufficient, such as with a battery,[3] is one option. However, this only reduces the minimum shortfall by half, requiring a customer to continue to rely on electricity from the regional electric grid for 10 percent to 28 percent of its annual load.[4] Resolving the shortfall by procuring extra renewable power (e.g., to 150 percent of annual electricity demand with renewables) can drive costs up substantially without closing the gap.
The authors instead suggest companies can take the following steps to better meet zero-carbon electricity goals and avoid accusations of greenwashing:
- Employ procurement methods that match a company’s demand with low-carbon supplies on an hour-by-hour basis using local resources.
- Move beyond supply targets exclusively centered around variable renewable energy and batteries to diverse portfolios of low-carbon resources, including variable renewable energy and also firm low-carbon electricity generation resources (e.g., large hydropower, nuclear, fossil fuels with carbon capture and sequestration systems, and geothermal) and long-duration energy storage (e.g., zero-carbon hydrogen and other seasonal storage options).
Companies that advance procurement practices that reflect these recommendations would increase the demand for firm low-carbon generation and long-duration energy storage technologies, sending stronger price signals to drive investment in zero-carbon technologies that better coincide with the timing of customer electricity demand and accelerate carbon emission reductions. These practices could also improve the performance, reduce the cost, and accelerate the commercialization of advanced technologies that are needed to achieve the goal of full decarbonization in a practical and affordable manner.
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