Corporate electricity purchases aren't driving down emissions like they used to

A new paper from Princeton suggests only 24/7 matching with clean electricity makes a significant emissions impact in a grid increasingly outfitted with clean energy.

Solar panels

Photo credit: Agostime / Europa Press via Getty Images

In clean energy development, Big Tech companies like Microsoft, Meta, and Amazon play a major role. Over the course of more than a decade, the companies have designed new power purchase types, announced mega-projects, and invested in areas of the country where the grid has little wind or solar power. Tech companies and other corporate buyers have contracted for nearly 150 gigawatts of renewable energy in the last 14 years — nearly 70% of the total renewable capacity the United States has installed today.

However, as the grid has become increasingly clean, the climate significance of those commitments appears to be waning, a recent paper found.

  • The top line: A January paper from researchers at Princeton found that the only way for clean electricity buying to continue to have a significant emissions impact in the coming decade is through matching purchases to hourly demand. Today, many companies use an annual matching standard to meet 100% renewable energy targets, which the researchers found to be largely ineffective at lowering system-wide emissions. 
  • The current take: Wilson Ricks, a Princeton PhD candidate and one of the study’s authors, said the results suggest that many corporate clean electricity buyers need to alter purchasing strategies to measurably draw down grid-level emissions in the coming years. “The act of buying clean electricity is no longer really sufficient to prove that you're having a climate impact,” he said. 

The paper focused on clean electricity purchases in Wyoming, California, and Colorado — covering both markets with high renewable energy penetration as well as high coal use — but the results are likely to hold across parts of the country where economic clean electricity generation outpaces corporate demand for that electricity, Ricks said. 

The authors examined corporate clean electricity buying strategies that focused on annual matching of megawatt hours, matching of carbon emissions, and hourly matching, also called “temporal matching.” Only hourly matching, they found, would consistently drive more emissions reductions than would already occur given the status quo.

Essentially, the impacts of 100% clean electricity commitments have shifted because the market has. Renewable electricity is now among the most competitive sources of electricity in many places, so the demand from corporate purchasers is less likely to be the main driver of investment in new projects, the researchers found. 

“Only temporal matching makes an emissions impact, because it specifically requires that you procure clean power in times and places when it would normally be most cost-effective to use dirty power instead,” said Ricks. 

How to gauge impact 

That conclusion isn’t universally accepted, though. Hourly matching is an important tool, but it’s not always the most effective option, says Lee Taylor, co-founder and CEO of REsurety, a company that hosts a platform to help corporations invest in renewable energy projects. 

And matters are complicated by the fact that there’s no universally-accepted definition of what projects should count as “additional” to the grid. For instance, some in the industry consider a project additional if it came online within a certain period of time before or after the new investment was made, others consider projects additional only if the project wouldn’t have been built without the added investment. The on-paper emissions impact of purchasing decisions depends in part on what definition a company uses.

REsurety offers several strategies to help corporations reach 100% clean electricity targets, including carbon emissions matching and annual energy matching. Emissions matching aims to neutralize emissions associated with a company’s electricity use throughout the year, by purchasing from electricity sources that are cleaner than grid-sourced electricity. (That’s the strategy endorsed by the Emissions First Partnership, a group launched in late 2022 with members including Amazon, Meta, and Salesforce. The group did not respond to a request for comment on the paper’s findings.) 

Despite potential pushback, the findings do not mean that years of corporate renewables purchases have been insignificant, according to Ricks. Early corporate purchases helped drive down costs, making renewables more competitive. 

“The volumetric matching standard was good enough for its time,” said Ricks. “That’s a time when you can say that every bit of additional support you contribute to these projects is something that helps bring new zero-carbon power online.” 

The new world of purchases

But now, the paper’s results suggest, times have changed.

In December, a group including Google, Microsoft, and LevelTen Energy announced the creation of the Granular Certificate Trading Alliance. The group advocates for the use of renewable energy credits called “granular certificates” that include information about the type of generation, as well as the location and hour where it’s produced. This data, the group said, would provide more information and price transparency for corporate buyers looking to maximize emissions impact.

Google and Microsoft have both set goals of relying on 24/7 clean energy by 2030, and in 2021 a group of companies launched a pact to work towards that target. Outside of a few trailblazers, though, Taylor said there appears to be few companies committing to a 24/7 framework for clean electricity purchases. Today, implementation and cost often throw up barriers to doing so, he said. 

For instance, hourly data is not always available. The Princeton study also found that a 100% temporal matching goal could add more than $20 per megawatt hour to electricity procurements. 

“There are certain geographies where matching every single hour … with a clean energy project that is deliverable to your location is either impossible or too expensive to achieve,” said Taylor. “I think the industry is still trying to figure out those cost-benefit tradeoffs of each of those strategies.” 

Some corporations are also waiting to see how the Greenhouse Gas Protocol, last updated about a decade ago, will be adjusted, he added. The current standard allows volumetric matching to be claimed as 100% clean energy. 

For some companies, the increasing emphasis on 24/7 clean electricity procurement may feel like moving goalposts, but Ricks says making targets more ambitious over time is crucial. 

“If the corporate world is serious about reducing their climate impact, there needs to be a constant recalibration of what we see as a worthy goal in light of new evidence,” he said.

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