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Major companies are spending billions on clean power. New measurement tools can help them get the most climate impact from their investments.

Article By: Jeff St. John

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Major companies with ambitious clean energy goals face a complicated set of options for how they ought to prioritize their efforts over the coming decade. Should they make their own electricity supply as clean as possible, or should they focus first on cleaning up the dirtiest power grids?

The first approach means striving to get every watt of electricity they use from a carbon-free source. That’s the idea behind Google’s 24/7 clean energy pledge, made a year ago, which sets a 2030 deadline for powering its data centers and corporate campuses with 100 percent carbon-free energy every hour of the year. Microsoft followed up earlier this year with a 100/100/0 pledge to match 100 percent of its corporate power consumption with zero-carbon resources 100 percent of the time by decade’s end.

But a second pathway for maximizing corporate carbon reductions has been gaining traction in recent years: investing in clean energy projects based on their ​“emissionality,” or their ability to directly reduce carbon emissions. Instead of linking clean power with companies’ individual electricity loads, companies would target their dollars at projects with the most capacity to displace dirty energy, regardless of whether those projects are near their facilities or far away. These types of calculations are being made possible through a complex but increasingly data-driven set of methodologies. 

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So which approach is better? The answer depends on a wide range of variables, said Olivier Corradi, CEO of Tomorrow, a Danish company measuring the carbon intensity of power grids around the world. But in simple terms, ​“there are two optimization goals,” he said. ​“One is, can I reduce my own footprint? The other is, can I make investments that can avoid emissions somewhere else?”  More articles on clean power energy

Corporate procurements of clean power drove about one-fifth of total U.S. clean energy additions in 2020 and are expected to account for 55 to 85 gigawatts of deployment through 2030. That means companies’ decisions about how they purchase clean energy are a big deal. And the rules that guide how they’re able to claim credit for emissions reductions created by their investments are vitally important. 

There are pros and cons to both the 24/7 and emissionality approaches. The simplicity and directness of tying clean energy to consumption leave little wiggle room for problematic approaches like buying renewable energy credits for wind or solar that’s already been built. It’s also a way for companies to help curb emissions in their backyards — not just carbon emissions but also other types of air pollution — thereby allowing them to be better neighbors and community members. 

But there are practical limits to how far any one company can go on its own to achieve such round-the-clock clean energy targets. Even the wealthiest companies can’t force entire power grids to adopt clean energy. And the costs of achieving 24/7 clean energy within their walls may direct money away from building more clean power on the world’s dirtiest grids where it’s most urgently needed. 

That’s a key insight from this summer’s Clean Power by the Hour report from nonprofit research organization RMI, commissioned by Microsoft to help the software giant better understand the implications of its 100/100/0 policy. (Canary Media is an independent affiliate of RMI.) The report’s fundamental finding, said Mark Dyson, a principal with RMI’s Carbon-Free Electricity Practice, is this: ​“Don’t let the perfect be the enemy of the good.” 

In this case, the ​“perfect” would be the 100 percent carbon-free power ideal, whereas ​“the good is just building a bunch of wind and solar on the dirtiest grids, and pushing fossil fuels off the system,” he said. 

Consider the chart below, which shows the ​“load-matching” costs for a hypothetical data center served by mid-Atlantic grid operator PJM. Building the batteries to store enough carbon-free power to cover the final 40 percent of the data center’s annual energy demand would drive up costs dramatically. 

RMI PowerByTheHour CostIncrease.png?auto=compress%2Cformat&crop=focalpoint&fit=crop&fp x=0.5&fp y=0

That money could be better spent building wind power to serve the PJM grid, even if that leaves the data center shy of its round-the-clock clean energy goals, as the next chart shows.

RMI PowerByTheHour PJMWindvsMatching.png?auto=compress%2Cformat&crop=focalpoint&fit=crop&fp x=0.5&fp y=0

In short, these findings indicate that 24/7 goals like Microsoft’s and Google’s, if taken to extremes, aren’t the most cost-effective way to drive the most aggressive emissions reductions possible. Both companies are acknowledging this fact in their broader corporate decarbonization strategies.

Helping the rest of the world get to 24/7

While Dyson concedes that 24/7 goals are not the most economical way to get clean energy onto the grid today, he adds one important caveat to this observation. ​“We need to build the infrastructure and policy to enable a grid that’s clean 24 hours a day. One of the outcomes of reaching a 24/7 target is that you can’t do it cost-effectively on solar and wind and batteries alone,” he said. This is a huge challenge for mandates around the world requiring 100 percent clean electricity, as multiple studies over the years have pointed out. 

So when major companies push to achieve 24/7 goals, they are helping to develop the technologies and markets that will help everyone else get to 24/7 too. 

Today’s battery technologies can cost-effectively manage the variability of wind and solar power from hour to hour. But longer-duration forms of energy storage and more reliable and controllable forms of zero-carbon electricity generation will be needed to manage the mismatches that can arise across 24-hour day-to-night cycles and between winter and summer, as indicated by this chart from a May report by the U.S. National Renewable Energy Laboratory. 

NREL 100 clean power diurnal seasonal.png?auto=compress%2Cformat&crop=focalpoint&fit=crop&fp x=0.5&fp y=0
(National Renewable Energy Laboratory)

Corporations that lead the way on 24/7 targets can help solve the long-duration storage problem as well as additional challenges that face utilities, cities, states, and other companies with 100% clean energy goals.

The Google approach to the 24/7 challenge

That’s how Michael Terrell, Google’s director of energy, sees the value of the 24/7 clean energy approach. It’s ​“a signaling method to tell the market where we need to go,” he said in a July interview. ​“The ultimate destination is carbon-free power, 24/7, in every location everywhere around the world.” 

Google is investing in a range of technologies that could help it get more clean power in the hours when wind and solar can’t easily deliver it, including geothermal power. It’s also trying to shift its data centers’ computing loads to periods when grid power is cleanest.

Given its global footprint, Google has little choice but to work with each grid as it is, Terrell noted. ​“We have five data center sites that are over 90 percent carbon-free,” including one in Oregon where there’s ample hydropower, and one in Iowa where Google has invested heavily in wind power. In other markets with dirtier power, such as the U.S. Southeast or Taiwan, the company is pushing for policies such as green tariff programs to expand the opportunities to bring more clean power onto the grid. 

Google’s strategy is laid out in more detail in the company’s white paper on carbon-free energy methodologies and metrics, which underpin its assessment of the ​“avoided-emissions” impact of its procurement decisions. 

“We wanted to align corporate purchasing with where we want to take the grids,” Terrell said, ​“not just sourcing every hour, everywhere, for our own supply, but to do that for the grids we’re working with.” 

“We’re not doing this on an island,” he said. ​“We’re part of the system, and we recognize that to achieve our goal at every site, we need to drive system change at every site.” 

How Microsoft is balancing near-term and long-term impacts

Microsoft’s carbon plan also tries to balance the pros and cons of optimizing its own 24/7 clean energy goals with driving faster decarbonization on the grid, said Brian Janous, the company’s general manager of energy and renewables, in an August interview. 

“One of the things to get clear right out of the gate is to explain what it is we’re not trying to do,” he said. ​“Everyone can put solar on their roof and batteries in their garage, and sure, they can get 100 percent clean energy to cover their needs.” But to do that, ​“you’d vastly overbuild the amount of solar and storage you’d need.” 

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