European 24/7 Hub
Guiding principles for developing granular time-matched
carbon-free energy (CFE) procurement contracts
Context
Transitioning Procurement
1. New procurement models providing faster decarbonisation and more predictable costs
2. Building upon existing clean energy contracts
3. Including new concepts of hourly matching in PPA contracts
2. Building upon existing clean energy contracts
3. Including new concepts of hourly matching in PPA contracts
Growing Interest
1. A corporate shift to greater granularity in clean energy procurement
2. Leading companies & cities adopt 24/7 clean energy goals
3. United Nations 24/7 CFE Compact gains momentum
2. Leading companies & cities adopt 24/7 clean energy goals
3. United Nations 24/7 CFE Compact gains momentum
Regulatory Landscape
1. European Union recognising hourly and locational matching
2. European Union requiring hourly and locational matching for certain industries like green hydrogen
2. European Union requiring hourly and locational matching for certain industries like green hydrogen
Principle 1
Enhancing hourly CFE procurement through detailed data tracking and reporting
Principle 1
Increasing granularity of energy data tracking & reporting
01
Consumption Data
Steps for ensuring data accuracy:
- Hourly data should be sourced from a Revenue Meter.
- Retailer ensures settlement quality and its availability to the Buyer via a web API or accepted data transfer protocol.
Regulatory improvements and open data initiatives should work towards enhancing data access and quality.
02
Generation Data
Options for data management:
- suppliers share hourly meter data with the buyer via API or datahubs;
- grid operators verify meter compliance, aligning data with market protocols;
- for PPAs with multiple off-takers, suppliers divide up each MWh on an hourly basis and link each portion to hourly production data.
03
Reporting
Suppliers should track and report clean energy with the highest accuracy and precision possible, using granular EACs where suitable and referring to the EnergyTag standard.
Principle 2
Supplier and buyer define products delivered in 24/7 agreements
Principle 2
Defining CFE hourly matching products in agreements
Examples of supplier/buyer 24/7 CFE agreements:
24/7 Attribute Purchase Agreement
Product:
granular Energy Attribute Certificates (EACs)
24/7 Power Purchase Agreement (PPA)
Products:
granular EACs + CFE sourced from supplier's portfolio of generation assets
24/7 Energy Supply Agreement
Products:
granular EACs + retail supply contract
Additional products for consideration in CFE agreements to increase hourly matching:
- Options and conditions for supplier to sell excess CFE and EACs elsewhere
- Demand-side resources: load shaping and shifting
- Incorporation of energy storage technologies
Principle 3
Putting in place practices to ensure hourly CFE is being delivered
Principle 3
Five ways to better guarantee hourly CFE matching
A. Contractual Guarantees
supplier and buyer co-establish a commitment to a minimum % threshold of hourly CFE matching
B. Pricing Mechanisms
bonus for supplier when % threshold of hourly CFE matching exceeded; discount for buyer when % not met
C. Allocating Risks and Rewards
buyer and supplier agree to a transaction that balances affordability, risk aversion and risk appetite for both
D. Performance Reviews
regular meetings to discuss trends, challenges, opportunities and best practices to increase hourly matching
E. Flexibility
allowing adjustments and adaptations to accommodate changing conditions or unforeseen challenges
Commercial Contracting: Getting Started
1
Baseline Hourly Consumption
1. Understand your hourly electricity profile annually
2. Calculate hourly CFE scores with grid & existing contracts
2. Calculate hourly CFE scores with grid & existing contracts
2
Determine Your Goal
1. Understand your options and aim for a specific and realistic hourly matching score for decarbonisation.
2. Consult energy providers for market options & potential improvements
2. Consult energy providers for market options & potential improvements
3
Choose the Right Commercial Structure
1. Evaluate market options, internal risk appetitive, and needs to determine the right commercial structure.
