Meta, formerly a website you needed a college e-mail address to use and now one of the world’s largest clean energy buyers, will fund a series of reports in collaboration with the National Renewable Energy Research Laboratory (NREL) focused on the role of corporate clean energy procurement.
Securing investment capital for clean energy generation, transmission, and storage projects is a critical challenge, especially considering recent interest rate hikes. Many power systems models focus solely on costs and overlook risk exposure to investors, NREL contends. If unaccounted for, this could lead to an overestimation of the actual deployment of renewable energy needed.
NREL notices corporate investors (offtakers) are increasingly buying electricity generated from renewables as part of a “voluntary market,” providing necessary price certainty to renewables projects for their initial capital investment. This rapidly growing role of corporate cash in renewables procurement presents new research questions, including how voluntary market activity drives renewables deployment and how a diversity of voluntary market approaches (such as hourly matching and emissions matching) impacts power systems operations.
NREL and Meta’s reports aim to provide greater insight into corporate renewables procurement and the enabling conditions for clean energy investment.
In a first research project, in collaboration with research consultancy Aquilo Energy GmbH, NREL will investigate the common traits of corporate buyers and their future role in renewables procurement.
“We hope to inform corporate buyers and regulators about the characteristics of renewables procurement and its impacts in today’s power markets,” research partner Philipp Beiter from Aquilo Energy GmbH said. “As corporations’ roles as offtakers grows, a greater body of research can explore their exact role in mitigating power price risks and the interaction of corporations’ long-term contracts with other power market features.”
NREL publishes an annual market report on U.S. corporate procurement called Status and Trends in the U.S. Voluntary Green Power Market.
A 2023 perspectives article in Nature Energy showed that long-term contracts (so-called “contracts for difference”) established between power producers and offtakers are necessary for renewables financing because they offer a level of price stability that is largely absent in wholesale electricity markets. Rather than constituting a subsidy, these long-term contracts—whether offered by utilities, governments, or corporations—serve the purpose of risk management and are becoming lasting and fundamental market features.
This research effort between Meta and NREL will build upon the Nature Energy article’s focus on long-term contract diffusion on electricity market mechanisms and risk allocation.
“De-risking renewable generation revenue is critical for securing financing for the construction of renewable projects,” said Jenny Heeter, NREL’s principal investigator on the project. “We hope to explore how corporations manage these risks and whether that could limit future renewable energy deployment.”
NREL researchers aim to explain that even when renewable energy costs are competitive with fossil fuels, long-term offtake agreements are typically still needed for their deployment. NREL argues that recognizing this dynamic is crucial for policy and power systems planning, which often overstates renewable energy demand and underappreciates the importance of corporate procurement in driving renewable energy deployment.
