Emissionality helps differentiate between good and great renewable energy projects
What is Emissionality? It’s the carbon impact of a renewable energy project, looking at the emissions it has replaced in the grid, or “turned off”.
Emissionality is about taking into account not just the Zero emission electricity produced by a project, but also its avoided emissions.
For example, a project displacing energy from a natural gas plant is good. A project displacing energy from a diesel generator is even better – because it drives down more CO2 emissions, and this is what drives the real climate impact.
Emissionality is a critical factor because, at the end of the day, driving down actual physical emissions of Greenhouse gases in the atmosphere is the ultimate purpose of the energy transition.
At the end of the day, driving down actual physical emissions of greenhouse gases in the atmosphere is the ultimate purpose of the energy transition.
The single biggest influence on renewables’ emissionality comes down to location. Where is this project being built? What energy system is it displacing?
Some renewable energy projects have a larger impact depending on where they are built – for example, in India or Africa, in zones where power is generated through burning diesel or even coal.
Powertrust: Emissionality & Equity
- Distributed renewable energy systems are nearly peerless when it comes to avoided emissions. In developing markets, electricity often comes from diesel generators. This means that, per kWh, distributed renewable energy projects can displace up to seven times more carbon emissions than identical projects on the US grid.
- Source: ifc.org
Per kWh, distributed renewable energy projects in emerging markets can displace up to seven times more carbon emissions than identical projects on the US grid.
Powertrust sources projects that have the highest climate and social impact. What does this mean?
- Some renewable energy projects displace more fossil fuels than others and others provide crucial support for their local community.
- We source projects which are displacing dirty fuels.
- We source projects in the Global South, where the social impacts are highest.
- We electrify schools, hospitals, health care centres and rural communities which have not had stable access to electricity.
In 2020, Salesforce became the first corporate entity to publicly commit to evaluating avoided emissions as part of their renewable energy procurement decisions. They consider more than just megawatt hours in their renewable energy purchases. We are delighted to be partnering with them on projects throughout Brazil, India, Sub-saharan Africa and SouthEast Asia.
As a climate pioneer, Salesforce are committed to evaluating avoided emissions as part of their renewable energy procurement
“Corporate teams will need to talk about the effect of their procurement strategy on the ground”
What do you think is the main trend that will impact renewable energy procurement in 2023?
I see the first key trend as a move towards accountability and transparency. People want to know what kind of climate and social impact renewable energy is having. For example, corporates have the opportunity when buying electricity to reduce carbon emission but also to drive economic growth all around the world. Corporate teams will need to talk about the effect of their procurement strategy on the ground, they will need to talk about a chain of accountability that goes right through the whole system.
“People want to know what kind of impact renewable energy is having”
Do you see a potential for risk in the renewable energy sector similar to what is happening in the offset sector for example, where credibility is challenged?
Absolutely and that is part of that accountability trend I mentioned. Those who are buying renewable energy need to be totally transparent about how they are purchasing it, what is the certification process,. Certifications are great and they are needed, but that rubber stamp is no longer enough. People want to lift the hood and see what’s underneath.
“People want to lift the hood and see what’s underneath.”
What other change do you see in the renewable energy sector in the next year?
Another big trend we’re going to see is the huge electricity growth in emerging markets. We’re going to see companies extending what they’ve achieved in their own markets, in the US and Europe, to emerging markets.
Imagine you’re sitting on a ski lift with the CEO of a sports gear company who knows little about energy, what advice would you give him?
I’ll tell him that no matter what sector or country he works in, how he sources his renewable energy is really important. He will be held accountable for this electricity use and provenance, by his employers, his customers and his stakeholders. I would point out to him that there are many options and solutions available, like for example the one Powertrust is offering. Overall, he needs to get on board with what lots of companies are doing, which is to increase the proportion of his electricity coming from renewable sources, and communicate that in a very transparent way.
“No matter what sector or country a CEO is working in, how he sources his renewable energy is really important”.
Many people see Net Zero as an emissions’ game, thinking about reducing emissions and buying offsets. Do you think CEOs have electricity top of mind?
Once you’re at the offset stage, you’ve already passed a couple of preliminary steps which maybe you should have addressed first, in your plan to reach Net Zero. The first stage is to address energy efficiency, only consuming the electricity that you absolutely need to. But there is a second stage companies can and should do, which is to use renewable energy as much as is feasible to do so. The more renewable energy they can buy, the less offsets they’ll have to buy.
Increasing the share of renewable energy not only helps a company to reach Net Zero by directly reducing emissions, but it’s an opportunity to leverage their spend where there is a lot of impact – carbon impact but also social impact.
“Increasing the share of renewable energy is an opportunity to leverage their spend where there is a lot of impact – carbon impact but also social impact.
How would you explain the Powertrust approach?
Powertrust is an evolution of the way companies have been buying their renewable electricity for 20 years or so. There is a standard method called the power purchase agreement, which we are really building off in a couple of different ways. We’re making these long term agreements for electricity accessible to new parts of the world, in emerging markets. We’re also making these agreements accessible to a new type of company. It’s no longer just the largest companies in the world that are able to purchase renewables in this way, but also the small and medium size businesses.
“It’s no longer just the largest companies in the world that are able to purchase renewables in this way, but also the small and medium size businesses.”
“The partnership with Powertrust helps us on cash-flow planning and is an ideal example of blended finance – making us more competitive with donors”
Raghu, how was your first experience working with Powertrust?
It was a very fast process. We got introduced to Powertrust in September 2022, and one transaction was quickly closed in the month of December. Overall, it has been a very nice and professional experience. Powertrust moved quickly to contract, and once that agreement was signed, we delivered the RE credit and they paid.
We now have a pipeline of more than 20 projects over multiple sites, it’s a very strong partnership. At E-hands Energy, our concept is to provide power and microgrids to remote and underprivileged areas. I believe all of our projects will qualify for the Powertrust criteria.
“It was a very fast process, a very professional experience.”
Has it been technically difficult to plug into the Powertrust Platform?
No, it has not been complicated, they have been quite easy to deal with. We are putting in a lot of time and effort to streamline and provide the data that Powertrust wants. I would say we are still learning and that’s fine – it’s a very new thing. Powertrust’s approach is very innovative, they are a front runner and thought leader – and they have thought out the whole process very well.
How important is this partnership for your business plans?
This partnership is very important at 3 levels. It helps us on cash flow planning, because Powertrust pays for the D-RECS upfront. It projects us as company moving towards Net Zero and complying with the Sustainable Development goals. Finally, and importantly, it is an ideal example of blended finance. I have shared this with a multi-million grant foundation, and they were blown away by the idea, because they don’t want to be seen as the sole giver. Donors want the risk to be shared, and their investment to be leveraged through this type of blended financing.
“The partnership with Powertrust helps us on cash-flow planning and is an ideal example of blended finance – making us more competitive with donors.”
Do you think this financing from Powertrust will help you deliver more impact?
To power a village with 50 homes, the cost is USD $20 to $25K. A partnership with Powertrust would help us cover about 10 to 15% of the project. Either we use that money for long term maintenance of the site, or we lower the cost for users even further. So Powertrust has a direct impact.
The first initiative we partnered with them is very high impact. It is an eye hospital in a remote area, where the grid power is available maybe only 2 to 3 hours a day, the hospital runs mainly on diesel generator. With the use of solar, we have been able to reduce the use of diesel by 60%. The money saved directly helps this charity hospital to do more surgery for the poor – they estimate up to 1000 additional cataract surgeries a year, thanks to the savings on fuel.