Today, wind and solar energy are preferred sources of new generation due to both their lack of carbon emissions and their cost effectiveness. Wind and solar energy generation have declined in price dramatically since 2009 and are now the lowest cost options for new energy generation. This price decline was driven by early adopters who, in response to regulatory requirements and stakeholder demands, entered into long-term Power Purchase Agreements (PPAs) with wind and solar generators allowing project developers to secure financing and the wind and solar industries to mature.
According to a report by the World Business Council for Sustainable Development, the business case for PPAs is threefold: First, PPAs offer predictable energy prices which is particularly important for regulated utilities and energy intensive industries. Second, clean energy PPAs provide an avenue for utilities and C&I energy customers to meet clean energy targets. Third, utility and C&I customers that enter into PPAs including Renewable Energy Certificates can publicly claim the use of clean energy, demonstrating leadership in corporate sustainability and supporting marketing efforts.
Most of today’s clean energy PPAs, while beneficial, are “pay as produced,” which means that an off taker will purchase the clean energy generated by a wind or solar asset whenever it is generated, regardless of whether that correlates with actual energy use. This leaves a gap between clean energy supply and demand if a given energy user’s demand is high but renewable generation is low during a certain time period. While battery storage has begun to make up the difference, the gap is still often filled by fossil fuel generation at the grid level, an obstacle to deep decarbonization and the climate commitments of major energy users. As recognition of this gap has increased, climate-focused energy users have begun to demand 24/7 renewable PPAs, as detailed in a report this summer by the LDES Council.
As the report explains, 24/7 PPA structures match supply and demand for renewable power more closely. They measure electricity consumption on a much smaller timescale, such as by the hour, and require time-matched energy delivery. While this may be challenging for wind or solar to meet alone given their inherently intermittent nature, when LDES is added to a renewable generator, it becomes possible to flexibly meet the needs of energy users.
Much as early PPAs drove the deployment of wind and solar energy, 24/7 PPAs present the opportunity for large corporations, governments, and other entities to drive the deployment and advancement of LDES in order to “time shift” renewable energy generation from periods when wind and sunshine are plentiful but demand is lower, to periods when demand is high but generation is low.
The need to decarbonize our energy system becomes more apparent every day. Whether it’s another record-setting heat wave in California, or record-setting rainfall in the Midwest, it is impossible to ignore the real impacts of climate change. 24/7 clean PPAs enabling sustainable and reliable LDES technologies are a prime way for large enterprises and corporations to achieve true carbon reductions in a cost-effective manner. Once governments, corporations, industry leaders, and LDES technology suppliers fully embrace 24/7 clean PPAs, they will help drive the deployment of LDES and enable a fully decarbonized energy system.
Read the full LDES Council report to learn more about the advantages and opportunities of 24/7 clean PPAs.
Links to third-party articles and/or websites are for general information purposes only and the content of any third-party article or website is solely the responsibility of the author, owner, operator or publisher of that article and/or website. Views expressed in third-party articles and/or websites reflect the opinion of the author, owner, operator or publisher as of the date of publication, and not necessarily those of ESS Tech, Inc. ESS Tech, Inc. has not independently verified such content, makes no warranties, representations or undertakings relating to such content, and bears no responsibility for the accuracy, legality or content of any external site or for that of subsequent links. Any reliance you place on such information is strictly at your own risk. You are encouraged to read and evaluate the privacy and security policies on the specific site you are entering. ESS Tech, Inc. disclaims any loss, damage and any other consequences resulting directly or indirectly from or relating to your access to the third-party website or any information you may provide or any transaction conducted on or via the third-party website or the failure of any information, goods or services posted or offered at the third-party website or any error, omission or misrepresentation on the third-party website or any computer virus arising from or system failure associated with the third-party website.