The National Renewable Energy Laboratory is partnering with Meta, the parent company of Facebook and one of the largest corporate buyers of renewable energy globally, to produce a series of reports aimed at allowing greater insight into corporate renewables procurement and the enabling conditions for clean energy investment, NREL said.
This research will be funded by Meta.
Alongside compliance buyers such as utilities, corporate investors -- known as "offtakers" -- are increasingly buying the electricity from renewables directly as part of a "voluntary market," offering the type of price certainty to renewables projects that is needed for their initial capital investment, NREL noted.
This rapidly growing role of corporates in renewables procurement brings 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 said.
In a first research project, NREL-- in collaboration with research consultancy Aquilo Energy GmbH -- 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."
Why Corporate Offtake Matters
NREL has led research on U.S. corporate procurement with its annually published market report Status and Trends in the U.S. Voluntary Green Power Market. Additionally, 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, NREL said.
The 2023 perspectives article was meant to "stimulate a timely discussion about the impact of greater long-term contracts diffusion on electricity market mechanisms and risk allocation, which this research effort between Meta and NREL builds upon," it said.
"De-risking renewable generation revenue is critical for securing financing for the construction of renewable projects," said Jenny Sumner, 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."
Through this work, the 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. "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," it said.