Originally published on Huffington Post on February 15, 2017
Google recently announced that it would hit its target of using 100 percent renewable energy in 2017. It’s a major milestone that we should applaud and celebrate. Google is a leader here, and it’s important to push corporate America in this direction more aggressively.
All that said, and recognizing the importance of Google’s achievement, it is important to note we have further to go.
The key here is that “carbon offset” and “carbon free” are two different things. What Google announced is 100 percent carbon offset. They are buying clean energy to offset their corporate use. They are not carbon free.
And, unfortunately, the offset model won’t scale indefinitely. It breaks down as solar scales on the grid.
To migrate successfully to clean energy and hit the targets that many states are setting for themselves, we need to address the fact that energy consumption has a time-specific character to it that is critical.
In the long run, the goal is to optimize virtual net demand to zero, not virtual net metering.
This is where it gets a bit nerdy. It’s important, so forgive me.
Let’s start by introducing a couple concepts: Clean Generation, Green Operations, Brown Operations, Percent Carbon Offset and Percent Carbon Free.
• Clean Generation. Energy and power supplied by a carbon-free generation source like solar or wind.
• Clean Operations. Electrical load from a company that is supplied in real time by clean generation.
• Dirty Operations. Electrical load from a company that is not supplied directly by clean generation.
• Percent Carbon Offset. The ratio of Clean Generation against total electrical load from a company.
• Percent Carbon Free. The ratio of Clean Operations against total electrical load from a company.
Here’s what that means in an oversimplified chart.
The grey curve represents a fictitious company’s electrical load over the period of a day. This load is depicted as the combined grey and blue areas (A+C). The “load profile” is deliberately simplistic, but nonetheless you see higher load during working hours and reduced nighttime load, as you’d expect from most companies. The chart also depicts a solar generation deal (Power Purchase Agreement or “PPA”) that the company struck for energy supply. Total generation is depicted as the combined orange + blue areas (B+C).
In this case, Clean Generation has been dimensioned to match the electrical load. That is to say: A+C = B+C. The areas under both the load and generation curves are equal. That balance is often referred to as 100 Percent Carbon Offset. It’s a milestone, and exactly what Google preannounced for 2017.
Teasing that out, though... There is a good bit of excess generation at times, because the load and generation curves don’t line up perfectly. The blue area reflects Clean Operations, corporate electrical load that is supplied by Clean Generation. The orange, however, reflects excess Clean Generation that must be utilized elsewhere in the grid at the time it is generated. Most notably, the grey reflects Dirty Operations; corporate electrical load that requires traditional generation sources (coal or gas) for supply.
As you can see, this company still needs quite a bit of traditional generation to meet its need. It’s operating at only ~50 Percent Carbon Free, despite buying Clean Generation for 100 Percent Carbon Offset.
So what, you might say?
Well, in advanced solar markets like California, utilities don’t always have a place to use all the solar generation. Excess is periodically produced, and sometimes production from solar facilities gets curtailed because the grid is saturated. Curtailed energy is depicted as the light orange area below.
As the frequency of curtailment rises with growing solar penetration on the grid, the notion of carbon offset becomes less valuable and becomes more disingenuous.
In the chart, you can see that with periods of curtailment, not all clean generation potential is being used. Both Percent Carbon Offset and Percent Carbon Free Operations are less than they should be.
Great. How do we solve that?
It starts with focusing on Carbon Free Operations and building around that. To understand it, we need to dynamically measure load and generation, and assign that generation against load in real time. That’s Virtual Net Demand.
First, measurement. Then, we actively optimize Virtual Net Demand to zero (where load and generation are matched in real-time).
That can be accomplished in a couple ways:
• Manage Loads (to coincide with generation). Companies can reduce loads (e.g. more efficient lighting) or shift loads to occur at the time of generation, by running machines when power is being generated. EV charging may prove to be a particularly useful asset here.
• Diversify Clean Generation. Companies need not only strike solar deals — they can buy wind generation, too. Since these two sources often produce at different times of day, it’s a smart way to flatten out concentrated excess generation from a single source.
• Deploy Energy Storage. Whether onsite or through a storage purchase agreement, companies can use storage to absorb excess Clean Generation when it is produced and supply that energy to cover what would otherwise be Dirty Operations.
By employing these strategies, a company can be balanced at 100 Percent Clean Operations, with no carbon or grid footprint. “Net grid strain” would be zero at any given moment in time.
One last point, as excess generation saturates grids and utilities bear the weight of unbalanced grids, market rates for energy and power will change to naturally reflect the supply and demand imbalances. We’re already seeing that discussing evolving in places like CA, HI, AZ and NY.
The companies that best understand their energy profile will be best equipped to take advantage of the changing market dynamics and opportunities for cost savings. They’ll also be best informed as regulatory issues arise that create new operating dynamics.
Hats off to Google (and Apple and Walmart and Target) for leading on these fronts and taking real and meaningful steps. It’s critical progress, but let’s also recognize that we’re not there yet. We still have a long way to go.