Newcomer proposes path to 100% renewables with receipts

Clean energy start-up Renewabl is gearing up to launch an energy trading platform which will enable corporates and other large load consumers the ability to hourly match their renewables usage allowing the end users to "significantly increase" the percentage of carbon free power within their annual energy consumption.

The platform, called Renewabl Trade, is set to be launched next month [November 2024] and is intended to match energy consumers with clean energy producers.

Renewabl Trade pledges to ensure nearshoring of energy production through matching corporates with power purchase agreements (PPAs) from generation assets closer to end use and provide a multilateral platform for the trade of guarantee of origin (GO) certificates.

The trading platform will be accompanied by an analytics arm – which is currently live – that provides an hourly matching service to guarantee clean energy usage even during periods of low or no renewable energy generation.

Annual matching is currently the industry standard for corporates working towards cleaning up their energy usage.

Net zero targets are becoming increasingly prevalent within the private sectors with global enterprises such as Goldman Sachs, in 2019, pledging to become carbon neutral by 2030 and Australia's Lendlease Fund Management promising the same target by as early as next year [2025].

Goldman Sachs and Lendlease are joined by host of other private investors, developers and everything in between which have also incorporated net zero pledges into their operational targets.

Meeting this target, however, through annual matching PPA is not "truly" possible.

Most PPAs in the market, operate on a pay-as-produced basis and due to the intermittency of renewables generation, the offtaker will have to use other base load capacity derived from fossil fuel sources such as gas or coal during period of low/no clean energy generation.

The matter is further complicated by the clean energy technology that underpins the PPA. Solar farms, mostly, generate energy during the day while wind farms are effective at night.

An offaker that requires an uninterrupted source of energy – like data centre operators – cannot truly become carbon neutral with just annual matching PPAs and the ones that claim the claim to do so often face green washing accusations.

Renewabl proposes to solve this issue through hourly matching which allows end uses to buy GOs or request to purchase additional clean energy capacity through its trading platform when a PPA is rendered ineffective.

The company also asserts that the visibility of the demand for clean energy during periods of low clean power generation will prompt the suppliers to incorporate carbon free firming capabilities to the generation assets in the form of battery storage.

The company co-founder and chief executive officer Juan Pablo Cerda further reiterated that the platform would allow for more visibility of demand and supply of clean energy which will in turn provide more certainly for both investment in generation assets and the help stabilise PPA price uncertainly for end users.

Hourly matching, as a concept, is not new to the sector and has been available, to some degree, for almost half a decade.

In comparison to annual matching, hourly matching for a corporation tends to be more expensive.

Large corporations such as Alphabet Inc (Google) have expressed interest in becoming truly net zero and may be willing to swallow the additional cost to achieve the goal, it remains to be seen if the same can be said of smaller businesses without the added pressure of government policy.

The policy shift, however, is in works with the industry moving towards more regulated reporting standards for ESG compliance which could push corporations towards hourly matching.

UK's Financial Conduct Authority (FCA), earlier this year [May 2024], brought forward a set of anti-greenwashing rules for asset managers requiring these companies to abide by much stricter reporting standards.

In addition, the European Union has proposed a 'Green claims' directive which could require companies to substantiate voluntary green claims. The proposal is going through the European Parliament and remains to be firmed up.

Renewabl CEO Cerda has said that he is confident the company's offering will be boosted by the policy shift combined with the private sector's initiative to decarbonise.

The company is the process of onboarding energy sellers and buyers ahead of the trading platform launch.

Cerda has confirmed that 20 sellers are already using the analytics arm of the platform and a further 80 are set to join the ranks before Renewabl Trade goes live.

"Around half a dozen" buyers are also understood to be in the process of registering interest.

Commenting on the platform, a UK based solar developer that does not wish to be named said: "The attractiveness hourly energy trading aspect remains to be tested against the added cost for end users but the GO trading element is a definite benefit.

"Right now, bi-lateral trade is the standard for trading GOs and industry players often don't have the visibility of cost or availability at any given time. The platform should help resolve the issue."

Renewabl chose not to disclose the names of any of its clients but has said it is focusing on the energy consumption of data centres in the near term.

The company currently operates in Europe with plans for a pilot trial in the US next year [2025].

Renewabl is majority owned by its founds and a Series A fundraising round is scheduled for "mid 2025".

The company is working closely with KPMG which has expressed interest in managing the accountancy and reporting aspect of the trading platform but a formal partnership agreement remains to be established.