ACHIEVING SUSTAINABILITY GOALS THROUGH ADDITIONALITY
November 4, 2021
Many businesses working on achieving net zero targets will already be procuring renewable energy – as an obvious step towards sustainability. However, not all businesses are going that step further to purchase green energy in a way that actually puts new renewable energy onto the grid.
If we’re going to achieve net zero targets and make a meaningful difference, we have to make the grid greener and displace fossil fuel-generated electricity. One way to achieve this is by delivering additionality.
In this article we’ll explore the concept of additionality in relation to renewable energy and carbon offsets, as well as outlining the numerous benefits to large businesses. As an organisation, you have options around how you procure renewable energy and an opportunity to make an even bigger difference whilst meeting sustainability goals.
What is additionality?
Additionality is a concept within renewable energy that refers to organisations directly adding new capacity for renewable energy to the national grid. Organisations can achieve additionality by committing to and investing in green power generators in a way that allows them to fund new renewable power generation. One way businesses can invest is via Corporate Power Purchase Agreements.
As a business, you have the option to help add genuine new green power from sources such as wind or solar to the grid, rather than purchasing renewable energy that already exists. It can be as simple as investing in a PPA that means new renewable energy capacity is added to the grid.
Additionality is difficult to pin down and define beyond this, as currently no universally agreed metrics exist. Your investment might mean a project goes ahead that otherwise wouldn’t have, or comes to fruition quicker, thanks to your purchase.
Additionality can potentially be achieved with on-site energy production, but this is only possible for certain businesses.
Additionality and renewable energy
When it comes to purchasing renewable energy, there are ways to do it that help you deliver additionality. Additionality represents an upgrade to REGO-certified green energy because you are procuring renewable energy in a way that actually puts green energy on the grid. Large companies like Google and Apple are directly responsible for the building of new renewable projects, but now PPAs make additionality possible for smaller organisations.
Additionality and PPAs
Many businesses understand that procuring high-quality renewable electricity is a vital component of any net zero strategy. However, when it comes to obtaining renewable energy, it can be difficult to understand what option will have the most real-world impact. Confusion exists around the different mechanisms, and concerns often arise around potential green-washing. As we mentioned, one route to additionality and the decarbonisation of power is through power purchase agreements (PPAs).
PPAs are on the rise with some businesses already using them as a means of decarbonisation. But more businesses need to get involved and in the right way, to take advantage of the benefits that these energy contracts present, especially in light of additionality and net zero targets.
To go back to basics, a corporate Power Purchase Agreement (CPPA) is an energy contract for businesses who want to purchase renewable electricity directly from a specific producer. They offer the flexibility to fix the price you pay for that energy for a specific, often longer (normally between five and 25 years), period of time.
By buying your green energy directly from the generator, you both receive benefits. The producer has capital to invest in new renewable energy generation, de-risking the building of new generation plants. As a business, you get price certainty, protecting you from an increasingly volatile wholesale energy market. This in turn allows you to budget for other projects that focus on energy efficiency and move you closer to true net zero.
There was a time when PPAs were more expensive – this made it a more difficult decision to adopt them. Currently PPAs are sitting in-line with the market, making them even more attractive, offering both additionality and value. With PPAs, you may be able to have a private wire arrangement that allows you to move renewable power directly from the provider’s generator to your business. This cuts the costs of having an interim utilities provider, making the PPA even less of a financial burden.
At Ignite, we have considerable experience in purchasing CPPAs matched to your business’s attitude towards risk and sustainability goals. Find out more about their benefits and our PPA service in this article.
Benefits of Additionality
Additionality offers many benefits. It is a real badge of honour that underlines your commitment to a greener future – it’s a proactive step to show your progress towards net zero as a company.
You can also put additionality at the front and centre of your sustainability process. As a business, you can celebrate your role in helping renewable energy plants be built. It may be the case that, without your money, that plant wouldn’t have been built. That makes a very compelling narrative and marketing asset, and a key point of difference with your competitors.
Ignite Energy – helping you achieve additionality
Additionality is not easy to achieve, especially when there are considerable risks around fixing an energy price for longer periods. Ignite aims to form long and meaningful partnerships with our customers and really understand your business. With our experience in net zero strategy, PPAs and a thorough grasp of your business and attitude to risk, we will strike the right balance.
At Ignite, additionality is just one piece of the decarbonisation puzzle. We take a long-term approach to net zero success and balance all the available methods with your goals and attitude to risk. We enable you to actively speed up the decarbonisation of the grid while investing in energy efficiency projects that can dramatically cut your usage and waste.
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