Post: Achieving sustainability through additionality

Achieving sustainability through additionality

Businesses with net-zero goals recognise that procuring authentically renewable electricity is a vital part of delivering their strategy. With that said, understanding which options have the most tangible impact can be quite challenging. The different sourcing mechanisms can at times be confusing, plus there may be concerns about the potential for ‘green-washing’ (where the buyer thinks they are buying green energy when actually they’re not).

Successful procurement strategies can include directly sourcing electricity from an existing local renewable generation plant via a private wire connection or from an off-site partner; in both cases the electricity supply should come renewables certificates for the purposes of proving the sources green credentials.

Some businesses will go even further than this though and this is where ‘additionality’ comes in,

This article explores the concept of additionality and its benefits for businesses.

What is Additionality?

Additionality, with respect to renewable electricity, is the idea of facilitating new capacity being added to the grid. This is achieved when businesses directly invest in new renewable generation,  that may not have been built otherwise. One of the main means of delivering this investment is via a Corporate Power Purchase Agreement (CPPA).

By choosing to support new renewable electricity generation, businesses can make a real impact on the amount of green energy being produced in a given economy and whilst reducing their carbon emissions.

Additionality serves as a significant endorsement of a company’s commitment to a greener future and showcasing progress towards their net-zero goals. By prioritising additionality, businesses can highlight their role in helping build renewable energy plants and this may be a key differentiator in the market.

Corporate PPAs: A Key Tool for Meeting Additionality Targets

Whilst on-site and private wire arrangements are a great way for customers to deliver additionality, the requirement for space on the customer’s site (or on a nearby site) is a usually a limiting factor. Securing electricity from an off-site source via a CPPA is another way to ensure that new renewable energy capacity is added to the grid.

A CPPA is an energy contract for businesses that want to purchase renewable electricity directly from a specific producer. These agreements allow businesses to fix the price they pay for energy over a longer period (typically between five and 25 years). The CPPA defines all of the commercial terms for the sale of electricity between the two parties, including when the project will begin commercial operation, the schedule for delivery of electricity, any penalties for under or over delivery, the payment terms and termination rights.

By purchasing green energy directly from the generator, both parties benefit. The producer gains capital to invest in new renewable energy projects, reducing the risk of building new generation plants. The business gains price and volume certainty, protecting against the volatile wholesale energy market, and can budget for other energy efficiency projects, moving closer to true net zero.

Whilst additionality clearly offers numerous benefits to businesses, it comes with it’s own complications, risks around project timelines being met and fixing prices for longer periods. At GridBeyond, we have considerable experience in delivering CPPAs that cater for a business’s specific sustainability, price and volume goals.

At GridBeyond, we can support you with a long-term approach towards achieving net zero success, using an appropriate balance of all of the available tools which are aligned to your goals and appetite for risk. Additionality is just one piece of the decarbonisation puzzle. With our experience in delivering net zero services including net zero strategies, CPPAs and a thorough grasp of your business and attitude to risk, we will strike the right balance.

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