Cost and emissions impact of voluntary clean energy procurement strategies

Abstract

Large electricity consumers, particularly companies in the technology sector, are pursuing several different strategies to reduce their Scope 2 emissions through clean energy procurement. We calculate the cost and effectiveness of four different clean energy procurement strategies: U.S.-wide annual energy matching, local annual energy matching, hourly energy matching, and carbon matching. Carbon matching requires balancing emissions attributable to electricity load with avoided emissions from clean energy procurement (calculated with locational marginal emission rates), while energy matching requires balancing load and clean energy generation on an annual or hourly timescale. We evaluated these strategies as pursued by large electricity consumers with two different load profiles located in five different U.S. regions which vary in regulatory structure. We find that carbon matching is the most cost-effective procurement strategy, with a cost between $4.7 and $7.6/MWh, and has the lowest carbon emissions abatement cost at $13/t CO₂ displaced. We find that annual energy matching costs range from $10/MWh to $32/MWh, and that it does not guarantee carbon neutrality. Hourly energy matching costs are higher, ranging from $68/MWh to $181/MWh, depending on region and load profile, and it is the least cost-effective strategy at carbon emissions reduction, with abatement costs ranging from $77/t CO₂ to $161/t CO₂. These results suggest that targeting clean energy investment in regions where current renewable energy penetration is low and marginal emissions rates are high is the most effective way for individual actors to reduce Scope 2 carbon emissions and reach carbon neutrality.