How Granular Energy’s founder made the case for hourly REC matching

More than a decade ago, Toby Ferenczi started hearing a question he couldn’t quite answer.

He was running a demand response program for the British energy supplier OVO, which had acquired VCharge, the electric vehicle charger demand response company Ferenczi founded. OVO marketed 100% clean energy to its customers. But it also asked them to shift their consumption to times when the company could source clean energy.

This confused customers. If all of OVO’s energy was clean, why ask customers to join a demand response program?

The answer centered around renewable energy credits, or RECs. OVO purchased RECs from clean energy generated elsewhere, or energy generated at a different time.

“I could buy all of my energy from a solar farm in the summer and claim to use that energy throughout the year, including at nighttime” because the RECs were accounted for on an annual basis, Ferenczi said on the With Great Power podcast.

Ferenczi felt this approach to REC accounting — matching supply and demand on an annual basis — needed to evolve. He wanted to see RECs tied more closely to clean energy production. Doing so, he argued, could incentivize building more renewable energy generation, as well as energy storage, on the grid.

So in 2020 Ferenczi founded the non-profit Energy Tag to develop a protocol for matching renewable energy purchases to their time and place of use to allow for hourly accounting — or “matching” — of RECs. Then in 2022, after leaving Energy Tag’s executive team, he founded Granular Energy, a for-profit that sells utilities software based on the Energy Tag standard to support hourly matching.

As Ferenczi pivoted careers, debate was growing around how corporations should make clean energy purchase commitments. Large corporate energy buyers have converged around two camps.

One camp says companies should use hourly matching to show that they are buying clean power at times and from places where dirty power would otherwise be produced. The 24/7 Carbon-Free Coalition, which includes Google, Vodafone, and a handful of other corporations across industries, committed to this in September.

The other camp focuses on total emissions impact, not granular time-and-use tracking, of clean energy purchases. Its goal is to look for opportunities to offset as much dirty energy production as possible by procuring clean energy. The Emissions First Partnership led by Amazon, Meta, and several other companies, has been advancing this framework since late 2022. It’s how Amazon managed to supply all of its energy from clean sources seven years ahead of schedule.

Ferenczi and Granular Energy side with the 24/7 carbon-free energy camp. Ferenczi points to companies making big investments in funding renewable energy generation in places like India, where the electric grid relies on dirty fuel, despite not having any operations in India

“That’s fine, but that’s got nothing to do with your own emissions,” he argued.

But because tech companies are already headquartered in parts of the U.S. with abundant renewable energy, one counter-argument says they should fund clean energy elsewhere.

Ultimately, Ferenczi says, the Greenhouse Gas Protocol dictates how corporations account for the greenhouse gas emissions associated with their operations, or scope two emissions.

Currently, the protocol allows annual REC purchases to be considered 100% clean energy, but many stakeholders are pushing for an update to the protocol. The outcome of that update could change how corporations go about decarbonizing their operations, says Ferenczi — and also how they’re perceived by consumers.

“It’s a big potential cost difference to these tech companies between these two methods,” he said. “And in order to have a license to operate, they need to be able to show we’re not kind of destroying the planet every time we go on chat GPT.”

For the full conversation with Toby Ferenczi, listen to his interview on season 4 of With Great Power here.

With Great Power is a show about the people building the future grid, today. It’s a co-production of GridX and Latitude Studios. Subscribe on Apple, Spotify, or anywhere you get your shows.

Read the original article from Latitude Media here.