This is the sixth in a series of blog posts about renewable energy options for retailers.
As retailers look to reduce their environmental footprint and grow renewable energy investments, RILA continues to hear from our members that understanding the ever-changing renewables procurement landscape can be challenging. That's why we are developing a new renewable energy guide, which highlights fundamentals of different procurement options and key considerations, specifically for retailers.
In a series of blog posts, we'll be outlining various topics featured in the guide; the final chapter in our series, Additionality, is outlined below. We are excited to share the chapters one by one, and to work with partners like Schneider Electric in their development.
What is additionality?
Additionality is a term that describes renewable energy generation that is truly new – i.e. additional. For example, retailers responsible for financially supporting new, expanding, or developing renewable generation sources, as opposed to buying into what is already available or planned, can claim additionality. These projects have a material impact on displacing global emissions by reducing conventional fossil sources of generation on the grid.
In some cases, additionality can also be conveyed through other financial metrics. For example, in a region with high priced or highly demanded environmental commodities such as renewable energy certificates (RECs), purchase of these commodities may be considered additional. The same may be true in emerging international markets where demand for environmental commodities creates a powerful signal to the market of the value of renewable energy development and provides an instrumental source of revenue to new projects.
Who uses them/What are the key benefits?
Being able to state additionality emphasizes a company's commitment to advancing carbon reductions beyond business as usual.
Large companies have begun to showcase this material leadership. For example, Microsoft has commented on the additionality of their Keechi wind farm power purchase agreement (PPA). Apple participates in projects that would not have been built without the company's involvement and ensures that renewable energy counted towards its goals is not double-counted by utility regulatory obligations. And Google, the world's largest C&I purchaser of renewable energy, has been outspoken about their goal to invest in projects that convey additionality.
Is pursuing additionality right for you?
Demonstration of material leadership
Expense and/or risk
Ready to move forward with claims to additionality?
Like any renewable energy initiative, it is important to identify the company's short term and long-term goals around sustainability, carbon reduction, and renewable energy. By engaging stakeholders within purchasing and sustainability roles, retailers may be able to reach their goals without additionality.
NGOs can provide valuable insight about their positions and the role of additionality. Examples include Rocky Mountain Institute's Business Renewables Center, World Wildlife Fund (WWF), the Center for Resource Solutions (CRS), and World Resources Institute (WRI).
Resources that can provide guidance include Schneider Electric's white paper The Role of RECs and Additionality in Green Power Markets and WRI's GHG Protocol Scope 2 Guidance and CDP's Accounting of Scope 2 Emissions technical notes.
To learn more about additionality, if they're a worthwhile consideration for your company, and next steps for moving forward, access the full chapter in the renewable energy guide here and all the chapters published so far here. For more information about RILA's renewable energy initiatives, contact Erin Hiatt.