A coalition of major utilities and cloud-computing giants plans to create a new trading platform to help companies meet their demand for around-the-clock carbon-free energy.
The Granular Certificate Trading Alliance — a collaboration between LevelTen Energy Inc., AES Corp. Constellation Energy Corp., Google LLC and Microsoft Corp. announced on Dec. 14 — will create the new platform to incorporate location and time elements in the trading of clean energy certificates.
The trading platform will launch in 2024 on the Intercontinental Exchange Inc. and create "a first-of-its-kind trading and management platform for 'granular certificates,'" according to a LevelTen Energy news release. The trading platform will let carbon-free energy buyers and sellers trade the certificates based on a buyer's preferred technologies, such as wind, solar, hydropower or nuclear, and the time and location of the generated electricity. This will help purchasers buy all of their clean energy needs on an hourly, 24/7 basis.
"We are excited about the development of an hourly marketplace through the [Granular Certificate] Trading Alliance and its potential for accelerating grid-scale decarbonization," said Adrian Anderson, general manager of renewables and carbon-free energy at Microsoft. "This marketplace opens new opportunities for buyers and sellers to access granular carbon-free energy and creates an hourly price signal — important for driving investment in assets that deliver carbon-free energy in the right place, at the right time."
There will also be a central management platform to manage the certificates before and after trades, including access to market data, custom reports, tracking and settlement. The alliance said the platform will offer standard contracts and price transparency.
"As an early pioneer in developing and advancing 24/7 carbon-free energy solutions, AES celebrates the [Granular Certificate] Trading Alliance's ... trading and management platform," Erin Eckenrod, vice president of environmental products trading at AES, said. "Both customers and energy providers will now have an additional channel to support the development of clean energy when and where it's needed most, with the right mix of renewables to cost-effectively and reliably serve the grid."
As demands for more particular information about carbon-free energy increase, standard annual certificates do not provide a clear enough picture of when and where clean energy is produced, thus hindering "energy buyers from sending useful time- and location-based price signals to generators and generally making 24/7 and carbon-intensity goals impossible to achieve," LevelTen CEO Bryce Smith said. The new model is needed to provide this additional information to buyers and sellers.
With conventional certificates, another challenge is incentivizing clean energy production when it is dark out or when there is no wind, without an hourly market signal.
"With the transactional precision provided by the platform, organizations can better utilize their capital to create impact exactly when and where they need to — and in doing so, spur the development of crucial grid assets that have historically lacked clear demand signals and avenues to investment," Smith said.
The additional information could allow buyers to relay specific needs to developers and help companies adjust their procurement strategies.
The alliance members will be some of the first to use the platform when it launches next year. Over time, the platforms will scale to allow more participants.
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