What You Need To Know About Additionality
This is the sixth and final in a series of blog posts co-developed by Schneider Electric and RILA about renewable energy options for retailers. To read the first on the opportunity for onsite PPAs, click here. For the second on owned onsite systems, click here. For the third on aggregated renewables, click here. For the fourth on renewable certificates, click here. For the fifth on global procurement, click here.
As retailers look to reduce their environmental footprint and grow renewable energy investments, understanding the ever-changing renewables procurement landscape can be challenging. That’s why RILA is developing a new renewable energy guide, which highlights fundamentals of different procurement options and key considerations, specifically for retailers. In this final excerpt from the guide, we discuss the concept of additionality of renewable energy.
What is additionality?
Additionality is a term that describes renewable energy generation that is truly new – i.e. additional. For example, companies 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 it/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?
Advantages:
- Demonstration of material leadership
- Indirect advantages
Downsides:
- Environmental claims
- Expense and/or risk
- Ambiguity
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, access all the chapters published so far here.