INTERVIEW: Renewable hourly certificates to bring transparency, aid liquidity, says Granular

The new proposed mechanism for hourly renewable energy certificates that is being launched in Great Britain will help bring transparency, liquidity and efficiency to the expanding clean energy market, said tech startup Granular in an interview May 12.

The UK's Renewable Energy Guarantees of Origin, or REGOs, are currently matched on an annual basis, failing to reflect where the availability of renewable energy changes from hour-to-hour.

"The 20-year-old system that allows consumers to choose the sources of their energy is flawed by some critical lack of transparency," Granular's founder Toby Ferenczi told S&P Global Commodity Insights.

According to Granular, fixing this problem will re-orient the energy markets towards carbon reduction.

Over the past two years, Granular's team developed a globally-recognized standard for a new system to digitally tag all units of energy with both time and location.

This new system will comply with the EnergyTag guidelines, which are set to improve the granularity of the energy certification market, adding information about the time of energy production on hourly basis as well as bring closer correlation between certificates and real-world availability of renewable energy.

"The traditional system needs to be set up with the Energy Tag guidelines. In the EU commission, there are debates about Granular certificates. The relaxation of the 1 MWh rule would accelerate the time for the GO system to move to hourly tracking," said Ferenczi, who also founded Energy Tag.

According to Ferenczi, the current energy certificates system has significant issues, as it records location but not time of production, and matches consumption and generation using these certificates over an annual period.

"This does not reflect physical reality and leads to distrust," he said.

Moving to hourly-tracked certificates solves this problem, claims Ferenczi.

"Using certificates that enforces matching between generation and consumption on an hourly period yields significant benefits. It builds trust with consumers, by solving the main issue of timing mismatch between generation and consumption, adds more revenues for storage and flexibility, by capturing the spread between low and high price hours, and improves a more accurate carbon accounting as carbon intensity varies significantly on an hourly basis," said Ferenczi.

'24/7 carbon-free energy'

The new system is coming from a global drive towards greater transparency in energy procurement, known as '24/7 carbon-free energy.'

According to Ferenczi, 24/7 certificates trading will resemble power trading, as in the two markets will be closely aligned to each other.

Talking about the alignment between the power and GOs markets, he said, Granular will provide a trading platform that will help users observe their renewables production and generation on the system.

"This will generate a price signal, as the additional demand for flexibility and green energy will help [in] reducing carbon emissions," explained Ferenczi.

Though he added: "Hourly sourcing is not going straight to be 24/7, covering all hours is being difficult ... so you start sourcing electricity on an hourly basis and then gradually set a pathway to increase the coverage."

The mandatory hourly matching for green hydro production in the EU and the proposed bill in California will incentivize hourly matching, according to Ferenczi.

"In order to move from annual to hourly changes, the way certificates are managed and traded needs to change," he said.

Granular's comments come at a time when market participants are cautious about the implementation of this new mechanism.

But Ferenczi believes the new system will help build trust with consumers and yield significant benefits.

"It builds trust with consumers, by solving the main issue of timing mismatch between generation and consumption, add more revenues for storage and flexibility, by capturing the spread between low and high price hours, and improves a more accurate carbon accounting as carbon intensity varies significantly on an hourly basis."