INTERVIEW: Hourly matching as a key mechanism for long-term energy security, says Renewabl CEO

The need to transition toward more traceable and localized renewable energy sources is becoming increasingly apparent, with the Middle East conflict further highlighting this need, JP Cerda, CEO of Renewabl, told Platts, part of S&P Global Energy, in a recent interview.

"The Middle East conflict has raised issues of sovereignty and energy security, which hourly matching and Energy Attribute Certificates (EACs) have helped address," Cerda said. "You cannot rely solely on traditional and external sources of power, such as imported gas. You must build a more resilient, localized system."

"Hourly matching is centered around locality," Cerda said. "Sellers will understand where the market is and build assets closer to where demand exists. Combined with energy storage, this approach will help balance the grid and enhance energy security in the long term."

This push marks a shift in focus away from additionality and toward ensuring that green energy claims can be traced to a specific renewable energy asset at a specific time. As a result, the certificate is increasingly holding more weight in Power Purchase Agreements than it did previously.

"Two years ago, certificates didn't really have much value. Now, they hold most of the value because they provide provenance and origination," Cerda said.

The cost of hourly matching

Energy attribute certificates have traditionally been generated annually, which means there is no perfect match for consumption. Hourly matching, or 24/7 matching, aims to align renewable energy portfolios with electricity consumption on an hourly basis, starting with increased granularity for certificates and providing hourly timestamps.

As the conversation around granular certificates grows louder, questions have also been raised about how much of a premium the unbundled certificates could carry away from PPAs.

Platts spot UK REGO non-bio assessment, which represents the price for the current compliance period (CP24), was GBP0.12/megawatt-hour, while the front-year equivalent was GBP0.60/MWh. REGOs prices have been on a downward trend for the past year, and remain close to where participants view the floor to be.

"The main focus of hourly matching is to balance the system and ensure that whatever is produced in a given hour matches the demand for that specific hour," Cerda said. "This will push prices up during certain hours and down during others. The cost of certificates is low at the moment, but that will change as we enter the era of hourly matching."

For example, solar certificates will be abundant during times of excess generation in the day, while certificates for the middle of the night will be scarcer, as less renewable energy is available, but demand from data centers remains high.

There is a premium for certificates tied to specific hours and those traceable to specific assets, with Cerda noting hourly certificates can carry a premium of GBP1-2/MWh over power for specific assets.

Demand for hourly matching

Other participants told Platts that they did not yet see consistent demand for granular certificates, nor a premium in the market. Cerda said demand for more granular certificates was twofold, stemming from regulatory requirements.

Demand "is closely linked to frameworks that use Scope 2 as their foundation, such as the CSRD, RE100, and the Greenhouse Gas Protocol," Cerda said.

"Demand typically originates from the regulatory side, but also from forward-thinking corporates that support greater traceability and a system that more accurately matches the production and consumption of renewable energy contracts."

These companies, including hyperscalers, are currently 100% matched on an annual basis and are trying to determine what's next and how to move toward achieving it, according to Cerda.

Although hourly matching could be achievable for large power consumers, participants have recently told Platts that smaller organizations are likely to struggle due to limited resources and accounting strains.

As participants watch developments with the GHGP's proposed Scope Two Guidance updates, a number of participants are calling for a middle ground where the market could transition to stricter annual matching or monthly matching before moving hourly. This already exists in some markets, such as France, where there are monthly matching obligations.

"The next logical step after annual matching is monthly matching," Cerda said. "The shift from annual to hourly is a significant challenge for large corporations, as it requires extensive data crunching and extraction."

"However, in the next few years, there will most likely be a shift from monthly to hourly matching due to standards requirements," he said.

However, Cerda emphasized that the shift toward further granularity will take time, and costs are expected to eventually reach parity with current levels.

"The shift is going to take time—it won't happen overnight. The idea is that hourly matching will become the norm moving forward. Right now, it appears more expensive to achieve 100% matching due to peak and non-solar hours, but with battery storage and a more localized system, costs are expected to reach parity with current prices."