Advancing corporate energy goals through flexibility management for renewable energy portfolios
In recent years, corporate sustainability efforts have evolved from marketing campaigns championed by progressive tech companies into mainstream, multi-faceted programs, highly scrutinized by customers, shareholders, and employees. Today, nearly every major company has some sustainability initiative, with these investments frequently being pursued as an attractive financial strategy in addition to prudent public relations. Energy management has emerged as a popular and accessible way to reduce both carbon footprint and operational expenditure. Increasingly, companies are exploring new energy management opportunities to achieve greater impact and improve ROI. Leading tech companies, faced with enormous data center energy demands and culturally programed to foster innovation and seek new operating models, have applied some of their disruptor DNA to energy procurement. Unsatisfied with the status quo offerings from their local utility electric providers, they pursued new innovative models for procuring renewable energy. This has spearheaded a suite of new renewable energy options, from renewable energy certificates (RECs) to onsite renewables to power purchase agreements (PPAs) to green tariffs.
Sustainability and the growth of corporate power purchase agreements
As corporate interest swelled and buyers gained experience, transactions have increased in both scale and sophistication. Now companies of all sizes and industries, recognizing energy costs as a fundamental lever in corporate strategy, are growing their in-house expertise and taking more active roles in managing energy procurement and market exposure. Whereas corporate buyers may have initially been content with unbundled RECs, company strategies now include considerations such as additionality, proximity, and alignment for matching supply versus demand. Corporate PPAs have emerged as a mechanism for corporate buyers to take their energy procurement future into their own hands. The accelerating volume of corporate PPA transactions is a testament to the value and power of these instruments.
While the origination and execution of corporate PPAs has matured considerably, including several robust marketplaces, distinct gaps remain in operational solutions for managing and optimizing these arrangements over their lifetime. A corporate PPA is a complex contract, with deliberate risk allocation between parties. PPAs represent significant investments in both time and money, and buyers need the ability to monitor performance and ensure compliance with agreed upon terms. Unfortunately, in many cases, corporate offtakers are only able to access limited data from their renewable projects. This makes it difficult to assess progress against goals, manage budget risk, and make informed decisions about future energy/sustainability investments.
Driving success in the next wave of sustainability goals will require monitoring, analytics, and controls solutions that can keep pace with corporate offtakers’ growing ambitions. To understand the health of your PPA portfolio, one needs granular production data, presented alongside powerful forecasting analysis and factoring in real-time market conditions. However, energy generation is just one side of the equation. In order to achieve a complete picture of one’s energy position, it is also critical to overlay energy consumption and demand side flexibility. Holistic visibility across both energy supply and demand portfolios, segmented by region, time period, and resource type is vital. Such reporting will be instrumental to assessing gaps, identifying new opportunities, and moving to less dependence on conventional generation to balance one’s renewable energy portfolio.
Role of virtual power plants
Aggregating and optimizing a disparate set of energy resources, whether they generate, consume, or store power, is the function of a Virtual Power Plant (VPP). These software applications ingest huge volumes of data and then define the ideal operational strategy for a portfolio of assets, balancing local constraints (e.g. time-of-use rates or backup power requirements) with global value streams (e.g. capacity obligations or grid congestion relief).
At AutoGrid, we subsist on energy data, as granular and real time as we can get it. We’ve developed a library of connectors and protocols to ingest this data from energy assets. Device data sources range from behind-the-meter devices like thermostats and EV chargers to utility-scale resources like wind turbines and large battery installations. Through secure, device-level connections, we provide real-time visibility into performance at every level of granularity from individual assets to geographic regions to entire portfolios. We then process this data through forecasting and optimization models to not only view historical and current trends, but also to project future conditions. Finally, based on the optimization models, we directly control and automate energy resources to achieve predefined objective functions such as reducing site energy costs, maximizing market trading revenue, or increasing alignment of consumption to production.
The AutoGrid Flex VPP platform has been designed from the ground up to support the scale, security, and resilience requirements of critical electric power infrastructure. Our modular architecture allows for quick deployment and configuration, and our cloud application environment is NERC-CIP attested, meeting full data sovereignty requirements of the North America region for critical infrastructure protection. We ensure high performance through several layers of scalability, including in Amazon Elastic Kubernetes System (Amazon EKS), where we utilize both cluster automatic scaling and horizontal pod automatic scaling. This means that our system can adjust in seconds to changing loads and demands, such as compute-intensive forecasting or optimization jobs with hundreds (or thousands) of devices. Our platform also leverages significant redundancy and distributed backups, including clusters spanning multiple AWS availability zones, cross-region replication of data, and archiving of data with AWS Backup. Finally, we employ comprehensive monitoring using multiple cloud-native solutions including Amazon CloudWatch to ensure that our team identifies any issues before they cause disruptions. It’s this commitment to security and performance that has allowed our customers to trust us with control of over five gigawatts (5 GW) of energy assets.
Results in action
One AutoGrid customer is using the VPP solution to aggregate 425 MW of wind capacity from across 61 sites into a single tradable portfolio. This includes monitoring real-time SCADA telemetry directly from the site controller, managing and analyzing multiple different production forecasts, and then determining day-ahead and intra-day market nominations to maximize revenue. In the past year, this customer has used the platform to support the trading of more than 500 GWh of renewable power worth more than $15 million. The portfolio is expected to grow to 650 MW in 2020, supporting the trading of more than one TWh of electricity each year, worth approximately $28 million.
Balancing a renewable future
Powerful software, adept at orchestrating and balancing resources on both the supply and demand sides, is going to be critical to increasing the penetration of renewable energy on the grid. For example, one widespread oversimplification that must be addressed is the use of annual time horizons for matching renewable energy production to consumption. The acquisition and consumption of energy is addressed under the Scope 2 guidelines issued by the Greenhouse Gas Protocol for the reduction of greenhouse gas emissions. This framework defines the rules and standards for measuring and mitigating one’s greenhouse gas footprint for consumed energy, and traditionally companies approach this objective at an annual timescale. The RE100 comprises 242 companies that have committed to this goal, including many of the largest companies in the world. However, while this is a laudable goal, it is far from the finish line. Annual accounting of energy production and consumption glosses over the reality of seasonal, daily, and hourly fluctuations in renewable energy generation.
The next phase of energy sustainability goals will seek to match demand to renewable supply at progressively shorter timescales: quarterly, then monthly, then eventually weekly, daily, and hourly. This requires granular visibility, powerful forecasting, and intelligent automation across both the supply and demand sides of one’s energy footprint. Virtual Power Plants aggregate and optimize a collection of distributed resources to provide the same essential services as traditional centralized generation, but with less reliance on carbon-based energy, greater flexibility, and reduced cost. As companies design their five-year energy plans and sustainability goals, we should all be looking ahead beyond the coarse annual renewable energy procurement cycles tracked today. Instead, we should be preparing corporate PPA portfolios for the true goal of granular real-time alignment between demand and renewable energy generation. Contact us here for more information.
Endnote: Learn more about Amazon’s commitment to sustainability.