Renewable Energy, Additionality, and Impact: An FAQ on the U.S. Voluntary Renewable Energy Markets
Organizations continue to pursue renewable energy PPAs for both risk management and financial value, since these instruments can reduce exposure to energy price volatility. But renewables purchases are also often driven by sustainability goals, such as greenhouse gas (GHG) reduction targets, and buyers increasingly want to know their purchase will have the direct effect of increasing renewable energy generation and lowering carbon emissions. This desired effect is commonly referred to as 'additionality,' a term borrowed from the carbon offsets market, where it describes projects that result in real and verifiable emissions reduction or avoidance. While this term is increasingly used in the renewables market, it is important that buyers understand the difference between the markets for renewables and carbon so their related — yet distinct — tradeable attributes (RECs and offsets) are not conflated.
This document, authored by Tim Juliani from our Renewable Energy Advisory team, provides guidance to organizations navigating the sustainability aspects of renewables transactions. Through a series of questions and answers, it explores how buyers can describe their impact and leadership in bringing new renewables online and transforming the grid, and share the most credible and transparent stories about their purchases with stakeholders.