Today, if a company claims to run on “100% clean power,” that generally means it’s adding up its electricity use for the entire year, then offsetting any fossil fuel-generated electricity through the purchase of renewable energy certificates, a.k.a. RECs. So a New York-based firm using natural gas to power its data center at night can offset that dirty power by purchasing RECs generated by a California-based solar farm in the middle of the day, so long as energy production and procurement happen within the same year.
We call this system “annual matching,” and it may not be much longer for this world.
The U.S. Treasury Department announced in December that, to qualify for the most generous subsidies under the Inflation Reduction Act’s hydrogen production tax credit, clean hydrogen must be produced using a relatively new source of carbon-free electricity generated within the same hour it’s used and in roughly the same location. The hourly matching requirement, which will take effect in 2028, could compel utilities, grid operators, energy producers and consumers to adopt new systems for clean energy accounting, ultimately laying the groundwork for a 24/7 clean electricity market that extends far beyond the hydrogen sector.
Energy system experts generally hailed the move, and not just because without it, electricity-hungry hydrogen production could potentially do more harm to the climate than good. Annual matching, also, is no longer serving its original purpose of incentivizing the buildout of new renewables. When wind and solar were more expensive than fossil fuels, developers could make up the cost difference by selling annually-matched RECs. But today, wind and solar are often the cheapest energy options available.
That’s not to say everyone was in favor of hourly matching, however. Many of the companies that underpin the U.S.’s clean energy generation and accounting systems, some major hydrogen players, and even a number of Senate Democrats say that moving to hourly matching in the next four years could not only prove too logistically challenging, but also lead to infeasibly high costs for clean hydrogen that will hamper the growth of the emerging industry. More than a year of furious lobbying, public commenting, and punditry over the future of America’s nascent hydrogen industry hinges on this question: Can we pull off verifiable 24/7 clean energy?
There’s an emerging ecosystem of companies trying to help do just that. Granular Energy is a European startup creating software to help utilities and power suppliers move toward 24/7 energy matching by telling them where and when clean energy is most needed. “When you get down to the hourly level,” Natalie Valentin, Granular’s commercial lead for North America, told me, “it can help drive investment in the types of technologies — whether it’s battery storage, clean firm generation, or renewable generation.”
Utilities and power suppliers generally have hourly generation data on hand, Valentin said. It’s just that the energy attribution certificates they receive from tracking systems and registries for renewable energy credits don’t usually include this information. “This data is very readily available,” she told me. “What we’re helping to do is put it into a tool that creates transparency, it streamlines the operations, it has that audit trail that's preventing any double counting.”
Granular links the information from energy certificates with the utility or power provider’s internal metering data to provide an hour-by-hour snapshot of the supplier’s energy mix. That then gives energy suppliers the ability to offer hourly-matched green power programs to their customers.
All of this would be simpler if electricity customers had insight into their hourly electricity usage in the first place, or if the tracking systems provided suppliers with time-matched certificates upfront. But as it stands, most customers don’t have meters that provide this level of detail, making it difficult for them to understand where their energy is coming from. And out of the nation’s 10 renewable energy credit tracking systems and registries, seven don’t report hourly information.
The three that do include the nation’s largest grid operator, PJM, the nonprofit Midwest Renewable Energy Tracking System, and the North American Renewables Registry. Seattle-based LevelTen Energy will utilize the data from these three entities to create a new marketplace for buying, selling, and managing hourly-matched energy certificates, to be launched later this year in regions where hourly tracking exists. LevelTen is building this platform in partnership with the Intercontinental Exchange, a tech company that operates global financial exchanges. Other partners include Google and Microsoft, each of which has announced plans to move to hourly matching by 2030.
“We’re looking to provide an end-to-end experience so people can indicate, here's where we have demand,” explained Katie Soroye, a LevelTen executive. Crucially, the platform will also ensure that hourly matching certificates are retired once they’re purchased to prevent double-counting.
The hope is that the seven tracking systems that lack hourly matching capabilities will soon be either persuaded or mandated to develop them, leading to a country-wide granular certificate marketplace — something the clean hydrogen tax rules were designed to help expedite. Once the mandate is finalized, the Center for Resource Solutions found, most of the tracking systems could phase in hourly matching within two years.
That doesn’t mean they’re eager to make the change, with many citing cost, low demand, and in some cases lack of data availability and confusion over how to handle a more complex dataset as top concerns with hourly matching. Cost is also a major concern for the hydrogen industry overall.
“To the extent that 24/7 works, it has to increase hydrogen prices,” said Aaron Bergman, a fellow at the nonprofit research group Resources for the Future, although he acknowledged that hourly matching is also likely to reduce emissions. “Now, I think what’s challenging is, is that going to be enough to interfere with the ability to really start building out green hydrogen?”
The American Clean Power Association thinks so. Its members estimate “a 20-150% price premium for hourly matched hydrogen production” because electrolyzers, the devices used to make clean hydrogen, will only be able to operate when clean electricity is available. The trade group recommends waiting until 2032 to implement hourly matching, saying this will give the market more time to mature and lower prices through economies of scale.
The whole industry is hardly aligned on this question. Seven companies, including the world’s largest hydrogen producer, filed a joint letter with Treasury officials before the draft rules were released urging them to require 24/7 hourly matching by 2028. “Hourly matching will catalyze cutting-edge, flexible electrolyzer technologies and establish a flourishing and world-leading domestic U.S. advanced electrolyzer manufacturing base,” the letter said.
The rule-making process will continue with a public hearing scheduled for later this month. But assuming the hourly-matching requirement stays, it will certainly add momentum to what’s become a movement for 24/7 clean electricity. Even the U.S. federal government has committed to sourcing 100% of their facility’s electricity from carbon-free sources, half of which will be hourly matched by 2030.
“Time is ticking,” said Bergman. “It’s really standing up something that is relatively new in a relatively short period of time.” Some degree of delays and logistical roadblocks may prove inevitable. But, he said, “it certainly can be done.”
Editor’s note: This story has been updated to clarify that a new platform from LevelTen Energy is distinct from the Granular Certificate Trading Alliance.
Courtesy of Harbinger