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There are two kinds of people who work on climate solutions: Those who still believe in the promise of carbon markets, and those who think the whole concept is fundamentally flawed.
In the first category, you have people like McGee Young, the CEO of a company called WattCarbon. Young is aware of the ways carbon markets can be a race to the bottom — enabling companies to buy cheap certificates that say they used clean energy or reduced their carbon footprint, when in reality their purchase had little effect on the environment or the energy system.
And yet, there’s all this money out there for the taking! Companies want to green their image! Tackling climate change is expensive! There must be a way to funnel corporate sustainability budgets to where they can make a real impact!
To Young, the solution is a matter of better data and greater transparency. “We need a record-keeping system that allows us to raise the bar,” he told me.
Young launched his vision for that record-keeping system on Wednesday — the WattCarbon Energy Attribute Tracking System, or WEATS. It functions similarly to other environmental credit registries: Owners of clean energy assets can sign up to generate credits known as Environmental Attribute Certificates, or EACs, which buyers can then purchase to count toward their own clean energy or carbon goals.
WEATS has two main features that differentiate it. First, it will include credits from small-scale distributed energy resources like residential solar panels, batteries, and heat pumps — clean energy solutions that haven’t really been able to participate in carbon markets until now. Second, each EAC will include granular information about where and when the power was generated, in the case of solar, or the carbon savings incurred, in the case of heat pumps, down to the hour.
The first feature is part of what motivated Young to start WattCarbon. “The clean energy transition is more than just wind and solar, it’s more than just generation,” he told me. But it’s the second that Young said is key to improving the credibility of claims that companies are “using 100% clean energy,” or “achieving net-zero.”
Today, many companies simply buy enough clean energy credits to match their annual energy use, regardless of where or when the energy was generated. But researchers have shown that this strategy can have little to no impact on emissions. For example, if a company is only buying solar credits, but it is using energy at night, its carbon footprint from that nighttime energy could surpass any environmental benefits of the solar it bought.
To solve this, some energy buyers have embraced a concept called “24/7 carbon-free energy,” which means that “every kilowatt-hour of electricity consumption is met with carbon-free electricity sources, every hour of every day, everywhere,” in the words of a United Nations-led initiative to promote the concept. “It is both the end state of a fully decarbonized electricity system,” according to the UN, “and a transformative approach to energy procurement, supply, and policy design that is critical to accelerating its arrival.”
If you’ve followed the recent debate about the green hydrogen tax credit, you might be familiar with the idea. In December, the Treasury Department proposed that hydrogen producers will have to match their electricity consumption with the purchase of local clean electricity generation on an hourly basis to prove their hydrogen is clean enough to qualify for the full value of the tax credit. That means producers can either hook up directly to a solar farm or wind farm or geothermal power plant and operate only when it is generating power, or, it can buy renewable energy credits or EACs that correspond to the hours that it operates.
WattCarbon’s marketplace is one of the first to enable this by requiring sellers to include data about exactly where and when each EAC was produced. It also include the carbon intensity of the grid in the place and time when that unit of power was produced. For example, 1 megawatt-hour of solar power in West Virginia, where the grid is supplied by a lot of coal-fired power plants, would likely reduce emissions far more than 1 megawatt-hour of solar power in California, where the main fossil fuel burned for power is natural gas. Similarly, 1 megawatt-hour of solar generated in the afternoon in California will not do as much to reduce emissions as if that unit of power were stored in a battery and then dispatched at night. On other markets, all of these credits might simply be advertised as 1 megawatt-hour of solar power, and the buyer would be none the wiser.
So what does this new carbon trading marketplace look like in practice? There are a lot of possibilities, but here’s one scenario. WattCarbon partners with a company that helps homeowners electrify their heating or install and manage their solar and battery systems. That third party company can then say to their customers, “As an extra incentive to do this, we can help you sell the environmental benefits it provides to third parties through the WattCarbon marketplace,” and those extra payments are what convinces the homeowner to go for it.
Independent experts I spoke with were cautiously optimistic about what this new marketplace could do. “We need to deploy on the order of a billion machines, in the U.S. alone — and not over a century, but on the order of a decade,” said Kevin Kircher, an assistant professor of mechanical engineering at Purdue University, whose research focuses on heat pumps and other distributed energy resources. “So there’s a lot that needs to be done, and just connecting people to money to do the work is really important.”
Wilson Ricks, a PhD candidate at Princeton University whose research informed the Treasury’s proposal for the hydrogen tax credit, said that having a platform where hydrogen companies can procure clean energy from a variety of projects, and with time and location data, would be very useful. He was also intrigued by WattCarbon’s attempt to create EACs tied to batteries because energy storage systems are one of the few resources that can produce clean power when the wind isn’t blowing and the sun isn’t shining.
But both Ricks and Kircher warned there are a number of ways this system of credits could fall into the same traps that ensnare many carbon offset projects and reduce their credibility. For one, it’s really hard to get the math right. That’s especially true for a project like a heat pump, where the carbon savings are based on a counterfactual situation where the homeowner would have kept their gas heater. You have to basically estimate how often they would have run it, which opens the door to sloppiness at best and fraud at worst.
Another key criterion — a concept called additionality — is very hard to assess. Would the household that switches to a heat pump have done so regardless of whether they were getting extra revenue from selling EACs? If the answer is unequivocally yes, the credits are meaningless and serve to give corporate emitters an excuse to keep emitting.
Young acknowledged to me that this was likely going to be true in some cases, but still felt that heat pump owners deserved to be paid for the environmental benefits they were providing. “We provide environmental subsidies for large-scale wind and solar, and we don't do that for the things that we're putting into our buildings and our communities. And to me, there’s an inherent inequality in the way that we treat and value clean energy that needs to be addressed.”
That didn’t quite make sense to me — the government provides subsidies for all kinds of clean energy resources, including distributed energy resources, I countered. The Treasury will give you $2,000 for a heat pump and a 30% discount on rooftop solar.
“That’s true,” Young said. “But we don’t have enough money in all of our government programs to truly scale those.”
I couldn’t argue with that. But the real challenge is helping low-income homeowners with the upfront capital to install these devices — after-the-fact payments are not enough. Young said he had plans to create a way for companies to procure EACs in advance from groups of homeowners. The deals would be similar to the power purchase agreements that big electricity consumers like Google and Walmart make with large-scale renewable energy developers, helping to finance those projects by reducing the risk.
“This is a necessary but not sufficient step,” Young said of the version of the marketplace that launched Wednesday. “Without this, we can’t do that. But this by itself would be inadequate for the market to be able to reach its fullest potential.”
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Amarillo-area residents successfully beat back a $600 million project from Xcel Energy that would have provided useful tax revenue.
Power giant Xcel Energy just suffered a major public relations flap in the Texas Panhandle, scrubbing plans for a solar project amidst harsh backlash from local residents.
On Friday, Xcel Energy withdrew plans to build a $600 million solar project right outside of Rolling Hills, a small, relatively isolated residential neighborhood just north of the city of Amarillo, Texas. The project was part of several solar farms it had proposed to the Texas Public Utilities Commission to meet the load growth created by the state’s AI data center boom. As we’ve covered in The Fight, Texas should’ve been an easier place to do this, and there were few if any legal obstacles standing in the way of the project, dubbed Oneida 2. It was sited on private lands, and Texas counties lack the sort of authority to veto projects you’re used to seeing in, say, Ohio or California.
But a full-on revolt from homeowners and realtors apparently created a public relations crisis.
Mere weeks ago, shortly after word of the project made its way through the small community that is Rolling Hills, more than 60 complaints were filed to the Texas Public Utilities Commission in protest. When Xcel organized a public forum to try and educate the public about the project’s potential benefits, at least 150 residents turned out, overwhelmingly to oppose its construction. This led the Minnesota-based power company to say it would scrap the project entirely.
Xcel has tried to put a happy face on the situation. “We are grateful that so many people from the Rolling Hills neighborhood shared their concerns about this project because it gives us an opportunity to better serve our communities,” the company said in a statement to me. “Moving forward, we will ask for regulatory approval to build more generation sources to meet the needs of our growing economy, but we are taking the lessons from this project seriously.”
But what lessons, exactly, could Xcel have learned? What seems to have happened is that it simply tried to put a solar project in the wrong place, prizing convenience and proximity to an existing electrical grid over the risk of backlash in an area with a conservative, older population that is resistant to change.
Just ask John Coffee, one of the commissioners for Potter County, which includes Amarillo, Rolling Hills, and a lot of characteristically barren Texas landscape. As he told me over the phone this week, this solar farm would’ve been the first utility-scale project in the county. For years, he said, renewable energy developers have explored potentially building a project in the area. He’s entertained those conversations for two big reasons – the potential tax revenue benefits he’s seen elsewhere in Texas; and because ordinarily, a project like Oneida 2 would’ve been welcomed in any of the pockets of brush and plain where people don’t actually live.
“We’re struggling with tax rates and increases and stuff. In the proper location, it would be well-received,” he told me. “The issue is, it’s right next to a residential area.”
Indeed, Oneida 2 would’ve been smack dab up against Rolling Hills, occupying what project maps show would be the land surrounding the neighborhood’s southeast perimeter – truly the sort of encompassing adjacency that anti-solar advocates like to describe as a bogeyman.
Cotton also told me he wasn’t notified about the project’s existence until a few weeks ago, at the same time resident complaints began to reach a fever pitch. He recalled hearing from homeowners who were worried that they’d no longer be able to sell their properties. When I asked him if there was any data backing up the solar farm’s potential damage to home prices, he said he didn’t have hard numbers, but that the concerns he heard directly from the head of Amarillo’s Realtors Association should be evidence enough.
Many of the complaints against Oneida 2 were the sort of stuff we’re used to at The Fight, including fears of fires and stormwater runoff. But Cotton said it really boiled down to property values – and the likelihood that the solar farm would change the cultural fabric in Rolling Hills.
“This is a rural area. There are about 300 homes out there. Everybody sitting out there has half an acre, an acre, two acres, and they like to enjoy the quiet, look out their windows and doors, and see some distance,” he said.
Ironically, Cotton opposed the project on the urging of his constituents, but is now publicly asking Xcel to continue to develop solar in the county. “Hopefully they’ll look at other areas in Potter County,” he told me, adding that at least one resident has already come to him with potential properties the company could acquire. “We could really use the tax money from it. But you just can’t harm a community for tax dollars. That’s not what I’m about.”
I asked Xcel how all this happened and what their plans are next. A spokesperson repeatedly denied my requests to discuss Oneida 2 in any capacity. In a statement, the company told me it “will provide updates if the project is moved to another site,” and that “the company will continue to evaluate whether there is another location within Potter County, or elsewhere, to locate the solar project.”
Meanwhile, Amarillo may be about to welcome data center development because of course, and there’s speculation the first AI Stargate facility may be sited near Amarillo, as well.
City officials will decide in the coming weeks on whether to finalize a key water agreement with a 5,600-acre private “hypergrid” project from Fermi America, a new company cofounded by former Texas governor Rick Perry, says will provide upwards of 11 gigawatts to help fuel artificial intelligence services. Fermi claims that at least 1 gigawatt of power will be available by the end of next year – a lot of power.
The company promises that its “hypergrid” AI campus will use on-site gas and nuclear generation, as well as contracted gas and solar capacity. One thing’s for sure – it definitely won’t be benefiting from a large solar farm nearby anytime soon.
And more of the most important news about renewable projects fighting it out this week.
1. Racine County, Wisconsin – Microsoft is scrapping plans for a data center after fierce opposition from a host community in Wisconsin.
2. Rockingham County, Virginia – Another day, another chokepoint in Dominion Energy’s effort to build more solar energy to power surging load growth in the state, this time in the quaint town of Timberville.
3. Clark County, Ohio – This county is one step closer to its first utility-scale solar project, despite the local government restricting development of new projects.
4. Coles County, Illinois – Speaking of good news, this county reaffirmed the special use permit for Earthrise Energy’s Glacier Moraine solar project, rebuffing loud criticisms from surrounding households.
5. Lee County, Mississippi – It’s full steam ahead for the Jugfork solar project in Mississippi, a Competitive Power Ventures proposal that is expected to feed electricity to the Tennessee Valley Authority.
A conversation with Enchanted Rock’s Joel Yu.
This week’s chat was with Joel Yu, senior vice president for policy and external affairs at the data center micro-grid services company Enchanted Rock. Now, Enchanted Rock does work I usually don’t elevate in The Fight – gas-power tracking – but I wanted to talk to him about how conflicts over renewable energy are affecting his business, too. You see, when you talk to solar or wind developers about the potential downsides in this difficult economic environment, they’re willing to be candid … but only to a certain extent. As I expected, someone like Yu who is separated enough from the heartburn that is the Trump administration’s anti-renewables agenda was able to give me a sober truth: Land use and conflicts over siting are going to advantage fossil fuels in at least some cases.
The following conversation was lightly edited for clarity.
Help me understand where, from your perspective, the generation for new data centers is going to come from. I know there are gas turbine shortages, but also that solar and wind are dealing with headwinds in the United States given cuts to the Inflation Reduction Act.
There are a lot of stories out there about certain technologies coming out to the forefront to solve the problem, whether it’s gas generation or something else. But the scale and the scope of this stuff … I don’t think there is a silver bullet where it’s all going to come from one place.
The Energy Department put out a request for information looking for ways to get to 3 gigawatts quickly, but I don’t think there is any way to do that quickly in the United States. It’s going to take work from generation developers, batteries, thermal generation, emerging storage technologies, and transmission. Reality is, whether it is supply chain issues or technology readiness or the grid’s readiness to accept that load generation profile, none of it is ready. We need investment and innovation on all fronts.
How do conflicts over siting play into solving the data center power problem? Like, how much of the generation that we need for data center development is being held back by those fights?
I do have an intuitive sense that the local siting and permitting concerns around data centers are expanding in scope from the normal noise and water considerations to include impacts to energy affordability and reliability, as well as the selection of certain generation technologies. We’ve seen diesel generation, for example, come into the spotlight. It’s had to do with data center permitting in certain jurisdictions, in places like Maryland and Minnesota. Folks are realizing that a data center comes with a big power plant – their diesel generation. When other power sources fall short, they’ll rely on their diesel more frequently, so folks are raising red flags there. Then, with respect to gas turbines or large cycle units, there’s concerns about viewsheds, noise and cooling requirements, on top of water usage.
How many data center projects are getting their generation on-site versus through the grid today?
Very few are using on-site generation today. There’s a lot of talk about it and interest, but in order to serve our traditional cloud services data center or AI-type loads, they’re looking for really high availability rates. That’s really costly and really difficult to do if you’re off the grid and being serviced by on-site generation.
In the context of policy discussions, co-location has primarily meant baseload resources on sites that are serving the data centers 24/7 – the big stories behind Three Mile Island and the Susquehanna nuclear plant. But to be fair, most data centers operational today have on-site generation. That’s their diesel backup, what backstops the grid reliability.
I think where you’re seeing innovation is modular gas storage technologies and battery storage technologies that try to come in and take the space of the diesel generation that is the standard today, increasing the capability of data centers in terms of on-site power relative to status quo. Renewable power for data centers at scale – talking about hundreds of megawatts at a time – I think land is constraining.
If a data center is looking to scale up and play a balancing act of competing capacity versus land for energy production, the competing capacity is extremely valuable. They’re going to prioritize that first and pack as much as they can into whatever land they have to develop. Data centers trying to procure zero-carbon energy are primarily focused on getting that energy over wires. Grid connection, transmission service for large-scale renewables that can match the scale of natural gas, there’s still very strong demand to stay connected to the grid for reliability and sustainability.
Have you seen the state of conflict around renewable energy development impact data center development?
Not necessarily. There is an opportunity for data center development to coincide with renewable project development from a siting perspective, if they’re going to be co-located or near to each other in remote areas. For some of these multi-gigawatt data centers, the reason they’re out in the middle of nowhere is a combination of favorable permitting and siting conditions for thousands of acres of data center building, substations and transmission –
Sorry, but even for projects not siting generation, if megawatts – if not gigawatts – are held up from coming to the grid over local conflicts, do you think that’s going to impact data center development at all? The affordability conversions? The environmental ones?
Oh yeah, I think so. In the big picture, the concern is if you can integrate large loads reliably and affordably. Governors, state lawmakers are thinking about this, and it’s bubbling up to the federal level. You need a broad set of resources on the grid to provide that adequacy. To the extent you hold up any grid resources, renewable or otherwise, you’re going to be staring down some serious challenges in serving the load. Virginia’s a good example, where local groups have held up large-scale renewable projects in the state, and Dominion’s trying to build a gas peaker plant that’s being debated, too. But in the meantime, it is Data Center Alley, and there are gigawatts of data centers that continue to want to get in and get online as quickly as possible. But the resources to serve that load are not coming online in time.
The push toward co-location probably does favor thermal generation and battery storage technologies over straight renewable energy resources. But a battery can’t cover 24/7 use cases for a data center, and neither will our unit. We’re positioned to be a bridge resource for 24/7 use for a few years until they can get more power to the market, and then we can be a flexible backup resource – not a replacement for the large-scale and transmission-connected baseload power resources, like solar and wind. Texas has benefited from huge deployments of solar and wind. That has trickled down to lower electricity costs. Those resources can’t do it alone, and there’s thermal to balance the system, but you need it all to meet the load growth.