Tackling misleading "100 percent carbon-free energy" claims and the rising costs of PPAs

It seems like every day, there is another announcement of a tech company signing a new PPA and in 2023, projections are that there are more to come. Research shows that in 2022 alone, the number of PPAs purchased in the first three quarters, surpassed the total volume recorded across the whole of 2021. According to statistics, however, the cost of PPAs in Europe and the US are also on the rise. The rise is not, however, at the same rate as last year, where a number of factors, including increased demand for clean energy and supply chain issues, caused a ruckus. For example, in 2022, PPA prices in Europe jumped nearly 50 percent from 2021. 

Aside from rising PPA costs, it is also important to note the drawbacks of PPAs and understand that it is not a guarantee of green energy, as some might believe. According to carbon accounting startup Flexidao, although many data centers claim they have decarbonised their energy supplies, "100 percent renewable energy" claims are misleading. This is because many carbon-free accounts don't consider the fluctuating peaks and troughs of renewable energy supply. So, when companies have bought PPAs, often they are under the impression that they're decarbonising and going green, but they're not matched hour by hour. In response to this lack of guarantee around fossil fuel usage, operators in the sector are increasingly being advised to switch to new power purchase agreements (PPAs), whereby green energy production is matched with their consumption 24 hours a day. 

A report written by McKinsey for the Long Duration Energy Council (LDES), outlined that switching would pay for power producers to decrease their fossil fuel usage when balancing: "24x7 clean PPAs provide a form of time-matched clean power, a highly desirable commodity for corporates looking to reduce their Scope 2 greenhouse gas emissions." The report also recommends large batteries and other technologies for energy storage to help power operations when there are intermittent renewable energy sources.