The Australian


Tracking the source of energy a big step towards renewable power

We track almost everything these days: packages, food, supply chains, even pets. But energy, especially clean energy, has remained obscure, hidden behind a confusing mesh of regulation, plans and wildly divergent pricing.

When Texas suffered grid out ages last month during a storm, some consumers were smacked with eye-watering electricity charges because of this opacity. US Army veteran Scott Willoughby found himself with a bill for $US16,752 ($22,036) just for keeping the lights on during the storm.

This is about to change and the consequences for how we do business will be profound. In January, BlackRock chief executive Larry Fink, flagging that his $US7 trillion fund would be demanding measurable climate impact accountability from the companies it invested in, signalled the end for so-called “green washing”.

Green certificates have played their role in identifying how much energy is produced by clean generation sources. Now traceability technology is disrupting the old model, allowing us to see the source, the time and the price. It’s only a question of time before certificates go the way of the fax.

Big tech leading the way

As influential as Fink is in global corporate governance, he isn’t the only one. Google, Microsoft and IBM have all come out with a commitment to 24/7 traceability of their clean energy purchasing to meet their net-zero goals. Net zero will actually be replaced with true zero targets since it means households and businesses buying all their energy from renewable sources without offset certificates or other regulatory stopgaps.

These big tech leaders have recognised that certificates and offsets leave too much wriggle room for fossil-fuel supply. If their current true clean energy match is measured at 60-70 per cent (rather than “100 per cent offset”) that’s a good thing, creating the incentive for improvement and Fink’s “measurable climate impact”.

True Zero carbon the goal

Trace ability provides transparency into where we spend our money specific to energy source. Allowing buyers to purchase clean energy exactly matched in time to its generation ultimately will accelerate the transition to 24/7 carbon-free energy. Consumers large and small are turning their attention to provenance, and traceability is the next big frontier in demanding clean energy from source to socket.

driving the demand

With traceability, the consumer — an organisation or an individual — is given transparency and choice like never before. They can see and choose where they want to buy their power from and will know if clean power is delivering their environmental requirements.

To really drive the change, the consumer will need to see that the price of their traced clean energy on their bill is better than the alternative. This in turn pushes up demand and, as a result, traceability is likely to speed the development of cheaper and cleaner energy sources. Those building the next wave of power plants — renewable generation or battery storage — will have a clear path to market.

As a result, the electricity sector could undergo a rapid transition to wind and solar energy, and storage resources such as batteries and pumped hydro. Technology is the key driver in this and the technology is coming fast. My team has been across the development of cracking the puzzle, but there are thousands of experts around the world driving towards this change.

Digitising the grid means we can measure electricity source and flow in minute detail. Software is now capable of matching kilowatt hours going in with kilowatt hours going out. It is a straightforward but transformational change, just as we have seen a single app disrupt the taxi industry globally.

Benefits for business

I expect that the demand from organisations proactively seeking accountability for where their power is coming from will grow. My hope is that we will see a divestment of conventional power as major companies vote with their wallets.

Fortunately for business, redirecting their spend will be money saving and it will deliver strong brand and partnership benefits. For example, traceability allows businesses to extend clean energy benefits to a broad network of employees, suppliers and partners through easy-to-craft energy plans. As a result, businesses can extend their climate action into a wider network, making an even bigger impact.

Steve Hoy is IBM’s former global smart grid systems leader and the chief executive at Enosi, a company focused on supporting the transition to clean energy

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