The challenge of truly clean-powered operations

From pv magazine 04/25

Many U.S. electricity buyers have used PPAs to run on clean power, filling gaps by buying renewable energy certificates generated by clean power operators. Such corporate and institutional sustainability goals drove 42% of the solar and wind power capacity installed in the United States between 2014 and 2023.

Critics of companies such as Amazon, which covers its electricity needs with clean energy PPAs, say the fact the PPAs concern cheap daytime solar power means fossil fuel generation still takes place to fulfil the retail giant’s evening energy needs.

Google, Microsoft, and data center operator Iron Mountain have promised round-the-clock carbon-free energy by 2030, requiring non-fossil fueled energy to cover consumption every hour of the day. “Hourly matching” is designed to move the argument on from how to drive renewables onto the grid, to how to target them at the parts of the grid, and times, with the biggest clean energy gaps.

Corporate buyers are also responsible for a boom in power demand. A December 2024 report by power sector consultant Grid Strategies predicted average U.S. power demand will grow 3% annually through 2030, the fastest rate experienced since the 1980s, with 128 GW of new generation capacity needed within five years.

That growth will be driven by the onshoring of manufacturing, transport electrification, and chiefly by a boom in data centers, many of which are owned by the big tech companies with 100% renewable energy or hourly matching strategies. To take the most extreme example, data centers will account for half of Virginia’s power needs by 2030, up from 26% in 2023, according to the nonprofit Electric Power Research Institute.

Impact on solar

The PV industry is well placed to absorb some of that rising demand. A total of 39.6 GW of new PV generation capacity was added in the United States in 2024, beating the previous record of 27.4 GW set in 2023 and taking the total to 220 GW, according to the U.S. Energy Information Administration (EIA).

“Despite near-term challenges like tariff uncertainties and electricity transmission bottlenecks, solar continues to lead the charge as the top driver of new renewable capacity in the U.S.,” said Fengrong Li, managing director at FTI Consulting’s power, renewables and energy transition practice.

PV projects alone cannot provide the 24/7 supply needed by data centers. The big question is whether hourly matching will encourage more solar-plus-storage development and investment into long duration energy storage (LDES) technology. Pairing batteries with PV can extend power supply but, in most cases, only for two to four hours. That helps cover peak residential load in the evenings but does not cover nighttime data center demand so other technology is required.

U.S. battery energy storage capacity doubled to almost 29 GW last year, with 47% growth forecast for 2025 by the EIA. The vast majority of PV projects installed in the biggest US solar market, the California Independent System Operator (CAISO) grid, now include storage, supported by revenue mechanisms such as CAISO’s bilateral grid resource adequacy market. Buyers are increasingly favoring solar-plus-storage over standalone projects because “they offer more reliability and better alignment with real-time energy needs,” noted Li.

Energy storage procurement is led by utilities that create markets for “preferred” energy storage system types, said Chris Goldsberry, senior director of commercial and industrial business origination for the North America operations of Spanish-owned clean energy business EDP Renewables. “The capacity accreditation bodies will need to recognize and reward emerging storage technology alongside demand from 24/7 buyers if these have any hope of seeing wider adoption and availability.”

With the exception of pumped hydro energy storage, which is limited by geography, LDES technology is at an early stage. Federal tax incentives, state-level support, and utility procurement mandates are driving investment and 24/7 matching should also encourage R&D.

Pairing PV

Growing interest in 24/7 matching is likely to accentuate interest in hybrid PPAs, whether combining solar and wind power or renewable energy with energy storage. Baseload generation provision from hydro and nuclear could also benefit.

The U.S. Department of Energy has said that most onshore wind farms generate more at night, when electricity demand is lower. These projects could satisfy nighttime consumption while solar-plus-storage sites could meet daytime and evening demand.

Wind speeds at most offshore wind farms are generally highest during the afternoon and evening. Offshore wind is still likely to play a role because it has a higher capacity factor than either onshore wind or PV, meaning it delivers a bigger proportion of its theoretical maximum generation capacity. Offshore wind sites, though, have higher costs and require more complicated interconnection, permitting, and operation and maintenance. Those challenges “are growing stronger with the Trump administration’s plans to restrict leasing and permitting,” said Lori Bird, director of the US Energy Program at the nonprofit World Resources Institute.

There is a debate about whether nuclear power should be considered “clean” enough to be part of hourly matching strategies, amid particular interest in small modular reactors (SMRs). However, those have yet to be commercially deployed at scale and hurdles remain regarding siting, permitting, and financing, according to Bird.

“It’s far too early to treat SMRs as a panacea for this customer need,” said Goldsberry, because the first planned units will not come online until the mid-2030s at the earliest and their levelized cost of energy is uncertain. By contrast, PV projects are far quicker to develop and benefit from ongoing efficiency gains.

Local procurement

Different electricity buyers have differing interpretations of what counts as 24/7. Hourly matching and procurement strategies often require power to be produced and consumed on the same grid. That could benefit the PV sector because projects can be located close to consumption, unlike geographically constrained offshore wind and hydro schemes. Local matching “may mean a decreased interest in financial PPAs that currently are more often used across wider geographical areas than physical PPAs,” said Marcus Melin, business and product developer for business sales at Vattenfall.

Companies already procuring gigawatt-hours of renewable energy on a given electric grid may find that hourly matching is fairly easy to do “with just the addition of a few batteries to manage peaks and occasional mismatches between aggregate supply and demand,” noted EDP’s Goldsberry. Round-the-clock clean energy supply will be more complicated if electricity buyers begin to demand hourly matched products “come from a specific independent system operator, or grid company, utility territory, state, or locale specific to a load point, from an ‘all-in-one, co-located,’ resource-specific generation source, or if their load is itself not predictably constant,” he added.

Bird noted that where local production is required, solar is attractive because of its “ability to be sited in a wide variety of locations, its modularity [ability to be built in variety of sizes and configurations], and its cost-effectiveness.”

Granular certificates

“The growing push for carbon neutral electricity matched to real-time demand is shifting the US PPA market”, said Li, adding that synthetic PPAs are gaining traction. Synthetic deals bundle electricity from multiple wind and solar farms to smooth out renewable energy supply. However, such deals usually match energy on an annual basis, not hour by hour. Hourly matching requires pricing premiums to cover the higher costs of delivering renewable power during peak demand periods or when solar and wind projects are not operating.

A new type of certification is being launched – granular certificates (GCs), which track regionally specific carbon-free energy generation on an hourly basis. They are not currently available to trade, but pricing platform and PPA marketplace LevelTen Energy has launched its GC Marketplace, alongside partners Google, Microsoft and the energy companies AES and Constellation. The new service aims to accelerate the adoption of GCs by enabling buyers and sellers to trade them. The first auction is due this year.

“Using annual procurement tools to achieve granular strategies like time- and location-based matching can be costly and difficult for even the most ambitious organizations to achieve,” said Katie Soroye, LevelTen vice president of granular procurement solutions.

The GC Marketplace enables energy buyers to procure carbon-free resources during scarce hours without the need to over-procure through another PPA and also enables them to sell excess carbon-free energy in their portfolio, she added.

LevelTen sees PPAs as “complementary to this GC transition, part of a balanced, diversified portfolio,” said Soroye. “PPAs provide organizations with a way to enter into long-term contracts to manage energy costs and protect against market volatility, all while striving towards their clean energy goals, like hourly matching.”

Whatever the procurement method, as the cheapest renewable energy resource, PV will definitely be part of any “all of the above” solution, according to Goldsberry.

The views and opinions expressed in this article are the author’s own, and do not necessarily reflect those held by pv magazine.

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