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Best Practices for Using Credit Insurance for VPPAs

Part 4 of the Energy Customer Investment-Grade Credit Support Blog Series

Credit insurance is a financial product purchased by a clean energy developer to offset the risk of offtaker default in a virtual power purchase agreement (VPPA) with a non-investment grade offtaker. CEBI spoke with credit insurance providers to compile some best practices for offtakers and developers interested in leveraging it for their deals:

  1. Find an insurance provider with clean energy transaction experience: While credit insurance has been around since the 1800s to indemnify sellers against a client’s default and is particularly common in international trade, its use in clean energy transactions is somewhat new, especially in North America. To date, there are only about 15-20 North American companies who offer VPPA credit insurance, and most of these have European foundations. Therefore, make sure to confirm that your provider understands how clean energy deals work. It may be helpful to seek out a broker or consultant, who can connect you to experienced providers.
  2. Help connect developers to insurance providers: Since credit insurance in clean energy transactions is not common practice yet and it is something developers have to purchase, offtakers may have to take a more active role in convincing developers to use it. Experts note that offtakers should not be involved in negotiations between a developer and insurance company. However, they instead recommend that offtakers make introductions between both parties in order to jumpstart negotiations.
  3. Rely on your treasury teams: PPA negotiations are difficult, especially when newer enhancement mechanisms are part of the discussion. Engaging the treasury teams on both the offtaker and seller sides may be key in achieving the best deal. Experts highlight that allowing the treasury representatives on both ends to negotiate directly with each other has often had a pronounced effect on reducing the perceived risk and therefore the costs borne by the offtaker.
  4. Think about packaging different enhancement mechanisms: Credit insurance is just one credit support mechanism. Others, including Letters of Credit (LCs) and surety bonds, are available and experts have often recommended looking at them as a package. Many sub-investment grade offtakers may still be asked to post an LC and/or surety bond even if their developer secures credit insurance. However, credit insurance can help make LCs and surety bonds cheaper. In fact, experts indicate that LCs and surety bonds alone are most affordable for mid-grade offtakers, and credit insurance may be particularly helpful for those whose credit is lower.

If you are interested in leveraging credit insurance or have done so and would like to share insight, please reach out to disc-e@cebi.org.

This is Part 4 of CEBI’s Credit Support Blog Series. Stay tuned for further installments and for our forthcoming Credit Support Primer.

Insights on Surety Bonds from CEBA Members

Part 3 of the Energy Customer Investment-Grade Credit Support Blog Series

Surety bonds are an increasingly popular method of credit enhancement for non-investment grade offtakers looking to do clean energy deals. CEBI spoke to two long-standing CEBA members who have successfully leveraged them. Equinix and Iron Mountain Data Centers used surety bonds to negotiate power purchase agreements (PPAs) in 2015 and 2017, respectively. At the time they did these deals, both companies were sub-investment grade, though Equinix has since become investment grade. In a recent interview, Bruce Frandsen, Director of Global Renewable Energy and Cleantech at Equinix, and Chris Pennington, Director of Energy and Sustainability at Iron Mountain, shared advice on using surety bonds as a credit support mechanism for clean energy procurement:  

Leverage consultants and advisors: Both Pennington and Frandsen highlighted their reliance on consultants from the very beginning of their PPA process. A good consultant ensures that credit status and possible mitigation strategies are raised early. Consultants also help place offtakers in conversations with developers who are willing to consider surety bonds.  

Include your Treasury and Risk departments in strategic discussions from the very beginning: While setting sustainability goals can seem like a process that does not require heavy input from Treasury or Risk, both Frandsen and Pennington wish they had involved these teams earlier. Both companies used letters of credit (LCs) for their first PPA deals, but their Treasury departments immediately suggested surety bonds once they realized how many deals both companies aimed to pursue. LCs pull on a company’s line of credit, which may be fine on occasion but is not ideal for multiple deals. Had Treasury been involved in strategic planning, they may have aimed to avoid LCs altogether. In addition, since the Risk team is likely to be the team actually working with banks and insurers to underwrite agreements, it is helpful to also loop them in. 

Address your credit status and willingness to do surety bonds up front: Pennington noted “It’s super easy to… not have [the discussion about credit support and surety bonds] up front because you get so excited about talking about this solar project or wind project… But when the time comes, it’s like, oh, that’s a really hard barrier that can completely stop progress.” Frandsen agreed, suggesting that companies include this information in their requests for proposals (RFPs) or solicitation requests. In fact, Equinix still references surety bonds as a credit support mechanism in their RFPs, even though they are now investment grade, as a proactive measure to address the risk that their status may drop. 

Provide a surety bond that mirrors an LC’s callability and provide it up front: Offtakers might prefer surety bonds because they don’t impact their lines of credit. However, other deal chain stakeholders often prefer LCs because they are “immediately callable,” meaning that developers can more easily demand payment and when they do, the offtaker’s lender typically has only about 48 hours to pay. While surety bonds traditionally are not written that way, both Frandsen and Pennington recommend writing your agreement to mirror this functionality, with Frandsen stating, “that [lack of immediate draw capability] seems to be the main component that scares the financial institutions away from looking at this as a viable option.” Pennington recommends having the actual bond form ready during the terms sheet phase of PPA negotiation. Negotiating the bond form can take anywhere between a few weeks to a few months, so it is critical to ensure that all parties — financiers, developers, and offtakers — are comfortable with this as soon as possible.

Be willing to accept surety bonds in return: Developers have stated that a barrier for their acceptance of surety bonds is that while offtakers ask to use it for themselves, they are not often willing to accept them from developers in return. Especially in a more constrained buyers’ market, being willing to accept similar terms from a developer may be key. 

Be willing to accept an LC as a Plan B: While both companies were able to use surety bonds successfully, Frandsen and Pennington agree that the first attempts can involve trial and error. Be committed enough to the PPA negotiation that you are willing to consider other options if conditions change. In fact, Pennington mentioned that Iron Mountain recently had to switch from a surety bond to an LC at the last minute because while they had informally agreed on a surety bond, the project’s financier was unable to get comfortable with it after seeing the bond form. Pennington noted “…there has to be a strong enough commitment to what this contract achieves in the first place… it can’t entirely hinge on whether or not you have a surety bond in place.” 

If you are interested in leveraging surety bonds or have done so and would like to share insight, please reach out to disc-e@cebi.org.

This is Part 3 of CEBI’s Credit Support Blog Series. Read Part 1 and Part 2.

  • Advocacy Updates
  • 11 January 2024

CEBA Outlines Energy Customer Priorities for Meeting Resource Adequacy Needs

By Kate Harrison

Careful electricity resource planning plays a key role in enabling energy customers to achieve the Clean Energy Buyers Association’s (CEBA’s) aspiration to achieve a 90% carbon-free U.S. electricity system by 2030. Reliable grids need resource adequacy, and planners must ensure projected resource mixes can reliably meet future capacity and energy demands under nearly all conditions. To clarify customer needs, CEBA today published Energy Customer Priorities for Meeting Resource Adequacy Needs, and the Clean Energy Buyers Institute has released a new primer, Evolving Resource Adequacy Approaches Across the United States.

Frameworks used to evaluate and plan for resource adequacy have profound effects on customer costs, public health and safety, and the amount of clean energy added to the grid. CEBA’s Energy Customer Priorities for Meeting Resource Adequacy Needs recommends key planning improvements for a cost-effective and reliable energy future. The five priorities were developed with input from industry experts and large energy customers and outline ways that decision makers should improve resource adequacy planning:

  1. Resource adequacy planning should take a regional view and use a common language. Regional resource adequacy frameworks can better capture resource, weather, and load diversity than individual utility balancing area planning, due to the regional frameworks’ expansive footprints. To fully assess adequacy or maximize power pooling, regional program participants must use consistent metrics and capacity accreditation methodologies.
  2. Resource adequacy planning frameworks should meet minimum standards and evolve to meet future grid needs. Planners should use a consistent, transparent, quantifiable metric that captures system stress and use this modeling to establish resource adequacy requirements and a planning reserve margin to maintain reliability. Planning metrics must evolve to better capture changing resource and load profiles, diversified resource contributions, and the varying impacts of outages.
  3. Expanded weather data and modeling will enable better resource adequacy planning. Extreme weather increasingly impacts electricity demand and supply, with multiple compounding and competing effects on generation, load, transmission, and distribution. Planners lack sufficient forecasting data as well as historical weather data that would help them fully understand possible supply and demand outcomes with more weather-dependent loads and increasing generation from wind and solar.
  4. Transmission optimization and expansion has a crucial role in supporting resource adequacy and reliability. Expanded transmission networks allow electricity resources to be delivered across broader geographies. Optimizing existing transmission and removing barriers that slow expansion of regional and interregional transmission would support resource adequacy and fortify the grid against extreme weather events.
  5. Wholesale power planning should account for and use the benefits of demand-side resources. As customer-sited power generation increases across the grid, understanding the impact of these resources on the wholesale-level power grid would improve resource adequacy planning. Customers could determine how to best use power from the grid, ensuring critical facilities have their needs met first and others are compensated for their demand response or onsite generation.

Grid planners should also improve their understanding of customer load. Grid Strategies in a recent report noted that data centers and industrial facilities are driving unprecedented load growth, but due to grid limitations including outdated technical review processes and lack of new generation and interconnection, some parts of the country may miss out on major economic development opportunities.

For large energy customers engaged in utility planning or market design reforms in a region, understanding resource planning and future industry innovation can support their ability to evaluate reforms that can enable a low-cost, reliable, and decarbonized grid. CEBI’s new primer, Evolving Resource Adequacy Approaches Across the United States, provides a basic overview of how resource adequacy planning works.

Together, the CEBA priorities and CEBI primer will help enable customers to assess and advocate for changes that will help them reach their goals of ensuring electricity reliability, minimizing energy costs, and procuring more clean energy.

New Year’s Intentions for Climate Action

Every year around this time, we take a moment to reflect on the previous year and to look ahead toward the new year. During your vision boarding, resolution writing, and KPI setting, we here at CEBA encourage you to include Scope 3 in those plans.

Although Scope 3 emissions can be up to 90% of an organization’s overall emissions, they are sometimes forgotten in our goal setting. They are coming from outside of the organization, so how can you manage them? The answer is not obvious, but at CEBA, we believe it lies in partnership and accountability.  

In 2024, we hope that you resolve, manifest, and decide. Let us explain.

Resolve to understand your Scope 3 impact. Where in your organization’s value chain are those emissions coming from? To what extent do you understand your suppliers and your relationship with them? It may seem that, because they are not your direct emissions, Scope 3 is not for you to solve; that is not the case. It is your job — and that of your finance, procurement, and sustainability teams — to start understanding your impact, building relationships with your suppliers, and reducing your Scope 3 emissions.

Manifest preparation in the face of incoming regulations. Scope 3 data reporting is in your future, so why not get a head start on planning? The United States and the European Union are two in a growing list of global actors prioritizing emissions data collection for Scopes 1, 2, and 3 with the goal of reducing overall carbon emissions. Be prepared to report for your company and your value chain; this New Year, educate yourself, make a plan, and get started. 

Decide to have a meaningful impact. Reducing Scope 3 emissions and partnering with suppliers means more than just setting a goal. Indeed, more than half of companies with an upstream Scope 3 target do not have a strategy to meet that goal. In 2024 we all have the chance to learn from the success and failures of others to make the most significant Scope 3 emissions reductions yet. 

Our Supply Chain Program connects you to emerging global insights, offers tailored educational tools and resources to engage with your suppliers, and keeps you up-to-date on procurement best practices. In the new year, resolve to join the movement. Take advantage of our diverse network of influential organizations to fill the gap with peer-to-peer learning on your Scope 3 emissions. Join CEBA today.

Expanding the Clean Energy Customer Market Through Credit Support

Part 2 of the Energy Customer Investment-Grade Credit Support Blog Series

Ask around about the process of doing a virtual power purchase agreement (VPPA) in the U.S. right now and you are likely to hear the phrase “seller’s market.” Simply put, this means that the number of top-rated potential energy customers more than meets the number of available clean energy projects. Developers have their pick of offtakers and therefore tend to go with the gold standard: investment-grade offtakers. But what happens when the market shifts and developers run out of investment-grade options? 

Enter credit support: the key to engaging non-investment grade offtakers in the present and future-proofing the VPPA market. Credit support helps protect project financiers and developers against offtaker default risk. Non-investment grade offtakers looking to transact today are almost always asked to provide some form of credit support. Available enhancement mechanisms differ in how they address offtaker default risk, which can influence costs to the offtaker. 

Understanding the key credit enhancement mechanisms — Letters of Credit (LCs), surety bonds, credit insurance, and shadow ratings — can help you transact now and prepare you for future market shifts. 

  • LCs: LCs are written agreements between a bank and a developer ensuring offtaker payment. While this is a common option in PPA negotiations for non-investment grade offtakers, they come with some drawbacks for offtakers. LCs typically require a hefty cash collateral and draw on a company’s line of credit, which needs to be preserved for core business functions. In addition, LCs are written to be immediately callable, meaning that issuing banks usually only have about 48 hours to pay a developer in the case of offtaker default. Considering these drawbacks, stakeholders are increasingly searching for alternatives. 
  • Surety Bonds: Unlike LCs, PPA surety bonds are third-party agreements that pass the risk of offtaker default onto a new party: an investment-grade surety company. In this scenario, the offtaker pays a premium to the surety company who, in turn, is responsible for paying the developer in case of default. In case of default, the surety pays the developer the agreed-upon sum and then either looks to the offtaker for reimbursement or attempts to find a replacement offtaker. This allows the offtaker to secure credit support without drawing on its line of credit. While commercial project lenders have been hesitant to accept traditional surety bonds because they are not immediately callable, recent offtakers have found success by offering “on-demand surety bonds,” which are modified to closely mirror the callability of an LC.
  • Credit Insurance: Credit insurance is a form of nonpayment insurance taken out by a developer against the risk of offtaker default. Here, the risk of default gets passed to an A-rated insurance company, instead of resting with the non-investment grade offtaker or developer. While the developer does pay a premium for the insurance, it can recuperate this expense through PPA pricing or even seek out more favorable terms from the project lender. This may end up being of no cost to the offtaker. And lastly, credit insurance lacks the “payment on demand” quality that is commonly seen in both LCs and modified surety bonds. All these qualities mean that credit insurance is often more affordable than other enhancement mechanisms and has the benefit of being an off-balance sheet solution. While the offtaker ideally should not be directly involved in the negotiation process between the developer and insurer, it can introduce credit insurance as an option. Those who have successfully used credit insurance in PPA negotiations have even gone as far as to seek out a preliminary quote from insurance agencies to include in their requests for proposals (RFPs). 
  • Shadow Ratings: Finally, for companies that lack a public investment-grade rating simply because of the often-prohibitive cost of the public ratings process, there is the option to leverage shadow ratings. Receiving a public rating is a complex process requiring multiple years of audited financial statements along with a detailed review of company management and industry health. The cost of being publicly rated ranges from the hundreds of thousands to millions of dollars. This usually is not financially pragmatic for companies that are not using the rating for its primary purpose — to issue bonds. Luckily, the shadow ratings process is a more flexible one that is often significantly more affordable. Shadow ratings review similar information but are less comprehensive and lack many of the hefty fees of a public rating. Therefore, shadow ratings typically only cost in the tens of thousands of dollars if done by a credit-rating agency and can even be done at no cost to the offtaker if it is done in-house by a deal chain stakeholder.

LCs, surety bonds, and credit insurance are all financial products that place the burden of default risk onto a different investment-grade entity. Meanwhile, shadow ratings can reduce perceived risk overall. These solutions can be used individually, but experts have noted that packaging them together can yield maximum benefit. If your company is struggling with credit access and/or is interested in exploring any of these options, please reach out to disc-e@cebi.org.

This is Part 2 of CEBI’s Credit Support Blog Series. Stay tuned for an educational primer on this topic.

Why Credit Support for Clean Energy Customers Matters

Part 1 of the Energy Customer Investment-Grade Credit Support Blog Series

Clean energy projects are one of the most impactful tools that corporate energy customers have to meet their sustainability goals and the Power Purchase Agreement (PPA) remains the most popular offsite deal structure. Energy customer creditworthiness plays a critical role in enabling these deals, but the market’s high credit requirements are shutting out most U.S. companies and stalling decarbonization.

Why is sufficient credit so out of reach, and how do we fix that?
By signing a PPA, large energy customers, or offtakers, provide guaranteed revenues to an energy project, which enables developers to secure project financing. Project financiers need assurance that their investments will be repaid and typically require that the offtaker have investment grade credit. This serves as an indicator of the offtaker’s ability to continue paying their bills and provide project revenues.
According to CEBA’s Deal Tracker, 89% of the offtakers for PPAs in 2022 had investment-grade credit. Unfortunately, according to Energetic Capital, of the nearly 80,000 companies tracked by S&P, less than 5% are investment-grade. As more companies begin to set sustainability goals and require their supply chain partners procure clean energy, there is a growing demand for market access from non-investment grade companies.

The primary reasons that a company may lack investment-grade credit could fall into one of the following categories:

  • Public Rating Requirements: Credit Ratings are primarily used to determine whether a company issuing a bond or other financial instrument is likely to meet its obligations. To demonstrate likelihood of future success, companies submit multiple years’ worth of audited financial statements to a rating agency like S&P, Moody’s, or Fitch. The cost can range from a few hundred thousand dollars to millions. Most U.S. companies do not issue bonds and do not need a public credit rating for their core business activities, so getting rated solely to transact in the clean energy space would result in a significant increase to the PPA’s per MWh price. In most cases, companies may judge that it is not a pragmatic use of resources.
  • Company Relationship to Parent: Subsidiary companies may not have robust enough records of financial success to qualify for their own credit rating. In some cases, their parent company may provide a parent guarantee, but it is often the case that they do not want to be held liable for a subsidiary, especially if they are not the sole owner of the brand.
  • Company sector: Credit ratings are partially determined by an analysis of sector health and industry-wide risk, meaning that companies in volatile sectors (like commodity manufacturing) may be plagued by sub-investment grade credit regardless of individual business performance.
  • Demonstrated reliability: Perhaps the hardest barrier to overcome, companies that cannot speak to their reliability may not be able to secure an investment grade rating. For example, companies that have previously defaulted on loans or have otherwise shown poor business performance are likely to be viewed as unreliable and therefore unable to receive an investment grade rating. This barrier also affects small and young companies, like startups, who often simply lack the financial track record to prove their reliability.

Building solutions to address these credit challenges requires collaboration between stakeholders across the deal chain – from customers and developers to tax equity companies and financiers. At the moment, these entities are largely siloed.

The Clean Energy Buyers Institute works to bring together key stakeholders along the project chain to expand credit access by scaling existing solutions- like credit insurance and surety bonds- and exploring new deal structures and products born out of cross-functional collaboration.

Is lack of credit support an issue you face? If so, our team is always looking to engage stakeholders who have experience with credit access barriers and/or thoughts on how to bridge them. If you or anyone at your company has a perspective on this issue you would like to share, please reach out to us at disc-e@cebi.org.

This is Part 1 of the Credit Support Blog Series. Stay tuned for an educational primer on this topic

  • Blog
  • 14 December 2023
  • Annie Lappe, VP Policy and Impact - Pivot Energy

CEBA Member Highlight: Pivot Energy

Why did your organization get involved with the Beyond the Megawatt initiative?

Pivot Energy is a national renewable energy provider that develops, finances, builds, and manages solar and energy storage projects. Headquartered in Denver, Colorado, Pivot Energy is proud to be on the cutting edge of environmentally responsible solar development, building projects that deliver meaningful benefits to the communities we operate in. When we heard about the Beyond the Megawatt (BTM) initiative, we were excited to get involved, learn from the cohort, and push our company to keep innovating in the realm of impact. We are proud participants in the equity working group of BTM, contributing our team’s experience of developing solar projects with significant economic benefits for low-income utility customers. 

What impact will the Principles for Purpose-Driven Energy Procurement have on the clean energy industry?

We believe the Principles for Purpose-Driven Energy Procurement will act as a roadmap for developers and corporate renewable energy procurement teams to come together to build projects that respect the land, deliver tangible benefits to local communities, and that help us build a resilient and clean grid. The Principles for Purpose-Driven Energy Procurement are setting a new gold standard for clean energy development, one that truly centers people and the planet. 

How do the principles influence the broader transition to clean energy?

The principles will help us succeed in developing clean energy at the pace that we need to avert climate disaster. By committing to clean energy development that centers delivering community benefits and caring for the land, Pivot feels confident that we can increase community interest and acceptance of these projects. 

How will you consider the principles during your clean energy procurement process?

At Pivot, we have embedded many of the principles into our development process, and have identified areas for our improvement. In early 2024, we will be releasing our 2024-2026 ESG roadmap, which outlines the 14 impact areas we plan to focus on to be a best-in-class purpose-driven solar developer. The principles have been, and will continue to be, an incredibly useful guide for us. 

  • Advocacy Updates
  • 07 December 2023

Upcoming FERC Rule Opens Historic Opportunity for Systemic Transmission Reform

By Tim Aiken and Bryn Baker


The transmission system is the backbone of the U.S. electricity grid, and increasing transmission capacity nationwide is key in enabling corporate and institutional customers to meet their clean energy goals and expand their operations where and how they would like. Without reforms in how we plan, permit, and pay for new transmission, customers will fall short of their goals, and the nation will lack a modern, clean, affordable, and reliable grid that helps enable innovation and build our economy.

The Federal Energy Regulatory Commission (FERC) in the year ahead has an important opportunity to develop the kind of systemic transmission reforms we need. Pending final action and approval before the commission is a Regional Transmission Planning and Cost Allocation Rule that provides a historic opportunity to remedy past planning rule deficiencies and set this nation on the course to an interconnected and resilient electric grid capable of meeting the demands and challenges for the coming decades.

Current Context

More than 70% of the nation’s transmission and power transformers are over 25 years old and in many cases have exceeded their original design life. Few new major lines are being built, and those in the pipeline average a 10- to 12-year permit approval process before construction can begin.

The gap between our transmission needs and existing capacity continues to grow. Last month, the U.S. Department of Energy’s (DOE’s) National Transmission Needs Study concluded that under a needs assessment forecasting moderate load and high clean energy growth due to the incentives and other provisions in the Inflation Reduction Act (IRA), regional transmission capacity must increase by 64% and interregional transmission must grow by 114% by 2035.

A 2022 analysis by Princeton University’s ZERO Lab found that without doubling the current pace of new transmission capacity, more than 80% of the IRA’s emission reductions would be unrealized. The study also found that without the added reliability benefits of interregional transmission, developing a clean energy grid would be far more expensive for customers.

Congressional action on permitting reform that includes strong reforms to speed transmission development has stalled ahead of an election year in 2024. Congress this past summer enacted a modest set of permitting reforms as part of the Debt Ceiling deal, but the deal’s sole provision on transmission, an up to three-year study on how regions could share electricity during periods of peak demand, does not adequately advance needed reform.

The deal diminished further congressional interest in comprehensive reforms. Democrats worry that the Republican price of altering landmark environmental laws in exchange for transmission reforms is too high, and Republicans worry that new transmission could accelerate the retirement of fossil fuel generation by adding predominantly clean generation. Bipartisan discussions around various transmission-related provisions continue, and the lame duck session after the November 2024 general election offers the next most likely window of opportunity to enact legislative reforms.

Meanwhile, the Energy Department this year began using its authorities under Section 216(h) of the Energy Policy Act to expedite federal reviews for transmission projects. A joint memorandum of understanding across multiple agencies was signed to designate DOE as the lead agency for transmission to streamline the National Environmental Protection Act review process and set enforceable deadlines.

DOE also raced to implement transmission-related provisions in both the IRA and the Bipartisan Infrastructure Law, through more than $20 billion in grants and loans to improve the electric grid. Collectively, these administrative actions will shave years off the federal review process and lower costs. But alone, executive action cannot overcome all the obstacles to planning, permitting, and paying for new transmission. 

Opportunity at FERC

FERC now has an important opportunity to make systemic transmission planning and cost allocation reforms. A strong planning rule that requires transmission planning authorities to standardize the process for planning and paying for new transmission could remove the single largest impediment to building new major transmission lines.

In April 2022, FERC released a proposed rule that addresses some aspects needed for transmission reform. However, that rule does not fully solve hurdles in how to pay for regional lines that are needed. These larger lines help reduce customer costs and improve reliability, especially during extreme weather, while also facilitating the integration of clean energy to the grid and its ability to accommodate growing loads.

The proposed draft planning rule would advance holistic transmission planning by requiring public utility transmission providers to develop long-term regional transmission plans that look at least 20 years into the future, and to update those plans every three years. Plans would also have to include multiple scenarios that use different assumptions, including extreme weather, corporate demand for clean energy, and load growth.

Two areas of the proposed planning rule would need to be strengthened to address systemic changes to planning and paying for lines, particularly regional lines, that benefit customers. FERC would need to:

  • Require public utility transmission providers to consider a broad set of up to 12 economic and reliability transmission benefits when identifying efficient or cost-effective transmission facilities in the regional transmission planning process. Currently, the list is optional.
  • Require utilities to consider Grid Enhancing Technologies that increase grid efficiency and reduce customer costs.

Under the 2-2 divided political party composition of FERC, the commission has not been able to move the planning rule forward. Commissioner James Danly, a Republican, must step down when his term expires at the end of December 2023, leaving a 2-1 commission that could move major rules forward.

CEBA encourages members to engage with us in supporting this FERC rule. The planning rule could advance in early 2024 and provides a significant opportunity to enable the transmission development customers need and to help modernize our grid to meet growing electricity demand and weather stresses on reliability, while providing improved access to low-cost, clean energy.

For more information on how transmission expansion benefits energy customers, read our issue brief.

  • Advocacy Updates
  • 22 November 2023

CEBA Comments to SBTI Emphasize Role of Market Certificates in Grid Decarbonization

By Kerri Metz and Priya Barua

The Science Based Targets Initiative (SBTi) in September issued a Call for Evidence on the Effectiveness of the Use of Environmental Attribute Certificates in Corporate Climate Targets, and the Clean Energy Buyers Association (CEBA) this week submitted a response that demonstrates the crucial role that market certificates have played in grid decarbonization and addressing supply chain emissions.

SBTi states that its aim in this call for evidence is to “help the corporate climate action ecosystem understand whether different instruments can credibly drive decarbonization and support corporate emission reduction claims.” CEBA encourages its members and any other interested organization to respond to this call for evidence before SBTi’s November 24 deadline.

Over the past decade, an increasing number of companies have voluntarily set clean energy commitments and taken steps to address climate change as part of their business strategy. Nearly one-third of the world’s 2,000 largest publicly traded companies have published net-zero emissions targets, and more than 90% of S&P 500 companies now publish environmental, social, and governance (ESG) reports.

SBTi, a partnership between the Carbon Disclosure Project, the United Nations Global Compact, World Resources Institute, and the World Wildlife Fund, works with various organizations to set science-based targets that are in line with Paris Agreement goals of limiting global warming to 1.5 degrees Celsius. Through collaboration with SBTi, approximately 3,900 companies have committed to setting science-based targets, and 2,590 have set net-zero commitments.  

SBTi’s call for evidence encompasses all environmental attribute certificates, including energy attributes certificates (EACs) for electricity, energy carrier certificates for green hydrogen, green gas, sustainable aviation fuel certificates, emissions reduction credits, and certified commodities conveying specific emission factors, including green steel.

CEBA recognizes the significance of EACs in the global voluntary market and their crucial role as a key tool for corporate climate action. Currently, EACs are the only uniform and global market-based instrument available to companies trying to reduce their corporate greenhouse gas emissions.

In addition to their environmental impact, the revenue from selling EACs for clean energy asset developers stimulates climate finance, mitigating market risks for developers and owners. EACs also help advance the adoption of low-carbon technologies, giving corporations the opportunity to displace high-emitting activities with lower-emission alternatives.  

Since 2014, energy customers have voluntarily procured more than 71 gigawatts (GW) of clean energy in the United States alone, equivalent to 42% of all wind and solar capacity added to the nation’s grid during that timeframe. In 2022, energy customers announced a record-breaking 16.9 gigawatts of new clean energy deals, equivalent to 70% of the carbon-free energy (CFE) capacity added to the grid last year. It’s important to help SBTi understand the impact of that customer procurement.

CEBA’s submission to SBTi’s call focuses on:

  • The role of energy attribute certificates: EACs have played a pivotal role in driving corporate CFE investment and deployment by providing corporations with a transparent and uniform means of procuring CFE and reducing greenhouse gas emissions. EACs can also evolve and be improved to activate the next generation of procurement and drive greater and more targeted emissions reductions.
  • Addressing supply chain and Scope 3 emissions: EACs are a valuable and potentially game-changing tool for tackling supply chain and Scope 3 greenhouse gas emissions. Scope 3 emissions can account for 65-95% of an organization’s total emissions, and EACs provide a crucial avenue for corporations to confront this significant portion of their supply chain emissions. In the absence of EACs, corporations and supply chain partners would have limited to no options for addressing Scope 3 and supply chain emissions in many global markets, and without a clear and accessible path for achievement, corporations might abandon setting supply chain decarbonization goals altogether.

SBTi is accepting the following types of evidence: 

  • empirical data and research studies,
  • reports and white papers,
  • statistical information,
  • case studies and examples,
  • surveys and polls, and
  • legal and regulatory analysis.

To support other organizations in submitting comments to SBTi, CEBA has shared a resource list that we used to inform our submission to SBTi. These resources highlight the effectiveness of EACs in meeting corporate climate targets.

CEBA is hard at work to advocate for policies that support and advance voluntary markets and to equip our members with the information and tools needed to demonstrate impact in driving clean energy procurement. By submitting responses to SBTi, organizations can help shape the types of market instruments that count toward achieving climate targets. To learn more about CEBA’s SBTi submission, contact Kerri Metz at kmetz@cebuyers.org or Priya Barua at pbarua@cebuyers.org.

  • Advocacy Updates
  • 16 November 2023

CEO Update to Members on CEBA’s Support for Voluntary Corporate Action on Grid Decarbonization

By Kevin Hagen, Interim CEO of CEBA and CEBI

This has been an exciting year for the Clean Energy Buyers Alliance, and together we are playing a crucial role in driving the clean energy transition and reducing carbon emissions in the electric power system. Energy customers have voluntarily procured more than 71 gigawatts of clean energy in the United States since 2014, and in 2022 alone, these procurement deals were equivalent to 70% of the carbon-free energy capacity added to the grid. At the same time, we also face a new and evolving accountability landscape, and the Clean Energy Buyers Association (CEBA) is hard at work to advocate for policies that support and advance voluntary markets and to equip our members with the information and tools needed to meet these new challenges.

These market evolutions include the ongoing process to update the Greenhouse Gas Protocol and the FTC Green Guides as well as the recent California law requiring companies that operate in California and make more than $1 billion in annual revenues to report both their direct and indirect emissions. As early as January, large U.S. companies that raise money on European stock exchanges will have to begin compiling information about their climate risks, strategies, and emissions, to comply with European Union disclosure rules, and the U.S. Securities and Exchange Commission may finalize a narrower climate disclosure rule in the year ahead.

We support and welcome improvements to modernize the accounting, reporting, and recognition systems that capture the impact of voluntary action. These systems should:

— Protect existing investments and contracts while increasing the accuracy and granularity of metrics,
— Allow various approaches for achieving success, and
— Open doors for innovative solutions to decarbonization.

As I noted in a recent Utility Dive op-ed, we recognize that to expand the market, increase the numbers of corporate and institutional customers buying clean energy, and maximize the benefits for all of us, we need collaborative engagement and partnership to improve emissions accounting and marketing associated with corporate and institutional energy procurement.

Here is an update on CEBA actions and recommendations we are making to support our members and community in this evolution:

— Earlier this year, the Clean Energy Buyers Institute (CEBI) submitted recommendations to the organizations overseeing the Greenhouse Gas Protocol — World Resources Institute (WRI) and World Business Council for Sustainable Development (WBCSD) — that include adding locational and temporal data hierarchy to accounting provisions in the protocol. We also provided recommendations to the FTC that urge clarifying in the guides that energy customers should have high-quality, detailed data — in addition to the energy attribute certificates they own — to substantiate claims.

— Last week, CEBA and CEBI signed a Clean Air Task Force letter with 15 other companies, academics, NGOs, and data providers, urging WRI and WBCSD leaders to improve location- and market-based reporting in the Greenhouse Gas Protocol’s Scope 2 Guidance and to add new and separate consequential impact accounting and reporting disclosures. As the letter notes, we are confident that including these three elements would best ensure the accuracy, effectiveness, and relevance of an updated Scope 2 Guidance.

— We will be submitting a response next week to the Science Based Targets Initiative (SBTi) in its Call for Evidence on the Effectiveness of the Use of Environmental Attribute Certificates in Corporate Climate Targets. In addition, we encourage all CEBA members to submit your own responses and let SBTi know it’s important to continue and enhance the use of the market-based certificates that underpin global voluntary markets and corporate climate action.

All these voluntary standards are global in scope, and we recognize that accountability demands for customers are international. As we step up momentum in these efforts, CEBA has also announced an opening for a new Director of Global Greenhouse Gas Accounting & Climate Recognition to lead these efforts. This position will support our aim to unlock $1 trillion in private investment for clean electricity projects this decade and accelerate the global clean energy transition. We’ve already had some wonderful candidates express interest, and if you know of someone who you think would be a good fit for the position, please share this with them right away.

Together, our energy customer community can continue to demonstrate the ingenuity and commitment you have already shown in pursuing and innovating for grid decarbonization. We will need to be clear and diligent in our accounting of our emissions reductions, and at the same time, our potential for global impact and motivating an international clean energy transition has never been greater. We at CEBA look forward to continuing to work with all of you and enable your great progress.