Energy Peace Partners leading effort to promote renewable credits for 'fragile' regions

Led by Energy Peace Partners and other 11 non-profits, the Leapfrog Alliance on March 26 launched operations to promote energy transition in fragile regions marked by conflict, energy poverty and climate change with high reliability on fossil fuels and a lack of access to electricity.

"The initiative calls upon policymakers and standards bodies to encourage and allow companies to dedicate up to 10% of their global clean energy procurement to projects that support increased clean energy access in unelectrified and underserved communities," Energy Peace Partners (EPP) said in a statement.

"This targeted geographic matching exemption would help extend clean energy financing to the 10% of people currently without electricity and empower communities to leapfrog over the fossil energy system," Doug Miller, EPP's director of market development, said March 27 on LinkedIn.

Geographical matching is a requirement for Energy Attribute Certificates (EAC) to come from a grid within the country or region where the energy procurement originated.

Peace Renewable Energy Credits

"(Peace Renewable Energy Credits) P-RECs are I-RECs with an impact label from Energy Peace Partners certifying the environmental and social benefits associated with qualifying projects in fragile settings," according to EPP's website.

Currently, P-REC buyers are in different regions than where the certificates are generated, and the certificates are sold unbundled with the electricity. If the buyer's operations are outside the country where the P-REC is generated, the EAC cannot be used to report renewable consumption or reduce scope 2 emissions due to the lack of geographical matching.

However, there are still benefits from the transaction. Companies can report their contribution to energy transition on marginalized areas as part of their social impact initiatives. Moreover, companies can reduce their scope three emissions through the purchase of P-RECs.

"Let's imagine a company has reached 93% adoption of clean energy across its global operations." Miller told S&P Global on March 26. "Let's also imagine that this company has trouble finding supply options in a country like Singapore, Taiwan, or South Korea where they have load — so they're stuck at 93%. Currently, that company has no incentive to buy clean energy elsewhere to cover that 7% gap.

"The Leapfrog Alliance believes that a company should be able to buy clean energy equal to that 7% from one or more countries with no direct relationship to their load if it increases energy access in unelectrified or underserved communities," Miller said. "The company should be able to count that purchase to achieve its 100% goal and for their global market-based emission reductions claims. So, by providing some flexibility at the edges in corporate accounting — the last 10% of a company's load and a company's value chain partners' load — based on social impact, we can unleash catalytic financing for clean energy access more widely."

EPP is targeting 27 climate-vulnerable states at risk of conflict that include Haiti, the Democratic Republic of Congo, South Sudan, and Chad, among others. When asked about the possibility of expanding the P-REC program to other countries, Miller mentioned EPP is exploring fragile regions not on only on a national level, but also within states.

For example, Miller said, "in a country like Mexico, which is not considered fragile, it is possible that a sub-national level may classify as fragile and so projects in that region or state could theoretically qualify as eligible for P-RECs. EPP is exploring how to define fragility the sub-national level in various countries so we can offer a list of regions or states where projects may qualify in an otherwise non-fragile country.

"In the meantime, project developers in countries not listed on the fragile countries list can submit their projects to EPP for consideration and supplement their application with an explanation about why the community where the project will go should qualify as fragile."

Currently, P-REC prices stand out from other EAC prices. Platts assessed Solar Current Year I-REC prices ranging between 24 cents/MWh and $5.52/MWh on March 26, while P-RECs prices could be nine times more that much depending on the country, according to S&P Global Commodity Insights.

Platts is part of S&P Global Commodity Insights.