Clean Energy Procurement (PPA, REC & 24/7 CFE)

Glossary

24/7 Carbon-Free Energy (CFE)

The most demanding clean-procurement standard, requiring that a buyer's consumption be matched by carbon-free generation in every hour and on the same grid region, rather than matched only in annual totals. It exposes the fossil-dependent hours that annual accounting hides and drives investment toward firm clean resources.

Additionality

The test of whether a clean-energy purchase caused generation to exist that would not have existed otherwise. A purchase is additional when the buyer's commitment is the marginal reason a project was financed and built; it is non-additional when it buys claims over generation that would have occurred anyway. Additionality is the key measure of real-world impact.

Carbon Displacement

The amount of fossil-fueled generation that new clean power actually replaces, which depends on the grid it feeds. A clean megawatt-hour added to a coal-heavy grid displaces far more carbon than the same amount added to a grid already dominated by hydro and nuclear, making location a decisive factor in real emissions impact.

Contractual vs. Physical Clean Power

The distinction between a bookkeeping arrangement in which a buyer holds certificates equal to its consumption (contractual) and the actual physical delivery of electrons from a clean source (physical). Because the grid pools all generation, nearly all corporate clean-power claims are contractual rather than physical.

Firm Carbon-Free Power

Carbon-free generation that produces steadily and on demand regardless of weather or time of day, such as nuclear, hydro, and geothermal power. Firm clean resources are essential for covering the overnight and windless hours that intermittent solar and wind cannot, which makes them central to achieving high hourly matching.

Power Purchase Agreement (PPA)

A long-term contract, typically ten to twenty years, in which a buyer commits to purchase a generator's electricity or its environmental attributes. The commitment provides the bankable revenue a developer needs to finance new construction, making the PPA the primary instrument through which corporate demand causes new clean generation to be built.

Renewable Energy Certificate (REC)

A tradeable instrument representing the environmental attributes of one megawatt-hour of renewable electricity. It can be sold separately from the physical power and is retired against a buyer's consumption to substantiate a clean-energy claim. In Europe the equivalent instrument is called a guarantee of origin.

Virtual (Financial) PPA

A PPA structured as a contract for differences in which no electricity physically changes hands. The generator sells into the wholesale market, and the buyer and generator settle the gap between the market price and an agreed strike price. The buyer receives the certificates, enabling it to finance projects anywhere regardless of its facilities' location.