About Grid Impact Score
The grid impact score is a measure of a company's energy procurement strategy's impact on adding net new clean energy to the grid.
Not all renewable energy procurement methods have the same impact on decarbonizing the electrical grid. Some actions directly contribute to adding new clean energy to the grid, while others simply purchase clean energy from existing generation assets.
Grid Impact Report evaluates companies based on the real-world impact of their clean energy procurement strategies, not just percentage claims. This helps sustainability leaders make more informed decisions about how to maximize their organization's positive impact on grid decarbonization.
By focusing on procurement methods that add new clean energy to the grid, companies can accelerate the transition to a carbon-free grid.
The grid impact score is a measure of a company's energy procurement strategy's impact on adding net new clean energy to the grid.
The Grid Impact Score is not designed as a precise measurement of a company's affect on the grid mix, but as an easily digestible metric that illustrates the extent to which a company’s electricity procurement supports new clean energy generation in relation to its total electricity consumption. Scores typically range from 0 to 100, with a score of 0 representing an organization that doesn't purchase any clean electricity and a score of 100 representing an organization that sources 100% of its electricity from high impact methods.
The score separates procurement methods into three groups:
Grid Impact Report defines High Impact procurement methods as those which directly contribute new clean generation capacity to the grid. This category includes Power Purchase Agreements (PPAs), Virtual Power Purchase Agreements (VPPAs), and Behind-the-Meter generation.
PPAs
A Power Purchase Agreement (PPA) is a long-term contract to purchase power from a specific renewable energy generator, typically spanning the first 10-20 years of the project's commercial operation. This upfront commitment provides project developers with the revenue assurance needed to secure financing. PPAs are considered High Impact because of this crucial role in supporting the project's financial feasibility and viability.
VPPAs
Similar to a PPA, Virtual Power Purchase Agreement is a long-term contract to purchase RECs and power from a generator for a specified timeframe at the beginning of the project's commercial operation. Unlike a traditional PPA, the energy produced is not delivered directly to the buyer; instead, it is sold into the grid at market prices. The VPPA buyer then settles the difference between the market price and a strike price specified in the contract. Like PPAs, VPPAs can be used to secure financing for renewable projects, and are also considered High Impact.
Behind-the-Meter
Behind-the-Meter (BTM) generation refers to renewable energy systems, such as solar panels or small wind turbines, that are installed at a facility to directly supply its energy needs. Electricity from BTM generation is used on-site, which directly reduces the facility's grid demand. BTM generation is considered High Impact because of this direct reduction on grid reliance.
Grid Impact Report defines Medium Impact procurement methods as those which either indirectly contribute new clean generation capacity to the grid or strongly signal demand for new clean energy generation. This category includes Additionality RECs (ARECs), Community Choice Aggregation (CCA), Green Tariffs, and Shared Renewables.
ARECs
Additionality RECs (ARECs) are long-term future contracts to purchase RECs from a new generation project during its first 5 or 10 years of commercial operation. Because ARECs are a forward commitment, they can be used by developers to secure financing for a generation project. However, ARECs might only make up a small portion of the project's offtake. For this reason, they're considered Medium Impact.
Community Choice Aggregation
Community Choice Aggregation (CCA) programs allow local governments to aggregate the electricity demand of their communities and purchase renewable energy on their behalf. CCAs offer customers access to higher renewable energy content than is typically available from default utility services. While these programs signal strong demand for renewable energy and often invest in local projects, their impact on new renewable generation varies. Consequently, CCAs are considered Medium Impact, as they indirectly contribute to clean energy development and support the transition to a greener grid.
Green Tariffs
Green Tariffs are utility-offered programs that allow large customers to buy renewable energy directly from the utility or via a third-party supplier through special rate structures. Customers pay a premium or agree to a long-term contract to match their electricity usage with renewably sourced power. Although Green Tariffs can support the demand for additional renewable generation, the impact is often limited to existing renewable sources or aggregated programs. Therefore, Green Tariffs are considered Medium Impact, as they promote renewable energy adoption without necessarily driving new projects.
Shared Renewables
Shared Renewables, often referred to as community solar or wind programs, allow individuals and businesses to buy or lease a portion of a local renewable energy project and receive credit for their share of the electricity generated. These programs enable broader access to renewable energy but are typically connected to existing community projects rather than new capacity. Shared Renewables are classified as Medium Impact because they support renewable energy adoption at a community level and demonstrate demand, though they generally lack the financial leverage to create additional generation capacity.
Procurement methods are considered Low Impact if they support existing renewable generation projects or weakly signal demand for new clean energy generation. These methods allow the buyer to claim the environmental attributes of carbon-free electricity, but they have little affect on the grid mix.
Unbundled RECs
This category refers to unbundled RECs from an existing generator purchased in arrears on a spot market. While purchasing and retiring unbundled RECs allows organizations to make clean energy claims, this method is considered Low Impact because it supports existing generators but does little to add new clean generation capacity to the grid.
Competitive Green Power Products
Competitive Green Power Products are options offered by competitive electricity suppliers that allow consumers to choose a renewable energy product. These products often pool existing renewable sources rather than funding new generation. Customers pay a premium to match their electricity usage with RECs, providing a way to demonstrate environmental commitment. However, because these products mainly support already operational renewable projects without requiring additional generation, they are classified as Low Impact in terms of grid impact.
Utility Green Power Products
Utility Green Power Products are voluntary programs offered by utilities that allow customers to purchase renewable energy, typically by paying a premium. Utilities source this renewable energy from existing projects and match it with the customer's electricity consumption. Like other low-impact options, these products help meet renewable energy goals but primarily support pre-existing renewable sources and have limited influence on adding new capacity, leading to a Low Impact rating in terms of grid impact.