GreenPower & Renewable Energy Purchase Agreements in LCA

If a building is purchasing renewable energy from an energy retailer, can this be modelled in the LCA? The answer is “probably not” if we are to observe one of the fundamental rules of LCA, that being avoiding double counting. Let’s break this down.

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EN15978 and Renewable Power

In EN15978 we definitely account for renewables generated on site, and this energy reduces demand from the grid. So on site renewables are accounted for. EN15978 ignores legislation relating to Renewable Energy Targets (RETs). So regardless of whether a building owner sells “Renewable Energy Certificates” or not, the LCA will account for the benefits and impacts of the on-site renewables.

What is GreenPower?

GreenPower is an Australian government program that allows energy retailers to market and sell renewable energy to households or businesses. They accredit the retailers by ensuring they have indeed purchased the renewable energy that they sold to consumers.

The mechanism for trading renewable energy relates to the Renewable Energy Target (RET) legislation in Australia that encourages the installation of renewable power generation by setting targets and allowing the trading of renewable energy certificates such that each major generator can achieve their targets by buying other’s excess renewable energy. Generators of renewable energy benefit by selling their certificates which helps offset the cost of the installation. Each certificate represents 1MWh of electricity generated.  The Renewable Energy Target legislation allows both large scale and small scale generators (e.g. roof-top solar) to create and sell certificates into this renewable energy market. Note that the Small-scale Renewable Energy Scheme (SRES) will be phased out in 2030.

An energy retailer who sells GreenPower must purchase the equivalent certificates which are then retired and therefore increase Australia’s overall renewable energy generated (over and above the mandatory target).

For example, if Australia’s Renewable Energy Target was 20%, and 5% of all energy use was sold as GreenPower, the legislation ensures that 25% of total energy generated would be renewable.

Note that GreenPower is not a zero carbon energy source (even renewables have a small impact, and sometimes a large one). It does however ensure more renewable energy installations

LCA Should Avoid Double Counting

The avoidance of double counting is a core principle of LCA. Some examples of double counting risks are outlined below:

Scenario 1 – Power Purchase Agreements or GreenPower Customers

Consider a simplified grid where the total grid energy is made up of :

  • 50% “Coal Fired Power” (20MWh of energy generated per annum)
  • 50% “Large Scale Solar Power” (20MWh of energy generated per annum)

Assume there’s four building connected to this grid all with equal energy demand of 10MWh/annum.

Let’s assume the green buildings is in a Power Purchase Agreement with the large scale solar farm (or are purchasing Green Power).  They conduct an LCA and assume that 100% of the power they are consuming is solar in their LCA and account for it accordingly. This is a reasonable assumption by the author of the study as the purchase of GreenPower is ensuring more renewable generation to the grid. It is however not strictly in accordance with EN15978 which only allows for onsite renewable generation to be accounted for.

The other three buildings are “Normal Consumers” (grey buildings) and may also conduct an LCA.  If they conducted their study in accordance with EN15978 and used the average whole grid environmental intensities (the 50:50 split between coal and solar power) the amount of renewable power being accounted for in all four buildings would be:

  • The Green Power Customer: 100% solar, 10MWh
  • Normal Customer 1: 5MWh
  • Normal Customer 2: 5MWh
  • Normal Customer 3: 5MWh
  • Total Solar Demand accounted for: 25MWh But there’s only 20MWh of solar actually being generated (we’re double counting somewhere)

To avoid double counting there’s two possible methods:

  • Conduct the LCA in accordance with EN15978: Any imported electricity should be accounted for by applying grid average data (usually published in national inventories).
  • Establish national or grid based inventories for “Green Power” customers and other customers.

Although we like the idea of option 2 it has some big practicality issues such as the shifting nature of renewable generation (year to year and even season to season) and the omission of this in standards would leave it to the industry to administer.  Even if we implemented this in eTool it would also need to be implemented in other software packages to enable studies to be comparable.

Scenario 2 – Onsite Renewables

Let’s say another building is added to the grid – the purple building in the next diagram. The developer notices that there’s more demand for renewable energy due to the GreenPower program and consequently they decide to install onsite solar because the net cost is pretty low after they sell their “in demand” renewable energy certificates.

Note that they can sell renewable energy certificates for all of the power they generate (regardless of whether they use it onsite or export that power).  The implication of this is that the renewables they have installed will not be in addition to the government regulated renewable energy target, but rather be part of that target.  If the purple building conducts and LCA following EN15978 they are going to account for the:

  • Embodied impacts of the on-site solar power plant
  • Reduced grid consumption due to the onsite generation (Module B6)
  • The credit associated with exporting power not used on site (Module D)

This is likely to cause further double counting. As the retailer who sold the GreenPower to the green building may purchase the purple building’s renewable energy certificates to comply with the GreenPower requirements. So now both the green building and the purple building are both accounting for the benefits of the same solar produced energy. This is double counting and we need to avoid it in LCA.

Scenario 3 – Developer Funded GreenPower

What if the developer of the green buildings actually funds the large scale solar plant and retires the renewable energy certificates generated by this plant? This is a really good strategy for improving the environmental performance of the grid as they’re both:

  • Helping to fund renewables and
  • Ensuring more renewables are needed to meet the government renewable energy target.

Notwithstanding this though, the grid inventories in future years will still include the energy generated from the large scale solar plant.  So there’s still likely to be double counting if normal customers are added to the grid in future years and conduct LCAs which is highly likely.

Practical Applications in LCA Reporting

The behaviour and choices of the green building in the above examples should be encouraged and the reputation of study author’s and reviewers needs to be maintained.  eTool’s position on the best way to account for GreenPower in LCAs is:

  • Consider the longevity of Power Purchase Agreements and GreenPower contracts and only account for benefits that are directly attributed to present day financial commitments (e.g. a 10 year agreement should not benefit the building over a 60 year study period)
  • The average grid supply should be reported in the main study, however an alternative design can be modeled to include the power purchase agreement / GreenPower accounting method but this design should be reported as an additional scenario (and emissions assuming average grid intensities should still be reported in the study).
  • Ensure that you account for the impacts of the renewable sources (if unknown user a mix of renewables currently supplying the grid)
  • Acknowledge in the deviation from EN15978, the potential risk for double counting, and justify the approach chosen
  • Reviewers should raise deviations from the standard so the audience of the study are aware and can make their own judgements
  • Note that there is no guidance in EN15978 on what module the benefits of GreenPower purchases should be reported in (as it’s outside of the scope).

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Other Considerations

Renewable power is a loose term, it includes some reasonably carbon intensive generation methods and some with negligible carbon intensity methods. GreenPower is about renewable energy and not CO2e, it is connected with the Renewable Energy Target legislation and although it’s motivated largely by climate change policy, it’s not directly linked to emissions regulations or targets. People often confuse renewable energy certificates as some form of CO2e offset but it’s all about incentivising/mandating renewable energy installation. A renewable energy certificate represents one MWh of electricity, not an amount of CO2e offset. Tracing a renewable energy certificate to an impact reduction is inherently difficult as the certificate itself doesn’t detail the impacts of the renewables source.

For the same reason, if you sell your RECs you aren’t selling your right to claim CO2e savings associated with the underlying generator (but you are reducing the requirement for more renewable energy to be installed through the RET).

Another thing to consider is the enforceability of a GreenPower purchase. What contractual obligation can a building enter to buy GreenPower? 5 years, 10 years, 60 years? It would be hard indeed to guarantee a building used GreenPower over it’s life.  Even if a power purchase agreement is established and paid in advance for 60 years, what is the likelihood of the Renewable Energy Target legislation (which GreenPower relies on) still being in existence in 60 years?  It has already been reviewed and the target was actually reduced by 20% in 2015.

Renewable Energy Certificates (RECs) or Large-scale Generation Certificates (LGCs) can be sold independantly of a Power Purchasing Agreement (PPA). Therefore, to ensure that the power purchased is legitimately ‘low carbon’, make sure that the certificates are bundled together with the PPA.

One last note is that the renewable energy certificates can be sold separately from the power purchasing agreement (PPA). Therefore, in order for a PPA to be a legitimate ‘low carbon’ strategy, it must be bundled with the RECs or large-scale generation certificates (LGCs) to ensure that the carbon reduction benefits are correctly attributed to your project. The certificates will also provide the energy generation source/type (i.e. solar, hydro, wind etc), so it will be helpful for modelling the purchased energy impacts more accurately in eTool.

NABERS and Green Star

The Guide to energy Efficiency in Volume One specifically prohibits using GreenPower in relation to ‘on-site renewable’ energy sources such as in a JV3. You can use GreenPower in Green Star, for example in Interiors tools and also Design and As-built. You can’t use GreenPower in NABERS Base Building (commitment agreement) modelling.

Other Renewable Energy Retailers

Other countries have different schemes relating to renewable energy retailing. An example in the UK is “Good Energy”. This company doesn’t retire its renewable energy certificates so purchasing from them, although probably sending a good message to industry, isn’t guaranteeing more renewable energy installations via any government target (Good Energy just sell their excess certificates to utilities that aren’t going to meet their renewable energy target). Whilst it’s still a good idea to purchase responsibly, some of those decisions won’t be necessarily recognised in an EN15978 compliant LCA.

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eTool Recommendations

eTool recommends following the EN15978 guidance and not including the benefits of GreenPower in your headline LCA results. That said, we still really encourage consumers to purchase Green Power as it will ensure more renewables are installed.

Modeling Green Power in eTool

To recognise this in your LCA study, you can of course run a scenario that demonstrates the effect of including the GreenPower benefits in your sensitivity analysis. That way you can still communicate the benefits but you aren’t banking them in your headline figures and hence you’re avoiding any double counting. Users should also consider the longevity of power purchase agreements etc when running these scenarios an only account for the benefits associated with currently committed purchases.

Below is an example of how your ‘Scenarios’ will look like to meet EN 15978 standards while being able to demonstrate to your clients the potential benefits from purchasing Green Power.

To model the Green Energy use scenario in eTool, you should be reporting this “credit” in module D and limiting the size of the credit to the length of time the PPA is signed for. Here are the steps:

  1. Enter each of your energy items with the default grid. These inputs should ideally be separated into their different end uses for granularity and transparency.
  2. Add another energy item with the same grid and enter a negative quantity that is equal to the sum of the demand and allocate this to module D (this cancels out the normal energy use). 
  3. You then need to add the impacts of the green energy supply to module D. If you know where the energy is coming from, you can add another energy item (or another source to the existing one) and change the “Delivery Method” to “Other” in place of “distribution grid” and then select, for example, “Electricity from Wind” as the energy source.  Enter in a positive quantity equal to the sum of the demand and allocate to module D.

Alternatively, you can ask the energy supplier for an EPD or manually calculate the energy supply impacts. Create the EPD in eTool as per this support post but don’t forget to enter the impacts of the green energy into Module D1 (remember to enter the non-GWP impacts as well).

If you are unable to source an EPD from your energy supplier, you could also just deal with the Global Warming Potential (GWP) impacts by creating a custom EPD with a negative GWP impact in module D1 equal to the combustion GWP impacts of the grid of the project (i.e. not life cycle impacts which include infrastructure such as poles and wires). Please ensure that you document your assumptions and methodology clearly within your supporting documentation and Scenario description.

Reporting from eTool

Once your Final/Proposed/As-Built Design has been certified and your Green Power Scenario design has been reviewed (it won’t be certified), you may proceed with generating a report from eTool. You can do this by running the LCA report from the Green Power Scenario Design.

Reporting for Green Star (Interiors/Design & As Built)

Once your Final/Proposed/As-Built Design has been certified and your ‘Green Energy Purchase’ Scenario design has been reviewed (it won’t be certified), you may proceed with generating the LCA report from the certified Proposed/Final Design. Below are the steps to generate your LCA report.

  1. In your ‘Green Energy Purchase’ scenario, under ‘Set Scenario Purpose’ change it to ‘Improved Design’. Save to implement the changes.
  2. Jump into your Proposed/Final Design and then the ‘Reports’ tab to generate the LCA report.
  3. Turn on the ‘Compare Against Benchmark’ & ‘Include Comparison’ buttons.
  4. Under the Benchmark option, select your Reference Design while under the Comparison option, select your ‘Green Power Purchase’ Scenario Design.
  5. Click ‘Generate’ to generate your LCA report.

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Related Articles:

Modeling Carbon Neutral Construction in eTool

Modeling Carbon Neutral Products in eTool

Model Construction Equipment Energy Use Offsets (Module A5)

Model Carbon Offsets for Remaining Impacts

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