Glossary

The Renewable Energy industry has a ton of jargon. We try to avoid it, but just in case we slip up, here’s a go-to glossary.

• Additionality
• In the context of corporate renewable energy, additionality can be understood as the degree to which a project impacts the grid. This impact is calculated in comparison to a baseline. If the implementation of a project brings more renewable electrons to the grid than continuation of the established baseline would have, it is said to be additional. The assumption is that this additional capacity would not exist if the project wasn’t commissioned.
• Banking
• While occasionally referring to physical storage of energy, this term largely refers to accounting methods used to virtually ‘bank’ energy output. For example, a solar project might ‘bank’ excess energy production during the day, so that it can provide ‘firm’ energy to its customers at night. The excess energy produced during the day is still physically provided to the grid in real time, and at night it is virtually distributed to the solar generator’s customers.
• Baseline
• A baseline is a company’s “starting line”. It entails a measurement of current impact, and a projection of what those impacts would be in the future if no new policies were implemented, and no new actions were taken. A baseline is an especially useful tool for showing a project’s impact over time. It is used for reporting, goal setting, and measurement of progress.
• Carbon Offsets
• Carbon offsets are a useful tool for covering those emissions that can’t be eliminated through efficiency improvements, or covered by switching to renewable energy. Many companies use carbon offsets to negate the impact of unavoidable emissions caused by things like shipping and business travel. Offsets themselves are certificates representative of activities that prevent or sequester greenhouse gas emissions. These certificates are generated by projects such as reforestation or methane trapping on farms. The projects must be deemed ‘additional’ and reduce emissions against a ‘baseline’, and are certified as doing so by centralized certification agencies. These agencies also ensure that carbon offsets are reliable, and are only claimed (known as ‘retiring’) once.
• CfD - Contract for Differences
  
• Contract for Differences (CfD) is a type of power purchase agreement. They are typically used by corporations as a vehicle to buy offsite renewable energy directly, for example, from a wind farm. This type of contract is unique because it doesn’t require consumption of the actual power generated by an offsite wind farm. Rather, a company can continue to utilize energy from the grid while paying the wind energy generator a “strike price” for each unit of power produced over a set period of time. Payments are made at the end of set time periods to satisfy the difference between grid price and strike price. CfDs are also commonly referred to as Synthetic or Virtual PPAs.
• LCOE - The Levelized Cost of Electricity
  
• The Levelized Cost of Electricity (LCOE) is a measurement of the cost competitiveness of different renewable energy sources. It is used by corporates to determine which type of renewable energy is best for a given application.
• Load balancing
  
• Load balancing is the act of matching power generation to consumption. This is achieved through variation of power source output, source diversification, and/or storage applications. Load balancing can be a useful tool in renewable energy strategy, as matching demand with surplus supply can help save on energy costs.
• PPA - Power Purchase Agreement
  
• A Power Purchase Agreement (PPA) is a contract between an energy provider and a third party. This agreement outlines the length of time the two parties will work together (generally 10 - 25 years), and the pricing structure under which their relationship will function.
• PPAs - Synthetic / Virtual
  
• Synthetic or Virtual PPAs are a type of power purchase agreement. They are typically used by corporations as a vehicle to buy offsite renewable energy directly, for example, from a wind farm. This type of contract is unique because it doesn’t require consumption of the actual power generated by an offsite wind farm. Rather, a company can continue to utilize energy from the grid while paying the wind energy generator a “strike price” for each unit of power produced over a set period of time. Payments are made at the end of set time periods to satisfy the difference between grid price and strike price. Synthetic or Virtual PPAs are also occasionally called Contracts for Differences (CfDs).
• Proximity
  
• Corporations are increasingly being scrutinized on how near their factories are to their contracted sources of power. For example, it is hard for renewable energy generation at a wind farm in Texas to qualify as “additional” if being counted towards energy consumption at a factory in China. In general, if power generation and consumption are located on the same grid, the energy will satisfy proximity claims. However, there are currently no official industry standards.
• RECs - Renewable Energy Certificates
  
• RECs, or Renewable Energy Certificates, allow companies to ‘trade’ and ‘purchase’ renewable energy on the open market. Every time one megawatt-hour (MWh) of renewable energy is generated, a corresponding REC is created as well. When that physical energy is transferred to the grid, and is mixed in with energy from other sources, the credit for that energy can be accounted for by gaining ownership of the accompanying REC. A number of groups track these RECs to ensure they are only ‘retired’ (officially claimed) once.
• RFP - Request for Proposal
  
• A Request for Proposal (RFP) is a document which solicits bids from outside vendors. In this document the requestor outlines the general bidding process and contractual terms. The document also details how bidders should format and present their proposed solutions.
• Solar Lease
  
• Companies can sign solar leases to save money and effort. By signing a lease, factory owners contract a third party to build, own, and operate the solar panels, therefore saving the factory owners from doing their own engineering, procurement, and construction (EPC). The factory owner then purchases the power directly from the third party, who makes it’s money back by charging a slight premium over the cost of power. Even with the premium, the power from the lease is generally cheaper than purchasing from the grid.
• Wheeling
  
• Wheeling is another name for power transmission, used when discussing transmission of power from a producer to a consumer, or across regions.