Hourly Matching Exists Today, You Just Have to Look

by Alex Piper · 12th June 2024 ·

Hourly matching and “3-pillar” electricity accounting are picking up speed in regulation, policy, and discourse. Yet, some argue these standards are too ambitious for the current moment due to a lack of readiness from the registries most likely to enable granular certificate issuance, retirement, and matching. This line of logic is misleading and misguided. Regardless of a rapidly developing ecosystem of registries that will enable hourly matching, there also exists another way to verify hourly matching today even without availability of hourly certificates from registries.

Both the European clean hydrogen requirements and draft 45V clean hydrogen production tax credit rules in the United States include hourly matching of clean electricity production and consumption to qualify as low-emissions. Registries are quickly developing, with some like PJM and M-RETS already offering limited functionality using hourly certificates. A recent study by CRS finds that existing US registries covering significant portions of the country can be fully hourly operable in the next 1-2 years. But until that point, policymakers — and critically the US Treasury — should rely on the hourly matching solution outlined in this blog to implement the 45V tax credit. This technique will enable verification of low-emissions hydrogen production and accelerate the liftoff of green hydrogen industry.

Hourly Matching is Already Scaling Globally 

Encouragingly, the granular tracking of electricity supply, accurate accounting of associated emissions, and liquidity of energy attribute certificates for trading and retirement are being quickly advanced through state policy, federal policy, registry ambition, solutions providers fulfilling various roles (Flexidao, Singularity, Powerledger, and Granular Energy, to name a few), new granular certificate trading platforms, sophisticated renewable forecasting technologies, emissions tracking at a granular level, and standards development. The United States is quickly catching up to other global actors, like Taiwan (which has had an hourly EAC system since 2018) and the European Union, which have already taken significant steps towards granular carbon accounting.

Today, there are over 20 projects located on 5 continents doing 5+ terawatt-hours of hourly matching.

Source: EnergyTag

How to Enable Hourly Matching in the US Today 

The current 45V proposed rule requires hydrogen production utilizing grid power to demonstrate purchases of low-carbon electricity on an hourly basis to validate low-emissions of hydrogen production starting in 2028. As discussed previously, the full functionality of a liquid hourly energy attribute certificate market, with full tradability and standardization, is simultaneously moving far faster than some would have policymakers believe and is not necessary for first-mover projects seeking hourly matching today. There is already a solution.

Hourly matching can be credibly demonstrated and claimed using monthly energy attribute certificates (EACs) and hourly production and consumption data, both of which are readily available today. While no hourly certificate trading can occur under this system, bilateral contracts such as power purchase agreements (PPAs) or utility tariffs can be tracked and verified using this method. This provides certainty to project developers that they can demonstrate hourly matching as soon as their project goes live.

In the hydrogen context, running an electrolyzer as often as possible is a critical way of keeping costs competitive. A combination of bilateral contracts (likely a portfolio of wind and solar generation contracts) can set the foundation for financeable hydrogen projects by enabling a high (e.g 70%+) capacity factor for hydrogen electrolyzers with complete hourly matching. The forecasting services available today provide confidence that the electrolyzer’s planned operations will be matched hourly by clean supply. This combination of matching certainty and high rates of electrolyzer utilization are integral to hydrogen projects obtaining financing and moving quickly to deployment. 

Europe is already demonstrating how this hourly matching technique can be implemented. Last year, the European Union finalized rules that will require hourly matching of clean electricity production and consumption to certify low-emissions hydrogen. To comply with this rule, projects will match hourly meter data (again, readily available) with retired monthly EACs. These datasets can be compared against one another to ensure proper accounting at an hourly level and verify claims. This system is then audited by a third party to ensure accuracy and avoid double counting. Hourly certificates will make this process more fluid as they are rolled out in Europe, but they are not required for bilateral contract tracking.  

EnergyTag’s Granular Certificate Scheme Standard (GC Scheme Standard) offers a set of criteria that makes this monthly certificate plus hourly data scheme even more robust. Known as “Configuration 3” within the standard, this process enables the issuance of an actual hourly EAC with a unique identification, as long as these hourly EACs are retired on behalf of the same beneficiary (e.g. the end consumer) as the monthly EAC from which it originates. This process of taking what Europe has outlined and adding in the step of generating a unique hourly EAC with its own ID adds benefits of traceability, audit, and verification. This robust standard could be adopted by the US Treasury today to enable a verifiable, auditable approach to hourly matching for the 45V tax credit and other clean energy goals. 

Source: EnergyTag

The visual below shows how a mature granular certificate registry (described in the Configuration 1 of the EnergyTag GC Scheme Standard) differs from the hourly matching solution widely available for use today (Configuration 3).

Source: EnergyTag

Clarity on Hourly Matching is Key

It is critical to maintain the hourly temporal matching requirement for low-carbon hydrogen production rules in the United States. Early certainty on how hourly matching will be implemented will create immediate value for companies pursuing 45V-compliant projects. This will help get projects to final investment decision (FID) and contribute to a rapid acceleration of the green hydrogen economy in the United States, critical for decarbonization of tough-to-abate sectors.

Early clarity also lays the groundwork for developing a fully integrated hourly matching system with a liquid attribute market and interoperable registry systems. If the US Treasury finalizes these rules based on what has been proposed, with a clear and strong requirement for hourly matching, registries and solutions providers will move quickly alongside partners to provide a system that allows trading and liquidity in the hourly EAC market. This will add value for projects by helping them achieve greater capacity factors or sell off excess EACs to projects on the market for additional revenue. 

The European Hydrogen Bank’s recent auction for €720 million in incentives to renewable hydrogen projects provides a real world example of how clarity and adoption of today’s hourly matching technique supports industry growth. Despite three pillars rules for clean hydrogen production in place, the auction was massively oversubscribed and sent a signal that projects are ready to meet climate-aligned standards and can compete on price. Europe’s hourly matching technique is providing certainty for projects to move forward. There is no reason that requiring hourly matching in the final 45V rules should impede project advancement in the US. 

The Future is Bright!

It is important to underline that the best-case scenario for hourly matching of projects — and the ecosystem tracking systems are building towards — includes a registry that directly issues hourly EACs, allows EACs to be traded on a market, and retires those hourly EACs for beneficiaries with oversight from an entity like the US Treasury. That world is coming, and EnergyTag’s Configuration 1 lays out how that can be standardized and scaled. The established registries developing this system have said full readiness is just a few years away, and the most innovative solutions may even get there faster. Their development will be key even beyond 45V implementation; registries with granular certificate readiness will provide the credibility and transparency necessary to validate clean electricity and low-emissions claims undergirding global trade of clean products and compatibility of international climate and trade policies. 

However, the exciting reality is that existing EACs and electricity data makes hourly matching an administrable feature of policies today. Policymakers can adapt their own rules in at least two different ways: reflect Europe’s rules outlined in their clean hydrogen production definition or adopt EnergyTag’s Standards and enable the Configuration 3 system. 

The 45V hourly matching requirement is administrable today and a prudent future-proofing decision. Today’s hourly matching technique can help enable hydrogen project financing and deployment, accelerate the maturation of a granular electricity attribute market necessary to achieve true economy-wide decarbonization, and support a resurgent green industrial economy.