The most important revision of the new criteria is categorizing renewable electricity procurement methods by CO2 reduction effect and stipulating that electricity must be procured from new power generation facilities, or if this is not feasible, electricity or certificates must be purchased from facilities in operation for 15 years or shorter (grandfathered for contracts before January 2024). By specifying the additionality emphasizing newer facilities, the program aims to encourage member companies to reduce their CO2 emissions effectively. It is expected not only RE100 member companies but many other electricity users will select renewable energy sources meeting the RE100 Technical Criteria to accelerate the reduction of CO2 emissions globally.
Recommending Self Generation and Corporate PPA
The new criteria categorize five types of renewable electricity procurement methods (details in Table 1).
2．Direct Procurement (Corporate PPA)
3．Contracts with Suppliers
4．Energy Attribute Certificates
5．Default Delivered (not applicable to Japan)
Table 1. Renewable Electricity Procurement Types by RE100 Technical Criteria
For each procurement method, requirements are specified based on the impact of the CO2 reduction effect. No restrictions are set for self generation (Type 1) and direct procurement (Type 2), in which consumers contribute to the addition of renewable energy generation facilities. Among direct procurement, off-site corporate PPAs supplying electricity via the grid are subject to make a long-term contract at the start of operation of the facilities.
On the other hand, when purchasing renewable electricity from a retailer through a power supply contract (Type 3), the electricity must be procured from a generating facility that has been in operation for 15 years or shorter. Under the new RE100 Technical Criteria, electricity from a generating facility in operation for longer than 15 years will not be compliant. The exception is a project-specific long-term contract for new generation facilities, same as corporate PPA, which can continue to be purchased beyond 15 years of operation. In Japan, regional utilities sell green products providing electricity from old hydro power plants. Those products will not comply with the new criteria except in case all the electricity comes from low-impact hydro power plants in operation within 15 years.
The same requirements apply to energy attribute certificates (Type 4). It will be restricted to certificates for power generation facilities in operation within 15 years. In Japan, Non-Fossil Certificates (NFCs), Green Electricity Certificates (GECs), and J-Credits (renewable generation) are available in the market. NFCs with tracking information meet the new criteria in case the operation date of the facilities is within 15 years. GECs and J-Credits do not disclose the operation start date of the facilities and will not meet the criteria. Virtual PPAs without Contract for Difference (CfD) are classified as Type 4 under the RE100 criteria. In such cases, long-term contracts for new power generation facilities are complied with the new criteria in the same way as direct procurement (Type 2), and contracts can continue beyond 15 years of operation (details in Table 2).
Table 2. Commissioning Date Regulations and Options in Japan by Procurement Type
RE100 member companies are required to apply the new criteria for renewable electricity procured on and after January 1, 2024. As a grandfathering, up to 15% of the annual electricity usage, member companies can use electricity or certificates that do not meet the requirements within 15 years of operation. However, those procurements should be reduced as soon as possible.
The RE100 Technical Criteria specify renewable electricity based on its CO2 reduction impact and will serve as a guideline for organizations promoting decarbonization. The more power generation facilities meet the criteria, the less electricity from thermal power generation supplies to reduce CO2 emissions for the entire region. Companies and local governments around the world have a major role in mitigating climate change through the procurement of renewable electricity.
Biomass and Hydro Should be Sustainable
In addition, stricter criteria are stipulated for energy sources of power generation. While there are no restrictions on wind, solar and geothermal, the RE100 technical criteria specify that biomass (including biogas) and hydropower be limited to sustainable sources. It recommends power generation methods and fuels should be proven through certification by third-party organizations such as the International Organization for Standardization. Hydropower should be environmentally low impact certified by NGOs or other third-party organizations. RE100 will continue taking environmental and social sustainability into account and considering new requirements for biomass and hydropower.
With respect to energy sources, hydrogen is excluded. RE100 considers hydrogen as an energy carrier (means of energy transmission), not an energy source. The type of energy source producing hydrogen determines whether it meets the criteria. Currently, hydrogen produced from wind, solar, geothermal, sustainable biomass and hydro meet the criteria. Similarly, energy storage such as batteries are not considered as energy sources and the energy source of the electricity to be stored is the determining factor.
1) RE100 Technical Criteria, Version 4.0 October 2022, RE100
2) Electricity Certificate for Renewables April 2022, Renewable Energy Institute