By now, it's abundantly clear for most professionals that claims to the use of renewable electricity have to be backed up by proper documentation. Opinions on “proper” documentation still tend to diverge however, despite a list of relevant reporting standards.

The confusion that (understandably) surrounds this topic stems from the simple fact that the electrons being pushed around in any given electric grid are just that - electrons moving through a conductive material to generate the power we all know and love. And they are neither green, nor black, regardless if it was a solar farm or a coal power plant that urged them to move around so.

Of course, that’s no excuse not to look for the next best alternative(s) to try and allocate responsibility for the choices we make in our electricity consumption. Our take at COVERE2 is that the more data-driven, science-based and verifiable our approach is, the better. To that end, let's explore the two primary methodologies for documenting renewable energy use: the familiar world of Energy Attribute Certificates (EACs) and the emerging approach of Power Flow Tracing (PFT).

The logic of Energy Attribute Certificates (EACs)

In the past decades, it has become the standard for companies to claim their use of electricity from renewable sources through a market-based instrument: EACs. These are known globally as Guarantees of Origin (GOs) in Europe, Renewable Energy Certificates (RECs) in North America, and various other forms in different regions. Their wide acceptance is exemplified by their inclusion in the GHG Protocol Scope 2 Guidance, the International Sustainability Standards Board (ISSB) standards.), or the ESRS framework that the European Corporate Sustainability Reporting Directive (CSRD) is based on.

How do they work?

The allocation of EACs is fundamentally a "book-and-claim" mechanism. When a generator (like a solar farm or a wind power plant) produces one megawatt-hour (MWh) of electricity, it is issued one certificate. This certificate contains the non-physical attributes of the energy - that is, what source it was generated from, at what place and at what time, was the asset subsidized, etc. The granularity of this additional information can vary greatly, something we’ll come back to in a minute.

The genius of this system is its simplicity and its ability to create a liquid market for environmental value. Its validity largely relies on the fact that once a consumer claims its use of electricity that the certificate was issued for, it is removed from the system, so no other consumer can claim the use of the same amount of electricity from that source.

This indeed makes it so that (given an adequately robust system) consumers can never claim more renewable energy use than what was physically produced. In principle a company, say a datacenter in Paris, can “cancel” a certificate from a wind farm in Spain to claim it as its own renewable electricity consumption. While perhaps a little counterintuitive, this does make sense as long as producers and consumers are within the same “market boundary”, i.e. have access to the same interconnected grid. You can read more about this in the Climate Group’s RE100 Technical Criteria document.

The Pitfall: Decoupling from space and time a little TOO much

The primary critique of the certificate system is that it decouples the environmental claim from the physical reality of the electricity flow. This wouldn’t be a grievous sin in itself (there is no such thing as a green electron, remember?), but real problems arise when EACs are completely commoditized - such as having no distinction between certificates from a two-year-old Spanish or a ten-year-old Danish wind asset - and their documentation is treated merely as a reporting exercise for reporting’s sake.

The same goes for the time of production. There are a few loose boundaries in reporting standards about what “vintage” of EACs you can use for which consumption year, however as the reader might already be aware, the electricity market is more often regarded on sub-hourly intervals. In an attempt to improve the integrity of the whole system, more and more proponents advocate for a more granular approach, sometimes referred to as 24/7 or hourly matching of production and consumption. There are many companies and coalitions behind this idea, including the UN’s 24/7 Carbon-Free Energy Compact and its signatories like Google, Microsoft, Constellation or Acciona Energy.

This call for more granularity, precision and thus transparency is indeed commendable and brings with it tangible benefits such as cost-effective demand response and procurement, efficient resource allocation through more accurate market signals, etc. But as with most things in life, expansion of the current system to include such granularity has its downsides like potentially considerable administrative costs, and that it largely remains a financial and contractual tool open for interpretation or even exploitation.

Enter: Power Flow Tracing (PFT): Getting closer to the physical truth of the grid

If certificates are the financial ledger, Power Flow Tracing (PFT) is the physical blueprint of the electricity network. PFT is an academic and engineering methodology that uses established electrical laws and network data to scientifically determine the contribution of every generator to the consumption of every load in a meshed power system, as assessed in the white paper published by the Fraunhofer-Institute For Applied Information Technology (FIT).

How PFT works

The PFT method is built upon fundamental power system principles, most notably the Proportional Sharing Principle (PSP), pioneered by researchers like Bialek (1996) and Kirschen et al. (1997).

Simply put, when power arrives at a network node (a substation or a bus) from multiple sources, PFT assumes the power flowing out of that node is shared proportionally among the generators that supplied the inflowing power. By applying this principle iteratively across the entire grid, PFT enables determining (i) power flows that run from every generator in the branches of an equivalent circuit of an electrical network, as well as (ii) power losses occurring while transmitting load from generation to every load.

This approach relies on comprehensive information about the network (i.e., about generation and load requirements, transformer and line parameters, and voltage) and follows Kirchhoff’s circuit laws to provide a clearer picture of physical flows. The goal is to more accurately represent which generator's output is physically being used by a company at any given moment.

This allows PFT to move beyond the country-level "grid mix" average and instead assign the actual, node-level mix of generation - including the specific share of renewable energy - to any point of consumption. This is critical for applications like allocating network losses and, most relevantly, accurately tracing carbon flows and renewable energy consumption. With such insight at hand, identifying the right opportunities for new renewable asset developments becomes easier, and more well-informed.

The COVERE2 advantage: Why PFT is the future of reporting

For a company or a government body committed to high-integrity sustainability reporting, our PFT-based approach offers a different path to the prevalent (and often ambiguous) one. The key advantage of PFT lies in its unparalleled scientific reliability and granularity.

1. Science-Based Reliability: PFT is not a reporting convention; it is a validated model rooted in the fundamental laws of physics. If a company wants to claim that its operations are powered by actual renewable energy, PFT provides the most robust, science-based, and data-driven proof available today.
2. Granular, Nodal Transparency: PFT enables a level of accountability that certificates in their current form often fall short of. By calculating the physical power mix at a specific location and time (granular nodal data), companies can use this information to inform operational decisions, such as shifting energy-intensive processes to times when the local grid mix is verifiably cleaner.
3. Future-Proofing Carbon Emissions Reporting: Academic research is rapidly moving towards using PFT to accurately trace carbon emissions from generators to consumers. Tracing carbon flow of electricity is essential for a low-carbon future. As regulators and investors demand greater accuracy, a PFT-based approach future-proofs a company's claims against increased scrutiny.

We believe such an approach isn't just about compliance; it's about authentic, transparent, and genuine climate leadership. While certificates will remain a useful tool for driving market finance and providing a general environmental claim, Power Flow Tracing is the definitive methodology for an organization that wants the most reliable, science-based, and transparent documentation of its renewable energy use.