Renewables Explained Simply: Bundled vs Unbundled Energy

Something that often confuses new entrants to the renewable market is the concept of bundled and unbundled renewable energy. This introductory article quickly covers these two terms and explains why this separation exists, so there’s no need to stress next time you hear somebody using these phrases.

Firstly, however, it’s crucial to learn how energy markets operate with regards to the unchanging physical principles of energy. This allows us to understand how participants transact with accuracy and predictability in mind.

How do physical electricity flows relate to commercial energy flows?

The physics of our electricity network is pretty simple, you’ve likely already grasped the core concept: At a basic level, regardless of whether energy is produced by a renewable production device (PD) or via the combustion of fuels, it enters the same grid. Here, the relevant transmission and distribution operators ensure it reaches the consumer. For the average person paying their utility company on time, unless they’re experiencing a blackout, they can be sure that their fridge is keeping cool and that their phone is charging overnight.

But let’s say a company has really intensive energy needs, and needs to be sure that the supply remains predictable in price. A regular utility bill just charges the going rate for electricity, which can swing around depending on market conditions that nobody can predict (like, for example, power-line sabotage). Market fluctuations are usually not the end of the world for households or small shops, but for huge corporates or governments running energy-heavy operations, those price swings translate into millions that cannot be operationally forecasted.

That’s where more structured agreements like Power Purchase Agreement (PPA) deals come into play. Instead of being exposed to a fluctuating market outside of their control, buyers make a direct and often long-term agreement, usually between 1 to 15 years in the case of PPAs, with a generator (the actual PD owner) or supplier (intermediary) who will fix your electricity price and delivery terms. There’s two main types of PPAs, virtual and physical (which you can learn more about in our article here), but they both serve the same goal: predictable energy spending, backed by legally enforceable, contractual obligations.

Nearly always, these obligations are delivered through the same electricity grid that everyone uses. View the grid as a big soup, and commercial mechanisms are the ways we agree exactly who is allowed to take from it - and exactly how much, based on what they have paid for. But in this soup, every spoonful of energy taken out or put in looks exactly the same. Meaning, all electrons are indistinguishable from one another. It’s physically impossible to determine which electrons arriving into your house, factory, or office come from renewable sources.

This leaves us with the question …

How is renewable energy bought and sold?

The simple answer - Energy Attribute Certificates (EACs). Since electrons are physically indistinguishable, renewable energy transactions exist on an entirely separate market layer - a certificate system that tracks the environmental attributes of electricity generation. Whilst each EAC represents one megawatt-hour (MWh) of renewable electricity generated, an EAC is NOT the raw energy itself  that was fed into the grid. They’re ultimately cancelled when the electricity is used, proving renewable consumption.

Instead, these certificates represent the renewable “attribute” of the energy, or put simply, the "renewable-ness" of the energy. They prove that somewhere within the grid, within a defined timeframe and market boundary, renewable energy was generated to match your consumption. Common EACs include Guarantees of Origin (GoOs/GOs) and International Renewable Energy Certificates (I-RECs), but the exact way they are included in an energy transaction takes us back to the topic at hand— the “bundling” of EACs into purchases.

What is ‘bundled’ energy?

If you just want to make one transaction to buy renewable energy, you likely want to purchase both the electricity itself AND the corresponding renewable energy certificates together, as it’s simpler.

When applied to PPAs, this is bundling in the simplest sense — one commercial transaction contains EACs sold together with the electricity from the same PD, and generators don’t need to go into the market to buy unbundled EACs to “match” with the energy they’re delivering. The EACs are never transacted separately or ‘unbundled’ from their corresponding energy.

However, sourcing and supplying GOs independently to bundle alongside energy is completely legitimate, and can be described as ‘bundled’ in the EU — There is no EU mandate for bundled Energy + EACs  to originate from the exact same PD. The RECS industry glossary affirms this idea, with bundled procurement simply defined as  “energy and attributes together (green contract or PPA)”.

What is ‘unbundled’ energy?

Unlike bundled, unbundled renewable transactions are EACs sold alone. This is the legal and industry-standard definition, with the EU stating a GO “can be transferred, independently of the energy to which it relates”. Moreover, in the EU, energy that is sold after corresponding EACs have been sold loses the right to be considered renewable.

You may also purchase EACs independently, regardless of if you plan to cancel them. For instance, traders have no intention (and often no ability in some countries) to use GOs for matching with energy consumption via cancellation. Their purchasing of GOs is still considered an unbundled transaction, and their goal is to find another unbundled buyer and make a profit.

For those who do wish to cancel unbundled EACs, purchased electricity is bought separately and comes from the standard grid mix (remember, the soup!). This energy is legally considered consumption of the residual mix until the correct and corresponding amount of EACs are cancelled.

Why do people choose bundled vs unbundled?

Flexibility: Whilst bundled is typical with PPAs, which are designed to be inflexible on price and delivery terms of energy, this only works if you have static, fixed requirements. Whereas, if you’re seeking cost-effective, competitive prices for EACs, you’re likely interested in ensuring the maximum flexibility in terms of volume and vintage, and so unbundled makes sense. You also simply might have such low consumption, unbundled is the easiest solution for low-volume procurement.

Specific EAC Requirements: If you’re looking for EACs to meet specific reporting requirements, compliance needs, or voluntary frameworks such as RE100, you’ll likely need to source them independently from a PPA. You might also be looking for specific quality labels, meaning you’d likely need to look harder for the exact EAC you need, as only certain projects qualify for these labels.

Matching PPA Energy: If a residual mix PPA has already been arranged as unbundled, the buyer may want to independently find EACs that match the volume, location, technology, and vintage requirements necessary to substantiate renewable energy claims and comply with market-based Scope 2 accounting.

Do you have a specific EAC requirement?

Thankfully, we’re best placed to help. Via Soldera's deep EAC market access and cross-registry account enablement, buyers of all backgrounds can navigate the fragmented European market with precision— whether corporates, utilities, suppliers or PPA players. Since launching in 2024, we’ve been running regular and frequent tenders using consistent and diverse volumes of GOs from the fastest growing network of renewable producers in the continent— supporting even the most complex procurement needs across niche labels and compliance headaches. Reach out to our email at support@soldera.org to let us know how we can alleviate your administrative workload.