Getting the Full Value from Every PPA with Avoided Pollution and Public Health Impacts

Why corporate energy buyers should compare clean energy projects on impact as well as price, and how to justify a PPA on more than its settlement economics.

By Daniel Howard, PhD, CEO of Quantum Energy

Why would anyone buy a PPA with upside down economics? That question has come up in many of our conversations with corporate energy buyers over the past few years. Settlement prices have not always covered the contract price, and sustainability teams have been asked to justify the difference with the only number they had: tonnes of CO2 avoided.

That number is real, but it is incomplete. A clean energy project physically reduces air pollution in the balancing authority where it operates, and that reduction can be quantified in avoided emissions, years of healthy life saved, species protected and dollars. For most buyers, none of it enters the procurement decision. Two projects at the same PPA price are treated as equivalent when one may deliver far more than the other in public health, ecosystem and economic benefits to the communities downwind of the power plants it displaces.

This post is about closing that gap at the point of purchase. It covers what a contracted megawatt-hour physically changes, why the health and ecosystem impacts are additional to carbon accounting, where the difference shows up when a buyer chooses and justifies a PPA, and how the numbers are made. A follow-up post will cover what the same analysis does for an operating portfolio once the contracts are signed: reporting, assurance and the return your finance team can see.

Renewables 1.0 and Renewables 2.0

The first wave of corporate clean energy procurement, what we call Renewables 1.0, was justified on cost. Wind and solar PPAs were signed because they were expected to save money against wholesale prices, and the carbon reduction was a welcome secondary result. That logic worked while the spread was favorable. In many markets over the past few years, it has not been.

Renewables 2.0 is procurement justified on strategic business value: regulatory compliance, disclosure quality, social license, brand protection and cost of capital. A PPA priced above market can still be a sound investment if those benefits are real and can be shown to a CFO and a board. The difficulty is that they have usually been asserted rather than measured. A supplier attestation that a project “supports the energy transition” does not help a finance team justify a premium. In other words, Renewables 2.0 needs numbers of the same quality as the ones that justified Renewables 1.0, and it needs them before the contract is signed.

What a contracted megawatt-hour physically changes

Start with a single hour. When the solar or wind project behind your PPA generates a megawatt-hour, the balancing authority needs one less megawatt-hour from another generator. Grid operators dispatch generation in order of cost, so in most balancing authorities the most expensive generation source running in that hour is the first to be displaced. That is usually natural gas or coal. Which fuel, and how much, depends on the region, the season and the hour. The response is not confined to one grid either. Because balancing authorities trade power with their neighbors, a project in PJM can turn down generators in PJM and in the balancing authorities around it, and the analysis identifies which specific generators those are.

When fossil generation is displaced, the air pollutants that would have been emitted in that hour are not emitted. Those pollutants would have dispersed and affected air quality over the following one to two weeks, depending on stack heights and meteorological conditions. So somewhere between a couple of hours and a couple of weeks after that megawatt-hour, people downwind are breathing less pollution.

Lower exposure means lower relative risk of disease. Epidemiological exposure-response functions quantify this relationship. Some of the diseases are acute, such as respiratory infections from short-term exposure. Others are chronic and come from long-term exposure: lung cancer, COPD, heart disease and cerebrovascular disease. Particulate matter alone has been traced to approximately 355,000 deaths per year in the United States, roughly 1 in 8 deaths.¹

The unit that carries this whole chain in one number is the disability-adjusted life year, or DALY, the World Health Organization’s standard measure of the burden of disease. One DALY can be thought of as one lost year of healthy life. For a 100 MW example project in PJM, TotalView estimates 326 DALYs saved, which is roughly 130 people each gaining 2.5 years of healthy life, along with 0.72 potentially disappeared fraction of species preserved and approximately $87 million in economic benefit from avoided health and ecosystem damage.

Carbon is global. Air pollution is local.

Carbon accounting answers one important question; quantifying avoided air pollution and public health impacts answers several additional ones. The two are different in a way that matters a great deal to a buyer choosing between projects.

CO2 is a global pollutant. It is buoyant, it rises and mixes into the upper atmosphere, and its effect is spread across everyone on the planet. A tonne of CO2 avoided in Pennsylvania delivers the same climate benefit as a tonne avoided anywhere else, and your market-based Scope 2 figure is the same whether the project sits upwind of a city or over open range.

Air pollutants behave differently. Fine particulate matter, sulfur dioxide, nitrogen oxides and the secondary particles they form are dense. They disperse downward and outward from the stack and end up in the lungs of local and regional communities, where they cause asthma, respiratory infections, heart disease, stroke and lung cancer. When a project displaces coal and gas generation, the health benefit accrues to the counties downwind of those plants. It depends on which plants are turned down, what they burn and who lives nearby.

This is why two PPAs with identical carbon numbers can have very different value. A carbon number tells your stakeholders the project is good for the planet. An avoided pollution and public health number tells them what the project does for specific communities, in years of healthy life and in dollars. This is additional to carbon accounting, and it is the part of the comparison that has been missing from most procurement decisions.

Where impact shows up in the procurement decision

For a corporate buyer, unquantified impact becomes a quantified business cost, or a missed benefit, at three predictable moments between the RFP and the signature.

Selecting the project. An RFP produces several offers at similar prices. Without impact data, the tiebreakers are term, credit and delivery risk, and the project’s health and ecosystem value is invisible. With it, the comparison changes. The same 100 MW at the same price in a region where it displaces mostly efficient gas over sparsely populated land would show a materially smaller benefit than the PJM example above. A wind profile that runs overnight turns down different units than a solar profile that peaks at noon, and the analysis shows which. Impact analytics make those differences visible before the contract is signed, so procurement can justify a specific project financially and strategically rather than on price alone.

Justifying the premium. When a PPA is priced above market, someone has to explain to a CFO what the company is buying for the difference. Health and ecosystem benefits valued in dollars put that answer in the same terms as any other capital decision. A project that delivers $87 million in avoided health and ecosystem damage is a different proposition from one described only as “renewable,” and a board can weigh the premium against a number rather than a principle. The same figures give legal and sustainability teams a documented, ISO 14040/14044-aligned basis for whatever the company later says about the project, which matters more each year as regulators in the EU and several U.S. states scrutinize environmental claims.

Getting the project built. A PPA only delivers if the project reaches commercial operation, and community opposition is one of the leading causes of delay and cancellation. A project with quantified public health benefits on the public record is easier to permit, because it gives the deciding commission data-driven evidence that the project is good for its own constituents. Buyers who ask for this analysis during procurement are also reducing the risk that the megawatt-hours they contracted never arrive.

Before commercial operation, the analysis is a projection: a modeled estimate of what the project will displace, at hourly resolution, validated against how the grid has actually responded when comparable projects came online. That is the right tool for a procurement decision, because the decision is about the future. After commercial operation it becomes reporting from metered generation, which is the subject of our follow-up post.

Numbers that have already survived cross-examination

The reason a buyer can rely on these figures in a procurement decision is that they have been tested in a harder setting than a sourcing committee. Quantum Energy’s analysis has been filed on contested state regulatory dockets as expert testimony, where opposing counsel and intervenors had every incentive to find fault with it.

Vista Sands Solar (1,315.6 MWac plus 300 MW of storage, Portage County, Wisconsin; Doral Renewables) is the clearest example. The project faced over 900 contesting comments on the Wisconsin Public Service Commission docket, along with a proposal to cut it by 365 MW. Our report was filed on the legal docket as an expert exhibit, and on December 13, 2024 the Commission approved the full 1.3 GW with no setbacks, safeguarding approximately $450 million in capital investment.² The World Economic Forum has since published the project as a Responsible Renewables Infrastructure case study.

For a buyer, that history matters in two ways. Numbers built to withstand cross-examination will withstand a sourcing committee, a CFO and, later, an auditor. More importantly, a project with quantified public health benefits on the record is more likely to be approved and built on schedule, which means the PPA you signed actually delivers the megawatt-hours and the impact you contracted for.

How the numbers are made

TotalView, Quantum Energy’s impact analytics platform, was developed with funding from the National Science Foundation (Award 2230578). It is an energy system optimization model that simulates the electricity grid on an hourly basis, together with grid-level life cycle emissions and the public health, ecosystem and economic impacts of those emissions. The analysis follows the ISO 14040/14044 life cycle assessment framework and proceeds in three steps.

Step 1: Grid simulation. TotalView simulates hourly generation for the balancing authority for the most recent complete year, then backtests the results against generation reported to the U.S. Energy Information Administration. Across all 69 U.S. balancing authorities the simulations fall within 1% of reported generation, with a coefficient of determination of 0.9999. The project is then added to the grid using its forecasted hourly generation profile (the 8760), and the model is re-run to determine what changes in each hour. Profiles at P50, P90 and P95 generation probability establish confidence intervals. For Vista Sands, the Year 1 result was approximately 2,296 GWh of solar generation displacing 1,216 GWh of natural gas, 950 GWh of coal and 117 GWh of hydro across MISO.

Step 2: Life cycle emissions inventory. For each hour’s change in generation, the emissions module quantifies the resulting changes in emissions and resource use. We run this at two scopes. The operations-only analysis covers the emissions from operating the generators that are turned down, which is where the local and regional air quality and public health impacts come from. The full life cycle analysis adds everything upstream and downstream of operation, from mining and processing raw materials through manufacturing, transport and disposal or recycling, on both sides of the ledger: the fuel extraction and transport behind a displaced megawatt-hour of gas, and the manufacturing of the solar panels counted against the project. In either scope, changes are quantified in each standard life cycle impact category and grouped into emissions to air (carbon, particulate matter, human toxicity, photochemical oxidants, ionizing radiation, ozone depletion), emissions to water (freshwater and marine ecotoxicity and eutrophication), emissions to soil (terrestrial acidification and ecotoxicity) and resource use (land transformation, material resources, non-renewable energy). Vista Sands Year 1: 1,624,113 tonnes of CO2-eq, 1,129 tonnes of PM2.5-eq, 3,260 tonnes of SO2-eq terrestrial acidification and 57,393 tonnes of 1,4-DCB-eq cancerous human toxicity avoided.

Step 3: Impact assessment. The changes in emissions are then traced down epidemiological and ecosystem impact pathways. The ReCiPe 2016 methodology, the industry standard life cycle impact assessment method for energy technologies, is used for the entire assessment, from the midpoint impact categories in Step 2 through to the health and ecosystem endpoints. For public health, the pathway runs from reduced emissions of NOx, NH3, SO2 and primary particulate matter, through atmospheric fate and chemistry, to reduced ambient concentrations, to reduced human intake, through exposure-response functions to changes in disease incidence, and finally to fewer hospital admissions and premature deaths. Location matters and is modeled. We identify the specific generators that are turned down, in the project’s balancing authority and in neighboring ones, and the meteorological conditions that govern how their emissions disperse, so the analysis shows which communities see the improvement in air quality. Parallel pathways run through soil acidification to terrestrial species loss and through aquatic toxicity to freshwater species loss. Public health is reported in DALYs and ecosystem quality in potentially disappeared fraction of species (PDF). As a final step, health economics and natural resource economics are applied to translate both of those metrics to real economic value. Vista Sands Year 1: 2,485 DALYs saved, 5.3 PDF of species preserved and approximately $630 million in economic benefit.³

Two properties in particular make these results useful in a procurement decision.

Hourly resolution. An average annual emissions factor erases the load curve that determines what a project actually displaces. A megawatt-hour at 2 p.m. in July does not displace the same generation as one at 2 a.m. in April, and PJM does not respond like ERCOT. TotalView resolves this hour by hour, for every balancing authority in the country, so a solar project and a wind project at the same price can be compared on what each one actually turns down.

Ranges, not a single number. Results include a cautious, expected and favorable case. The cautious case is typically still a clear benefit, so the claim in front of a sourcing committee is not that one number is exactly right. It is that even conservatively, the benefit is at least this much. Numbers built this way are sometimes lower than a headline claim, and that is exactly why they hold up under scrutiny.

The question to ask of your next PPA

Does your procurement process answer the question your stakeholders actually care about: what does this project change for the communities downwind of the power plants it turns down, and what is that change worth? Two projects at the same price can give very different answers. Without these metrics, a buyer has only a global answer (carbon) to a question that boards, regulators and communities are asking in local terms.

Closing that gap is what TotalView does, and the right time to do it is before the contract is signed. We would be glad to walk through what an analysis looks like for a specific RFP or shortlist, including project-by-project comparisons and the materials a sourcing committee and a CFO need to justify the choice. Reach us at www.quantum-ec.com or contact@quantum-ec.com.

Frequently asked questions

How can corporate buyers compare PPAs on impact, beyond price and carbon?

By quantifying what each project physically displaces in its balancing authority, hour by hour, and tracing the resulting changes in air, water and soil emissions through to public health, ecosystem and economic outcomes. The result is a set of comparable figures for each candidate project: tonnes of pollutants avoided, DALYs saved, potentially disappeared fraction of species preserved and dollars of economic benefit. Two projects at the same PPA price often differ substantially on these measures because they displace different plants in different places at different hours.

What is a DALY, and why does it matter for a PPA?

A disability-adjusted life year is the World Health Organization’s standard unit for the burden of disease. One DALY represents the loss of one year of full health, combining years lost to premature death with years lived with illness, weighted for severity. For a PPA, DALYs saved quantify the population health benefit of the project’s displacement of fossil generation and the resulting reduction in air pollution exposure. A 100 MW example project in PJM is estimated to save 326 DALYs; Vista Sands Solar in Wisconsin is projected to save 2,485 DALYs in Year 1.

How do you justify a PPA priced above market?

By quantifying what the company receives for the premium. Avoided pollution, public health and ecosystem benefits are valued in dollars using health and natural resource economics, which puts them in the same terms as the contract price. Alongside that figure sit the strategic benefits of Renewables 2.0: a documented basis for disclosure and public claims, social license with the communities near the project and the displaced plants, and a project that is more likely to be permitted and built. A CFO can weigh a premium against those numbers; a CFO cannot weigh it against an attestation.

How is this different from carbon accounting under the GHG Protocol?

Scope 2 accounting under the GHG Protocol tracks the greenhouse gas emissions attributed to a company’s electricity use. Impact analytics quantify what a specific project physically changes on the grid: the fossil generation it displaces and the air pollutants, health outcomes, ecosystem effects and economic value that follow. CO2 is a global pollutant whose benefit is shared by the world. Air pollutants are dense, disperse downward and end up in the lungs of local and regional communities. Impact analytics are additional to carbon accounting, and they answer the questions carbon accounting cannot.

When in the procurement process should the analysis be done?

At the shortlist stage, once the RFP has produced a small number of offers at comparable prices and the remaining question is which one to sign. The analysis takes each project’s location and generation profile and returns projected impacts at hourly resolution, so the sourcing team can compare candidates on what they deliver as well as what they cost. Buyers who already hold contracts can run the same analysis on operating projects to report what those investments have delivered, which is the subject of our follow-up post.

Footnotes

1. Vohra, Karn, et al. “Global mortality from outdoor fine particle pollution generated by fossil fuel combustion: Results from GEOS-Chem.” Environmental Research 195 (2021): 110754. ↩

2. https://www.pv-magazine.com/2024/12/17/vista-sands-1-3-gw-solar-project-approved-in-wisconsin/ ↩

3. Ex.-VSS-Howard-2, Wisconsin PSC docket 9820-CE-100: https://apps.psc.wi.gov/ERF/ERFview/viewdoc.aspx?docid=509892 ↩