EXPRESS #2 - September 4, 2018
With subsidies for renewables declining, the market for Guarantees of Origin may see strong growth
The market for renewable energy based on “Guarantees of Origin” (GOs) has shown steady growth again in 2018 so far.
At least, that’s the message coming from ECOHZ, a Norwegian consultancy which is active in the GO market. “Once again we have evidence that renewable energy is becoming increasingly important for households and industries across Europe,” Tom Lindberg, Managing Director of ECOHZ, has said in a press release, commenting on newly issued statistics from the the Association of Issuing Bodies (AIB), which oversees the EU market for GOs.
“Both available supply and market demand continue to grow, as we experience an increasingly healthy and robust market,” said Lindberg. “Comparing year-to-date (YTD) supply and demand of Guarantees of Origin (GOs) for 2018 and 2017 show that supply is up by 45 TWh, while demand is up by 34 TWh.”
It is not exactly clear from the press release what “year to date” means in this context. The data from the AIB referred to have not been made public by the AIB.
The total demand for renewable energy vouched for Guarantees of Origin is getting close to 500 TWh, according to the chart above. That’s about one-sixth of total EU electricity consumption.
GOs are to some extent controversial. They are, for example, issued on the basis of existing hydropower production in countries like Norway. In practice, this means that electricity suppliers in, say, the Netherlands, can make their “grey” electricity “green” by buying GOs from a Norwegian hydropower producer. That in itself is legitimate, but it does mean that now the Norwegian customers are in effect buying “grey” electricity when they buy it from the same Norwegian hydropower producer – without realizing it.
Nevertheless, ECOHZ reports that while “hydropower is still a big share, changes are occurring rapidly. Hydropower’s supply share fell from 79% in 2015, to 64% in 2017.”
“This change can primarily be explained by increased availability of solar and wind,” says Lindberg. Wind is increasing fast, from 11% in 2015, to 21% in 2017. Solar’s share is still small, but has grown from 1% in 2015, to 5% in 2017.
One thing that is holding back the market for GOs is that many countries, including Germany, forbid issuing GOs for renewable energy that has been produced with government subsidies. Governments regard this as double counting. The Netherlands and the Nordic countries are exceptions. However, since support schemes are being dismantled in many countries, the market for GOs may see additional growth of GOs based on solar and wind, notes Lindbergh.
In addition, more countries may be joining the AIB and the pan-European marketplace connected to AIB’s electronic GO hub. Currently there are 20 members. “Lithuania, Latvia and Greece are all vying to be approved as new AIB members, most likely sometime late 2018 or early 2019”, notes Lindbergh. “Poland, Serbia, and Bosnia, could be next in line, but full AIB membership will likely not happen until later in 2019.”