Technical assistance to monitor functioning of the guarantees of origin (GO) system
The Final Report, ‘Technical assistance to monitor the functioning of the guarantees of origin (GO) system’, examines the European system of guarantees of origin (GO) for energy. The study supports the European Commission’s monitoring remit under Article 19(13a) of the amended Renewable Energy Directive (RED II). It focuses on how the GO system operates, the balance between supply and demand in the market for guarantees of origin, and the factors influencing this balance.
The analysis initially concentrates on the electricity market for guarantees of origin. To this end, six market dimensions are examined: liquidity, harmonisation, stability, transparency, efficiency, and responsiveness or competitiveness. The study is based, as far as possible, on quantitative data on guarantees of origin flows and prices; this is supplemented by literature, available datasets, interviews and a stakeholder survey.
A key finding is that the European GOs market is fundamentally liquid but structurally characterised by an oversupply. The study estimates this oversupply at currently around 100 TWh per year; at the same time, the volume of GOs issued is, on average, growing faster than the volume of GOs cancelled: 74 TWh per year compared with 59 TWh per year since 2015. Issuance rates vary significantly by technology: in 2023, they stood at around 90 per cent of the electricity generated for hydropower, 54 per cent for wind and 34 per cent for solar energy. The analysis cites, among other influencing factors, the expansion of renewable energy, subsidy rules, administrative hurdles for smaller plants, self-consumption and differing rules for subsidised electricity.
The study also shows that the market is not yet fully harmonised in several areas. Whilst the Association of Issuing Bodies (AIB) makes a significant contribution to European market integration through the EECS standard and the AIB Hub, differences remain in market access, national registries, validity periods for guarantees of origin, and rules governing subsidised electricity volumes. Transparency also remains an issue: whilst regulatory information and historical GO data are well documented, current price information and price formation are only partially traceable. Many market participants are therefore reliant on third parties such as brokers or traders.
With regard to effectiveness, the study arrives at a nuanced assessment. Guarantees of Origin fulfil their core function of informing consumers and businesses about the origin of renewable energy and preventing double counting. The contribution of the GO system to the further expansion of renewable energy, however, is very limited and depends heavily on whether demand arises for specific qualities, such as regional origin, newer plants or additional renewable generation. With regard to further development up to 2030 and beyond, the study examines possible pathways for the electricity GO market, as well as developments such as RFNBOs, power purchase agreements, additional quality criteria and new market participants such as energy communities.
In addition, the report examines the market for gas GOs. This market is even less developed than the electricity GO market, but is becoming more relevant in the context of renewable gases, the Union Database and future certification requirements.
Finally, the study outlines the areas in which the GO system can be further developed, and the implications that various identified development options in these areas could have for GO systems. This includes, amongst other things, the areas of action relating to improved technical framework conditions, greater transparency, harmonised rules, a more targeted alignment of supply and demand, and specific clarifications regarding gas guarantees of origin. The analysis shows that many proposed developments to the guarantee of origin system give rise to conflicting objectives and, in some cases, pursue different, mutually incompatible visions of the future role of guarantees of origin. For example, the development option called for by some stakeholders to maintain a uniform GO market and abolish all geographical restrictions stands in clear contradiction to the equally considered demand to abolish or restrict the ‘book-and-claim’ approach for GOs, and to other development options aimed at greater geographical and temporal granularity. Therefore, at a societal and political level, the intended fundamental function of guarantees of origin and their market-based use within the European energy system should first be clarified before any concrete measures are implemented.
This study was produced with the participation of the Oeko-Institut e.V., in collaboration with LBST and Trinomics, on behalf of the European Commission, Directorate-General for Energy.