December 5 (Renewables Now) - Demand for Guarantees of Origin (GOs) in Europe remains on the rise, driven by European consumers and climate-conscious companies, and surpassing annual GO volumes of 750 TWh now looks quite possible for all of 2018, Tom Lindberg, managing director of ECOHZ, tells Renewables Now.
Buying Guarantees of Origin sends a signal to the market that one prefers to consume renewable energy and it shows a commitment to changing energy behaviour. Between 2016 and 2017 demand for GOs jumped by 28.6% to 472 TWh. Judging by year-to-date statistics, 2018 volumes will again be higher, so we sought insight from GO broker ECOHZ to see where the market is headed.
Q: Could you provide a forecast for the growth of GO deal volumes in 2018 as compared to 2017?
A: Renewable energy is becoming increasingly important for households and industries across Europe. Both available supply and market demand continue to grow, as we experience an increasingly healthy and robust market. Year-to-date statistics as of the end of August 2018 show that GO supply was up by 45 TWh over 2017, while demand was up by 34 TWh. This trend continues into the third and fourth quarter of the year.
Historically the Guarantees of Origin market has had a higher supply than demand on an annual basis. Now we see this changing fast, and the market surplus has decreased significantly over the last two years. Behind this surge in demand are European consumers and climate active companies that are increasingly fulfilling their green energy intentions by documenting their renewable purchases.
If this pace continues, we expect the total GO volumes procured in Europe to reach new heights; and likely exceed 750 TWh.
Q:What type of buyers are more interested in GOs?
A: The new EU Renewable Energy Directive (REDII) requires that suppliers, consumers and companies making renewable energy claims document these claims with Guarantees of Origin. This applies to all companies, from large corporations to medium and small businesses. Therefore, most companies with operations in Europe, that wish to source renewable energy, will likely have increased interest in GOs.
ECOHZ helps companies source renewable energy for their operations in different locations throughout the world. GOs are just one of the tools within the renewable energy “toolbox” that companies have at their disposal. What type of renewable energy solution the companies prefer depends on the company’s needs, size, risk-profile and financial situation.
Q: Which are the top European countries in terms of GOs deal volume in 2018 or 2017?
A: All in all, Germany is the largest “consumption country” – with a total volume that will exceed 100 TWh in 2018. But other markets are growing too. Both Italy and Switzerland reached record high levels of demand for Guarantees of Origin in 2018.
Q: What regulatory changes would support the European GO market's expansion in the future?
A: With a renewed and strengthened Renewable Directive (REDII) approved in EU, there should be a clear strategy to harmonise and simplify the implementation of the Directive in the members states. Two key areas where we shall see positive developments are around today’s policy driven barriers related to corporate power purchase agreements (PPA) in certain member states, along with standardising and harmonising the rules of usage and engagement of Guarantees of Origin across various European markets.
Q: Do you see a role for GOs outside Europe?
A: Guarantees of Origin are a legislated part of the EU Renewable Energy Directive. Based on best practice, there are already similar systems that enable companies to document renewable energy outside of Europe. These are RECs in North America and I-RECs in a growing number of countries in Asia, Africa, the Middle East and Latin America. I-RECs are built up from best practices from the GO system and REC system.
International companies wish to consume renewable energy in all parts of the world. ECOHZ works to give companies those options. Just in the past few years for example, ECOHZ has enabled renewable purchases using I-RECs in numerous markets in Asia, the Gulf Region and Latin America, making it possible for corporates with operations in those regions to source renewable energy there.