More and more businesses are committing to renewable energy. The corporate sector is the main driver for renewable electricity, although households and organizations also contribute to the market growth, according to a report from ECOHZ. An increasing number of businesses see renewable energy as necessary for future competitiveness — to attract customers, employees and investors. Several sustainability initiatives support renewable ambitions, but the most important, according to the report, is RE100. RE100 is a global initiative of over 190 influential corporates committed to consume 100% renewable electricity. The members purchase a huge number of Guarantees of Origin for their operations in Europe.
“Global reporting initiatives and standards like CDP and Greenhouse Gas Protocol form a critical foundation, by requiring Guarantees of Origin to be purchased and used to document any claim of renewable consumption,” says Tom Lindberg, Managing Director in ECOHZ. “In addition to this, in 2018 the EU approved a new Renewable Energy Directive (REDII), which included text strengthening the system of Guarantees of Origin toward 2030. REDII is a milestone, and clearly states that electricity suppliers and consumers of power shall (read: have to) use Guarantees of Origin to document and report renewable electricity claims in Europe.”
Lindberg states that the renewable energy market in Europe broke two barriers in 2018; with supply of Guarantees of Origin nearly reaching 600 TWh – and demand surpassing 500 TWh, commenting on new statistics from the Association of Issuing Bodies (AIB). “The European renewable energy market with Guarantees of Origin continued to grow and seemed like a market more balanced and mature than earlier. The surplus gap in 2018 did not widen, and seems likely to diminish in the near future,” says Lindberg.
Comparing the first half year supply and demand of Guarantees of Origin for 2019 with comparable figures in 2018, shows supply is growing by 14 TWh while demand grew significantly faster, with 60 TWh.
Netherlands and France with record high numbers for first half of 2019
The Netherlands has over the years installed a large amount of new wind and solar capacity and this is now impacting the volume of Guarantees of Origin issued during H1 2019. An increase of 9 TWh is almost a doubling compared to issued volumes in H1 2018.
France had a 5 TWh increase in issued volumes from H1 2018 to H1 2019 as a result of many more power plants now being able to issue Guarantees of Origin after ended feed-in-tariff periods. The demand still increased faster and grew with 9 TWh.
Dry weather in Norway during the first half of 2019 led to lower hydro power production than normal. This again is likely to further push down Norway’s share of issued Guarantees of Origin in Europe, from a 22% share in 2018 and 27% share in 2017. The Norwegian share of the total production mix has been declining the last year showing evidence of a more robust and diversified European market.
Wind is the fastest growing technology and new countries will push the market forward
“Hydropower is still the most common technology of issued Guarantees of Origin in Europe with a supply share of 56% in 2018, compared to 64% in 2017 – but changes are occurring rapidly due to increased availability of solar and wind,” states Lindberg.
AIB, the umbrella organization of national issuers of Guarantees of Origin, currently has 21 member countries. Portugal and Greece are next in line, and have indicated interest in joining the AIB, and its electronic hub. “Even more countries are likely to join the AIB in 2020 and will all-in-all likely bring more supply to the European renewable energy market. In parallel we also expect a growing demand for renewable electricity from corporations and households, pushing the market to new heights,” says Lindberg.
Guarantees of Origin prices
During 2018, Guarantees of Origin prices were at historic high levels, with prices trading at EUR 1.0–2.5 for standard qualities. The combination of steady growth in demand and higher prices seemed to be a wake-up call for many stakeholders, consumers and policy makers, according to the report. These price levels combined with increased sold volumes resulted in significantly higher market value. How to capture these revenue streams and ensure reinvestments in new renewable capacity became a hot topic. The market has now adjusted, and currently Guarantees of Origin 2019 wind wholesale price is EUR 0.40 – 0.50 and for 2020 EUR 0.75 – 0.85 per MWh.