Guarantees of Origin. Your chance to choose.
Guarantees of Origin are certificates that are used for energy tracking and as an accounting system in a large part of Europe. They allow you to commit to renewable energy and it is the only available system in Europe able to track how energy was produced. Sourcing your energy consumption from a renewable power plant allows you to choose the quantity, technology (solar, wind, hydro, biomass, etc.), the origin and much more.
In this way you can compensate for your company’s consumption by deciding what percentage of energy should be coming from renewable sources.
How it works
Guarantees of Origin (GOs) are renewable energy tracking certificates. They can be used to identify the type of generation that was used for a certain Megawatthour of electricity. Renewable energy, such as wind, solar, hydro, geothermal or biomass is mostly demanded as a preferred source over conventional production technologies. When 1 MegaWatthour of green electricity is produced, that producer receives 1 certificate. The certificate describes the attributes: the technology of production, which power plant the electricity comes from and other specifications.
1 GO is useable within 12 months. Within that validity time, it can be bought by electricity suppliers or any balancing responsible corporation who want to source their electricity from renewable energy sources.
GOs have been created by the European Union and implemented in most european countries as the way to track how a Megawatthour of electricity was produced. 1 GO correspond to 1 MWh. Once consumed, it is “cancelled”, in order to avoid double utilisation of the GO.
The GO system works as an accounting system where what is produced is accounted and what is consumed too. In between, the GOs can be exchanged between any company owning an account at the Registry in one of the Member countries.
GOs can be exported within the European Economic Area. The Association of Issuing Bodies (AIB) connects all regional and national Registries and keeps the accounting well measured, just like SWIFT for money, which connects the banks to facilitate transfers.
Depending on the registry and the software it implemented, a Guarantee of Origin (GO) will typically contain the following information:
- Production Period
- Expiry day
- Type of production
- Country of production
- Renewable or not
- Cogeneration or not
- Power station capacity
- Type of support
- Number of the first GO
- Date of the GO creation
Producers: Every company which owns a power generation unit can register at the local Regulator and receive Guarantees of Origin on their account at the Registry. Every MWh produced can claim 1 GO carrying its generation details. It can be used/cancelled by the producer for its own use and claim the attributes, or it can be sold to another company. Producers receive GOs as a tracker of their electricity uploaded on the grid. Producers can:
Sell the GOs to suppliers of electricity who want to acquire a certain type of generation;
Sell the GOs to an intermediate on the market;
Consume/Cancel the GO and claim the attributes for their own portfolio. Consuming a GO is actually named “Cancel” to emphasise that the same GO is not used twice for claiming sourcing attributes. Remember: GOs are similar to an accounting system (see: question 1.d.).
Suppliers: companies which procure electricity to businesses and households. The electricity in the portfolio of the supplier can be accompanied by Guarantees of Origin as documentation of the production specifications. We call this information “the attributes” of the supplied electricity.
Any other business which owns an account at a Registry. They typically have a Balancing Responsibility Agreement with a power grid or are classified as intermediate. They can consume GOs to support the development of green electricity as well as track that their used electricity is from their preferred source.
Anyone can demand from his supplier to deliver him green energy or switch to a competitor who can. The GOs then serve as documentation of the production specification.
The price of GOs is market-based, with supply and demand for GOs determining it at any given point in time. The total volume of GOs consumed in 2018 was 540 TeraWatthour. This is the equivalent of electricity usage in 150 million households (assuming average consumption is 3500 KWh per household). 540.000.000 GOs have been consumed to identify the origin of electricity. A total of 650 TWh of GOs have been issued in 2018, which is the total of the supply side. Since GOs are a voluntary instrument with few obligations about their use, it is mostly driven by demand. Buyers of GOs have the possibility to choose which GOs to use and this possibility is reflected in the price. Most common are Nordic hydro GOs. For instance, in 2019, the price lied around 0.35 EUR per GO from hydro sources. More specific and/or more rare products can be priced higher, in some cases up to 7.00 EUR per GO (wind produced in the Netherlands). Consumers are free to choose which GOs to obtain since the European Electricity Grid is interconnected. By using GOs to source electricity consumption, one is supporting the continuous development of renewable electricity.
GOs allow to track the origin of electricity and gives a choice to consumers and suppliers to determine where their electricity is coming from. It creates therefore additional value for electricity. By purchasing GOs, the supplier or consumer is able to provide additional information to their authorities on where their electricity is coming from.
Customers in turn can hold their supplier accountable for supplying green electricity. After all, GOs are a tracking and counting system to prove that a certain portion of electricity has been produced and is being supplied.
Among other options, the European Economic Area could have considered Tradable Green Certificates, which differ from GOs by national governments setting a target to be reached for the country in which they are introduced. GOs are a type of tradable green certificates, as both relate to the origin of the produced electricity. However, GOs may be issued independently of government policies and therefore create an extra source of income for producers. This extra income is fully based on market demand instead of government policy.
Feed-in Tariffs are a direct governmental subsidy for the producer per KWh of renewable electricity produced.Though FiT is beneficial for stimulating small-scale projects on a household level, it is driven by governmental policy instead of market supply and demand for renewable energy. It also differs from GOs that FiT does not allow consumers to source their energy consumption.
The main difference between GOs, Tradable green certificates and Feed-in Tariffs lies in the choice that consumers have. GOs are available to anyone and can be redeemed by anyone, whereas TGC and FiT are foremost governmental policy. Subsidies depend on government’s decision. They can be scrapped at any time.
All three systems have the same underlying mechanism and aim: to track the origin of the generated electricity. GOs are the instrument in Europe, RECs in North America and I-REC in a number of other countries across the globe. All three systems rely on the importance to document where electricity is coming from. A consumer buying any of these certificates in the geographic area where they operate, cancels these certificates in order to verify the origin of the electricity that they have consumed. All three certificates are market-based instruments and voluntary.
It is impossible to say with certainty which power plant produced which kWh when it comes out of the plug. All produced electricity (fossil and renewable) is loaded onto the national grid operator first and then distributed to households and businesses. It’s all just electricity and one cannot tell which MWh was produced by which plant. Therefore, green electricity does not exist. Only MegaWatthours travel on the grid, mixture of grey and green electricity. Unless one lives on an island with only one single type of power generation, it is impossible to know the origin of the electricity he consumes.
The only way to create a link between the production and the usage of MWh, is by counting all MWh at the beginning (production) and at the end of the line (consumption). In other words, an accounting system has been implemented by the European Union, measuring and counting the source (production) and the use of electricity (consumption). This is the Guarantees of Origin system. Each producer can receive the GOs corresponding to the amount of energy they injected on the grid with the specifications of the power plant. This GO identifies if the electricity is green or not. This GO can be sold, the same way the electricity was sold: via a contract with a buyer. And just like for his electricity, the buyer will then claim the attribute of the MWh with his contract. He will then be able to count how many MWh came from which source. The counting system ensures that no GO is used twice.
GOs are allocated to electricity producers in countries with a registry in the Association of Issuing Bodies, but GOs can be used or redeemed outside of that area as well. Therefore a business has the freedom to buy any GO they require. As a GO lists all kinds of information about the production of 1 MWh (such as technology, country of origin, type of powerplant and more), it enables consumers to make their own choices and adopt their own approach. It is entirely possible for a business to source their electricity specifically for their consumption per country (i.e. if a business has offices or factories in more than 1 country). With multiple facilities across the European Economic Area, a company can buy GOs from each and every specific country, should they wish to do so.
Consumers have, since the liberalisation of the electricity market, been allowed to choose their own supplier of electricity. This liberalisation has led to a larger choice of suppliers for consumers. Suppliers offer in their advertisement to supply green electricity to households and businesses, some even from local power plants. This range of choices allows the consumer to choose where the energy that is being supplied to their house comes from. An example: a business consumes 20.000 KWh of electricity per year and has an electricity contract with its supplier for 100% green energy. The supplier must obtain 20.000 KWh of GOs (20 GOs total) for this one particular business. Which GOs to obtain depends on the contract between the supplier and the business. If local green energy has been listed in the contract, the supplier can do so by obtaining GOs from specific power plants.
A business can trace its renewable energy consumption in three ways:
It builds its own renewable energy source (i.e. wind farm).
It enters into a Power Purchase Agreement (PPA) with a producer of renewable energy.
It goes to the secondary market to acquire directly the amount of electricity and GOs needed to source its energy. This can be done via intermediaries as well.
Just like electricity, a GO is contracted with a producer. If the consumer prefers a specific origin or technology, then the producer has to verify that they are specifically selling this type of electricity and GO. In order to obtain the GOs, businesses have two options:
A business opens an account at their national registry and has the GOs transferred to their account from the company selling the GOs. From their own account, the business can cancel/redeem the GOs for their electricity consumption.
A business lets a producer make a cancellation statement in their name. The producer then provides documentation which proves that the consumer has bought a certain portion of electricity or GOs. This method removes the need for an account at the national registry for each business.
Not every business wants to become an electricity producer. But every business may request consuming a type of energy instead of another. Buying GOs is the way to track energy. It is voluntary. Sustainability and reducing the environmental impact of businesses is an essential element of corporate responsibility. As more electricity is consumed in the world and with demand continuously growing, everyone can support renewable energy producers by buying their GOs. As a result, it will become more interesting and profitable to reinvest this extra income into more renewable energy projects. Getting a supplier to buy GOs for your consumption is sending a signal to them, that your business is making a conscious choice.
The Commerg platform displays buying and selling prices for any energy tracking certificates. It provides pricing and activity reports for any company which needs factual and tangible information about the value of GOs or other certificates. The platform enables the right price for each type of GO, ultimately driven by supply and demand as well as price competition between buyers and sellers of GOs. This market-based mechanism guarantees transparency and fair valuation of the certificates. Any client has the possibility to receive an account on the Commerg Trading Platform, provided they are looking to source their electricity with the means of Guarantees of Origin.
The Commerg Platform provides information on price and availability of all GOs produced, as well as Tradable Green Certificates in Belgium, France and Italy. Most commonly traded GOs are Nordic hydro, Dutch Wind, Italian Wind and a combination of all kinds of GOs called Any AIB renewable. A client can place an order directly on the Commerg Trading Platform or instruct a broker about which GOs their company needs. The technologies that can be chosen from on the platform are Hydro, Wind, Solar, Biomass, Geothermal, and also conventional source can be tracked, such as Gas, Coal or Nuclear. Some GOs have special labels attached to them, which indicates a high standard of the production facility. The added value of these labels stems from the conditions which need to be met in order for the production facility to receive these labels on their GOs. The labels section lists the most common labels such as TÜV SÜD EE or EKOenergy. The Commerg platform can be adjusted to show different GOs according to a client’s wishes.
For tailormade solutions such as special GO products or multiple, multi-national orders, Commerg has added the Off-Standard screen, where a customer can fill in all the details in an Excel sheet on the product that they wish to obtain or sell. The Off-Standard screen helps customers choose their own specific GOs by adding details such as installed capacity of the powerplant, the date the power plant has been installed, whether the power plant has received government support to be installed etc. Since consumers can choose which GOs they wish to use to source their electricity, it is only logical that they can freely decide how their consumption profile looks like.
- Experience: It has been the longest around
- Customisable to needs
- All GOs, Labels and Certificates can be listed on the platform and readily traded
- Activity ticker with live feed
- Prices on the screen are directly tradeable
- Direct order and booking system
- Competitive pricing between companies
- Fast back-office support and contract creation
- Personal service by broker
- Follow up service on contracts
- Credit Matrix protecting your counterparty risk
- Sales trading: other intermediates can act as a broker on it without disclosing their secondary counterparts.
- Transparency: without losing confidentiality, the market information is available and public to other platform users.
- Brokers neutrality: Commerg is not price sensitive and does not favour any participant or another.