With a Brexit agreement now awaiting final approval by the United Kingdom and the European Union, we have highlighted the most important areas with respect to energy attribute certificates and their continuation.
In summary, the agreement leans towards continuity of already existing markets, whilst giving priority to renewable energy. There is no specific mention of Energy Attribute Systems but there seems to be no objection towards continuity of the current situation. The absence of objections and the written intention to continue in the same manner is positive news, although exact details are yet to be determined.
If this agreement is ratified, it will be up to the national regulator to mutually recognise each other’s certificates (or not). The intention of Ofgem, the UK regulator, has been transparent in that respect, clearly indicating that GoOs from EU member states should be allowed to be imported by UK-based suppliers for their compliance under the FiT and CFD scheme. On the other hand, the European Commission announced in July 2020 that:
Guarantees of origin that have been issued by designated bodies in the United
Kingdom (…) will no longer be recognised by the EU Member States after the end of the transition period.
The implication of this seems to be that from the 1st of January 2021 there can be no export of GOs produced in the UK towards the European Union. The current Brexit agreement is not conclusive about the possibility to import and export either renewable energy certificate, but signifies a positive intention to continue.
Here is what we found most interesting about the agreement:
Article ENER.21: Renewable energy and energy efficiency
1. Each Party shall promote energy efficiency and the use of energy from renewable sources. (…)
2. The Union reaffirms the target for the share of gross final energy consumption from renewable energy sources in 2030 as set out in Directive (EU) 2018/2001 of the European Parliament and of the Council. The Union reaffirms its energy efficiency targets for 2030 as set out in the Directive 2012/27/EU of the European Parliament and of the Council.
3. The United Kingdom reaffirms: (a) its ambition for the share of energy from renewable sources in gross final energy consumption in 2030 as set out in its National Energy and Climate Plan; (b) its ambition for the absolute level of primary and final energy consumption in 2030 as set out in its National Energy and Climate Plan.
The ambition and reaffirmation of the targets by both parties is positive to see as it allows the continued development of renewable energy projects.
Article ENER.6: Provisions relating to wholesale electricity and gas markets
1. Each Party shall ensure that wholesale electricity and natural gas prices reflect actual supply and demand. To this end, each Party shall ensure that wholesale electricity and natural gas market rules (…):
e. enable the integration of electricity from renewable energy sources, and ensure the efficient and secure operation and development of the electricity system.
2. Each Party shall ensure that balancing markets are organised in such a way as to ensure: (…)
(c) that services are procured in a transparent, market-based manner, taking account of the advent of new technologies; and
(d) that producers of renewable energy are accorded reasonable and non-discriminatory terms when procuring products and services.
Article 6 encourages the continuation towards a liberalised, transparent, non-discriminatory electricity and gas market, giving priority to renewables into the grids. At the same time they seemingly guarantee the mutual access to each other’s grid which would be a great development.
Article ENER.20: Cooperation between regulatory authorities
1. The Parties shall ensure that the Agency for the Cooperation of Energy Regulators and the regulatory authority in the United Kingdom designated in accordance with Article ENER.12 [Independent regulatory authority] develop contacts and enter into administrative arrangements as soon as possible in order to facilitate meeting the objectives of this Agreement. The contacts and administrative arrangements shall cover at least the following areas:
(a) electricity and gas markets;
(b) access to networks; (…)
Article ENER.22: Support for renewable energy
1. Each Party shall ensure that support for electricity from renewable sources facilitates the integration of electricity from renewable sources in the electricity market.
2. Biofuels, bioliquids and biomass shall only be supported as renewable energy if they meet robust criteria for sustainability and greenhouse gas emissions saving, which are subject to verification.
3. Each Party shall clearly define any technical specifications which are to be met by renewable energy equipment and systems in order to benefit from support schemes. (…)
Article ENER.25: Cooperation on standards
(…), the Parties shall promote cooperation between the regulators and standardisation bodies located within their respective territories to facilitate the development of international standards with respect to energy efficiency and renewable energy, with a view to contributing to sustainable energy and climate policy.
To sum up:
We have not found any specific mention of energy attribute certificates, guarantees of origin (GOOs), renewable energy guarantee of origin (REGOs) yet this may be due to their specific purpose instead of outlining a full trade agreement. It does seem that this agreement will allow/force national regulators to issue decrees on whether or not to recognise each other energy attribute certificates.
We are positive about the clear intention for continuity of the currently existing situation and can only encourage this. This is also in line with Ofgem’s intention to continue to recognise GoOs from EU member states from the 1st of January 2021. Whether or not this will be possible is yet unclear.
You are always welcome to discuss with us what the exact consequences will be, should this agreement be approved. You can find the full text of the agreement here.