The beginning of 2021 has seen the prices of Guarantees of Origin going down for the same reasons mentioned in previous reports: High levels in Hydro reservoirs all over Europe, large volumes offered on French and Italian auctions and preference for Power Purchase Agreements as a way to secure renewable energy supply instead of acquiring the Energy Attributes Certificates directly in the market. In front of these bearish fundamentals, the demand for GOs kept growing as a logical consequence of a global trend favouring sustainability within the corporate world, but also as a choice made by end consumers.
A bottom seems to have been found though, by this downward trend. How can we state this? What makes this situation different than last year? – are logical questions you are certainly asking at this second.
One year ago
At this time of the year, one year ago, GOs were trading at a similar price, but the downward trend had a steeper slope. The Corona pandemic was adding on the general bearish perception. Buyers were taking their time, when they could be found.
Some indicators hint that we are in a different situation. First, the prices are not just falling. There are slightly higher than a year ago, and buyers are available. Secondly, some 2020 markets have settled at higher levels while expiry date were approaching. Then the French auction of March (for December 2020 volumes) saw all the wind being purchased (2 TWh) and many new companies have been joining schemes using EACs.
Without digging into fundamental analysis, we will limit ourselves by saying that a few more bullish elements have showed up and a bottom seems to be found. We welcome this as good news because we will be able to deliver price settlements of higher quality, and moreover, renewable energy production can hope for better encouragements via a higher price prospect.
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