How did the GO grow up so fast?
31.5.2021
MARKUS KLIMSCHEFFSKIJ
The Guarantees of Origin have come a long way since the 1990’s. The regulatory turmoil today changes the landscape and brings forward new opportunities. This post outlines the benchmarks and significant events of the story so far.
From minding a toddler to nurturing the growth of a young adult
Sweaty hands, dry throat and a blank head…I was about to set on stage for the RE-DISS workshop for Competent Bodies to present the results of the 2010 European Residual Mixes. The audience was full of GO masterminds, like Phil Moody and Christof Timpe to name a few… Whereas I was a complete rookie.
So, what happened? I’ll get to that, but first let me tell you how excited I am to return from my paternity leave with my dear toddler, assembling duplos and sand cakes onto a European-wide sandbox of renewable energy. I’m ready to give my everything to support the growth of the soon 20-year-old GO.
Indeed, the GO is grown up now and on the brink of something new. It’s discovering the world of opportunities open to it and changes are inevitable. Still, amidst the RED II talks, it is important to understand the childhood and youth of the GO. Hence the topic of my first blog is a speed-train-rollercoaster ride of its first 20 years.
The birth and first wabbly steps (1996 – 2003):
After the liberalization of the electricity market in late 1990’s companies started to seek means of differentiating their offering, for example by selling electricity from a renewable origin. This led to the birth of the RECS system in the turn of the millennium.
The terrible twos (2003 – 2009):
Between 2003 and 2009 the political atmosphere in many parts of Europe favored quantity-based support instruments. This led to GOs being widely envisioned as a flexibility mechanism between Member States’ renewable energy target attainment or even as a Union-wide renewable energy quota support scheme. Even as late as September 2008, the European Parliament suggested disallowing GO trading and that the main purpose of GOs would be to verify compliance with national targets. Indeed, the whole story of GOs could have easily gotten a very different ending.
In the end, the support for the triple function (support, targets, disclosure) of GOs started to loosen up and was abandoned in December 2008, due to several reasons including a) the vast difference between private and public willingness to pay for renewables, b) the fear of windfall profits, c) complexity of the mechanism, d) sovereignty of energy security of supply, and e) impressive track record of the FIT. The December 2008 Directive proposal set the basis for 2009/28/EC (RED I).
School age (2009- 2020):
It took some years, but with the RED I the purpose of GOs was finally set on electricity disclosure and nothing else. During the “period of enlightenment” that followed, the GO community (primarily AIB, RECS and RE-DISS) were free to set up rules, markets and processes towards this specific goal. It meant increased harmonization of the EECS standard as well as RE-DISS and AIB eradicating double counting of renewables with a strict disclosure framework. This seems simple, but was pretty damn hard to do collectively in 30 or so Member States.
The market actors, RECS and consumers held their side of the bargain and during the past 10 years GOs have proven their significance to a vast group of European companies and households. As proof, we have seen the cancellations of EECS-GOs rising from 246 TWh (2011) to 828 TWh (2020), which means 240 % growth in total or 14,4% annually (source: AIB statistics). (Note that the start and end values are not completely comparable due to new countries joining the AIB during the period)
As illustrated above, the 20-year history of GOs is filled with devious sidesteps and teething pain, followed by stability and growth.
But what about me then? It’s been 10 years from my first RE-DISS workshop and my hands are sweaty again, my throat could use some water and my head is just catching up…I’m about to step up into the shoes of one of the absolute GO legends, to say the least. Despite these sensations, why I’m I not in panic?
The RE-DISS workshop is one of my best professional memories. I had done my work well and prepared. As proof, I even got a pat on the shoulder from Christof Timpe himself. But more importantly, I was doing something I found immensely important: enabling consumers’ switch to green energy. Having seen GOs in action from the energy users’ side I’m more convinced than ever of their importance (another blog will follow on this subject on Wednesday). I’m not panicking, because being nervous only shows that I’m doing something I deeply care for and which is truly important. I will do my best and am confident that it will go well, just like RE-DISS.
But what about the next 20 years of GOs? Stay tuned for my post on Friday….