2021-03-26
Where does all the money GO?
Last week in this blog we estimated that some hundreds of millions of euros is channeled to renewable electricity producers through Guarantee of Origin (GO) system every year. Since the beginning of the system there has been concerns on where this money is going to: is it going to old established hydro production or for new renewable capacity.
GO system is not designed to specifically support new production capacity (additionality) but to be rather neutral tool for energy origin tracking which gives the power to consumers to act on their preferences. In that respect it is hard to argue against GO system for supporting also old hydro when consumers are doing the final choice. Nevertheless, let’s dive again on the EECS GO statistics and look on the big picture. How has the energy origin evolved throughout the years?
One limitation with the EECS Statistics is that there is no information about the commissioning dates of production devices. In the absence of that information, it is possible to get some idea of the original question by looking at the energy sources in general: what has been the relative share of hydro and other renewables over the years.
As shown in the below graph, the relative hydro production peak was in 2007. For that year hydro GO issuance represented 92% of all renewable GOs issued. Since 2012 there has been steady decline in the relative share of hydro while wind, solar and bio has been growing. For 2020, the renewable issuing mix consisted of 61% Hydro, 24% Wind, 8% Biomass, 5% Solar, 2% Geothermal and less than 1% of other renewable production.
Antti Kuronen
Antti Kuronen helps Grexel customers navigate energy attribute certificates.He is passionate about sustainability and believes energy certification is important step in transition to renewable energy based economy.
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While wind, especially, is growing fast, the hydro is still the most common GO and by a big margin. If comparing this issuing mix to Eurostat EU-27 statistics, the mix is quite different. For EU-27 electricity production, wind had already in 2019 a higher share than hydro. This demonstrates the important difference between the statistics: In difference to EU-27, EECS countries include Norway and Switzerland and exclude a few others. These significantly skew the renewable production mix towards hydro. Also, while the EU production statistics collect all electricity generation, the GOs are only issued to part of that production. Most notably renewable production receiving public support is not eligible for GOs in several countries, which typically include newly commissioned plants. While the share of hydro in the EECS Issuing mix is declining, how about the yearly contributions to the total growth of the EECS renewable Issuing?
The graph above paints a very mixed picture on the yearly contributions to the renewable Issuing growth. There are many reasons for this variation, such as annual hydro balances and political decision on GOs and support schemes. The overall picture is still that Wind contribution is increasing and Hydro decreasing, but Hydro contributes a lot to the total EECS renewable issuing growth, e.g. after low amounts of rainfall in 2019 the contribution for 2020 returned back to almost 50%.
Interesting fact about the hydro’s increase in the last few years is that it is not only due to new member states joining EECS, but also significant hydro issuance increases in some established member states like Austria, France and Sweden.
To come back to the original question. Still the premiss holds true that most of the GO issuance is based on Hydro. The share however is declining fast, and Wind is likely to take over the leading position in the next few years. In the EU-27 statistics Wind production is already higher than Hydro – let’s see how many years it takes for GO system, with its differences, to catch that.
The strength of the GO lies in it is neutrality. There are GOs for Hydro, Wind, Solar, Nuclear, and other energy sources. There are GOs from production devices commissioned in the last year, two years, five years and so on. There are multitude of independent criteria schemes such as Ekoenergy which mark the GOs with even higher sustainability claims, and there is variety of other information in GOs as well. GO is a tool that enables all kinds of consumer demands for electricity origin to be met.
From that comes my next question, when the GO prices are low, as established last week in this blog, does it indicate that consumers are just not interested, not willing to pay for renewables? Thank you for reading and join me next week in this blog for thoughts on the consumer behaviour.
