Guarantees of Origin for renewable energies

Sector coupling is the increasing integration of the energy sectors electricity, heating/cooling and transport into an overarching approach to energy supply. The view as an overall system enables and promotes aspects such as an increase in energy efficiency, the digital control of demand and supply, and the storage of energy. The integration of fluctuating renewable energies instead of fossil fuels is of central importance. In this way, sector coupling is a key factor in the energy transition – for the decarbonisation of energy production and consumption.

RED II stands for the Renewable Energy Directive II and refers to the Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 2018 on the promotion of the use of energy from renewable sources. It provides for a binding overall target at EU level of 32 % renewable energy by 2030. The member states must “jointly ensure” that the EU-wide expansion target is achieved from 2021 onwards.

In the course of the amendment of the directive, the EU has, among other things, expanded the area of application for Guarantees of Origin: in addition to electricity, the directive now also requires the introduction of Guarantees of Origin systems for renewable gases (including hydrogen) as well as for heating and cooling.

As the name suggests, Guarantees of Origin – or GOs for short – serve to provide transparency about the origin of energy. So far, this kind of verification system has only been established in the green electricity markets. The applications of GOs can be very diverse, including the original ideas of providing consumers with clear documentation of the origin of their electricity and enabling the tradability of renewable energy characteristics. As an instrument, GOs can also be used to support the implementation and monitoring of renewably energy policy instruments.

In the case of electricity, a fundamental distinction must be made between physical electricity transmission, electricity trading and the transfer of green electricity characteristics. Physically, every customer receives electricity from the nearest power plant (“path of least resistance”). Electricity trade is handled via balancing groups, where supply and demand needs to be balanced at all times. However, more and more consumers are making a conscious decision to purchase green electricity. This is where origin tracking comes into play: the origin of the electricity from renewable energies is proven by means of GOs. Suppliers can procure GOs from the same renewable energy producers as energy deliveries or seperately.

A Guarantee of Origin can be issued for each megawatt hour of green electricity produced. It records information such as energy source and technology, plant location and age, and whether a plant or the energy produced has received public support. GOs can be traded within a country and between many European states. In Europe, energy supply companies must back up each MWh sold as green electricity by a corresponding quantity of cancelled GOs in the Guarantee of Origin registry of the respective country. This ensures that the green quality of green electricity is only sold once to a customer. A special regulation applies to Germany: plants that are subsidised under the Renewable Energy Sources Act cannot be issued Guarantees of Origin. In this way, the legislator wants to express that the green quality of EEG electricity that is shown separately in the electricity labelling would not be sold or supplied again (so-called ban on double marketing).

In addition to the electricity sector, the development of GO systems for heating/cooling and gases is currently ongoing.  Several projects and initiatives at European and national level are currently dedicated to this task.