Guarantees of Origin can provide an additional revenue stream for RES producers

Romania is in process of designing its Guarantee of Origin (GO) scheme with the intention of transparently communicating where consumer energy comes from. However, the scheme can target multiple aims at once, if designed carefully.

European businesses are under pressure to deliver their products and services with a green mandate. Romania has leverage here; selling its renewable energy to companies can ensure their ESG targets are met and, in turn, shift financing for renewable energy development from the public sector onto the private sector. However, current GO schemes squander this opportunity through oversupply yielding ESG gains for private companies at prices too low to incentivise new development.

While limited in their ability to incentivise electricity development, GOs may be able to play a bigger role in the development of renewable heat and fuel. There are a significant number of customers who struggle to electrify but would like to reduce their emissions intensity. The low availability of renewable heat and fuel could yield a higher GO price.

Increasing transparency in renewable energy consumption

The revised Renewable Energy Directive mandates that all Member States GOs to promote informed renewable energy consumption and encourage uptake. A GO certifies that 1 MWh of energy was generated from a renewable source. Much like a product label, it tells the consumer the source, date and place of production. In turn, companies purchase GOs to fulfil their Environmental Social Governance targets while also creating a new revenue stream for producers.

Each MWh of generation is tracked within the electricity system, and consumers claim renewable energy use by cancelling certificates. Once cancelled, that energy is removed from the remaining mix to prevent double counting – what’s left is called the residual mix. This untracked electricity (excluding that sold through GOs) is used by electricity suppliers, system operators, regulators and consumers to understand the carbon intensity of their electricity usage. GOs are purely an accounting scheme and remains separate from all physical electricity purchase, and are not counted towards any national targets.

The Association of Issuing Bodies acts as a central point for transferring GOs and ensures standardisation across national systems. Countries are required to observe the scheme and its regulations before becoming full members.

Nadia Maki, EPG Senior Researcher

Nadia Maki is a Senior Researcher within the Energy Systems Department of EPG. She is an energy policy researcher focused on renewable energy financing, green technology and innovation and emerging economies.

Before joining EPG, Nadia worked as an independent evaluator for renewable energy financing schemes for the UK Department of Energy Security and Net Zero, evaluating schemes such as the Contracts for Difference scheme and the Capacity Market scheme. Nadia has extensive experience using theory-based evaluation methods. She has also contributed to projects for DG CLIMA, DG Environment, the Research Council of Norway, UN Women, the World Health Organization and ActionAid.

Nadia holds an MSc in Climate Change, Development and Policy from the Science Policy Research Unit and the Institute of Development Studies at the University of Sussex and a Bachelors of Arts degree from Queen’s University in Canada. 

Contact: nadia.maki@epg-thinktank.org