Corporate demand for renewable energy2012.07.04
When establishing the market in 2001, the European
Union attempted to encourage consumers and corporate customers to
actively choose renewable energy sources over fossil and
nuclear-based sources. By making an active choice, these customers
are now providing new and additional revenue sources to support
investment in renewable energy production. With European
governments increasingly lacking public funds, new revenue sources
are expected to play an important role in realising Europe's
ambitious renewable energy targets.
Provided that the market continues to see a 16-18% annual increase  in both volume development and end-user pricing, the market for renewable electricity documented with Guarantees of Origin (GO) will generate in excess of EUR 10,0 billion  of new funding for the renewable energy industry over the coming years. The above scenario assumes end-user pricing of around EUR 3.00 per GO (1 MWh) in 2020; equivalent to 0.3 cent per kWh.
In a more aggressive scenario - where the market's willingness to pay for renewable energy approaches that of the price of carbon offsets (EUA, CER) - revenue generation will increase even more dramatically. Using a price of EUR 15.00 per ton of CO2 as baseline in 2020 and a conservative emission factor of 500 grams of CO2 per KWh (European mix) during the same period, the price of a Guarantee of Origin should reach EUR 7.50. This would then bring potential revenue generation to EUR 18.5 billion. Assuming a conservative gearing of 70%, available funds for new renewable energy projects will amount to roughly EUR 23 billion in the first scenario, and EUR 43 billion in the second scenario. Using an investment estimate of EUR 0.5 per KWh, 47 TWh and 87 TWh of new energy production can be achieved respectively for the two scenarios.
With Europe ambitiously moving toward 100% fossil-free power production by 2050, being able to achieve "new" revenue sources on top of public and private investment should be invaluable.
In realising the above "value scenario", it is essential that key EU institutions continue to help build a level playing field through an even more harmonised market for renewable energy, documented with Guarantees of Origin. These efforts should include:
the demand for tracking revenue flows and documentation of
reinvestments in new renewable energy generation
- Avoidance of linking the sale and delivery of GO
and physical electricity, thus limiting market growth
- Moving from voluntary to mandatory market
implementation among EU member states
- Actively seeking support from NGOs and
key stakeholder organisations
Europe's target for new renewable generation from 2010 to 2020 is approximately 700 TWh. Achieving 50 TWh or more of renewable energy by tapping into consumer climate awareness and corporate demand for carbon reduction measures, is final confirmation that the GO market has matured - becoming a market of real significance.
Market prices grew by 200-300% from 2008-2011.