Guarantees of Origin – creating additionality by top-financing new wind farms

RE100 member becomes first corporate consumer to use the renewable accelerator concept GO² – ECOHZ’ position paper to the European Parliament

The Guarantee of Origin (GO) is an instrument created to track and document renewable electricity, and to allow households and businesses a real choice of power source. Businesses of different sizes and across all industries purchase GOs to document their renewable claims, as basis for their sustainability reporting and CO2 emission calculation. GOs are used for documenting electricity purchased from the grid and for power purchased directly from new renewable projects through Power Purchase Agreements – PPAs.

Since 2008, the GO volumes have grown year on year by 17.5%, with more countries joining the pan-European marketplace and more customers opting for documented renewable electricity. In 2017 more than 50% of all renewable electricity in Europe will be available and purchased with GOs. The GO system benefits from a broad stakeholder endorsement[1] and is a sterling example of European global leadership in energy market innovation.

GOs are regulated by the EU Renewable Energy Directive (2009/28). The European Commission’s proposal for a revision (COM(2016)0767) includes positive signals to the GO market: the Commission wants the use of GOs to be mandatory for making renewable electricity claims and also wants to expand the GO systems to other key energy areas such as gas, heating and cooling.

A recurring issue in the debate about how the GO system can be further improved, is how it could contribute to adding more renewable power in Europe. Although the Directive does not specifically define additionality as part of the GO function, new and innovative concepts based on the GO system now show that additionality is possible. One such concept is called ECOHZ GO².

Additionality through GOs with ECOHZ GO²

GO² uses GOs as a core component, combining the purchase of documented renewable power with the financing and building of new renewable power capacity. A pioneering GO² wind power project is coming to fruition at the end of November this year. A global RE100 member has top-financed the construction of four wind turbines through the purchase of GO² – thereby creating actual additionality with their renewable purchase. This wind farm in Sweden will start to generate electricity this month, supplying clean power to the local grid.

Renewable accelerator

The GO² financing model enables a significant share of the GO revenue to be used to top-finance the wind farm. The result is 18 GWh of clean, renewable power, generated annually, and delivered to the Swedish grid. By 2030, the new wind farm will have generated more than 230 GWh of new power. Moreover, the innovative financing model enables, within two to four years, the loan to be re-circulated and used to finance yet another power plant of similar size. Extrapolating based on this specific project and the circularity in the model – by 2030 this corporate customer’s decision will have resulted in the top-financing of another four equivalent projects. In this scenario, by 2030, a total of 630 GWh clean power will be generated.

Case #1
Impact of Corporate customer’s single GO2 purchase (100 GWh)

Adding new renewable energy sources was previously only thought possible through more complex investments in on-site power projects, or through long-term commitment using PPAs. This Swedish wind farm case is an example of how companies can consume and contribute to renewable energy production without committing to major infrastructure investments. This bold move will make the new wind farm possible applying a new and innovative additionality solution.

Projecting the above GO2 case – three future scenarios with additionality impact

To show the true impact of using Guarantees of Origin as an engine for building more renewable capacity, we have projected three future scenarios (enclosed) where companies like this RE100 member make similar GO/GO2 purchases – once or on a yearly basis.

ECOHZ GO2 is constructed to top-finance any renewable technology anywhere in Europe. For the sake of simplicity, the scenarios used are based on figures related to financing wind based projects. Projects based on solar, hydro or biomass will differ in the details, but the overall impact and results will be similar.

Reaching 2030 targets

2030 will be a milestone year for the new Renewable Energy Directive (REDII) and its targets. To reach these targets, all available tools need to be deployed. Guarantees of Origin allow consumers a real choice, and, used correctly, can bring additional renewable power to the European grid. To realise the maximum potential of the GO market and the power of the consumer, it is critical that the GO system is strengthened and not weakened in the REDII.

In summary, we want to emphasize the importance of the following elements in the REDII, in achieving an even better GO system moving toward 2030:

  • The proposal to make the GO mandatory for all renewable claims
  • Harmonising validity rules of the GO – using a full (12 month) calendar year, as well as a common 6-month deadline for providing national fuel disclosures
  • Expanding GOs to new energy sources like gas, heating and cooling
  • At this critical time, it also means that it is crucial to curb all attempts to limit the size and value of the market. Specifically, this relates to the proposed mandatory auctioning (19.2.3 of the Commission’s proposal), as well as other similar suggestions to limit the issuance of GOs – based on age, size, technology or whether power plants have received support or not.

The current GO system is recognised as a European success story that benefits from wide ranging stakeholder support. This system will be further strengthened as more countries, consumers, corporate buyers and power suppliers use it. When companies fully realise the possibilities of creating additionality with renewable purchases the benefits to the European energy transition could be massive.

[1] Notably by RE100, CDP, GHGP, EKOenergy, Eurelectric, CEDEC, Europex, EFET, CEER, REScoop, AIB, RECs Int

 

Three future scenarios

 

Case #2

Single customer
Yearly GO² purchases
Annual purchase: 100 GWh

• 35 new windfarms
• 224 MW new installed capacity
• 630 GWh annual generation 2030
• 3.3 TWh accumulated generation 2018-2030

 

 

 

Case #3

50 customers (RE100)
Single GO² purchase 2018
Annual purchase: 100 GWh

• 250 new windfarms
• 1,600 MW new installed capacity
• 4.5 TWh annual generation 2030
• 31.5 TWh accumulated generation 2018-2030

 

 

Case #4

50 customers (RE100)
Yearly GO² purchases
Annual purchase: 100 GWh

• 1,750 new windfarms
• 11,200 MW new innstalled capacity
• 31.5 TWh annual generation 2030
• 166.5 TWh accumulated generation 2018-2030