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What is a Guarantee of Origin?
With increasing environmental awareness and demand for green energy, European renewable energy producers have a unique opportunity to not only sell electricity but also receive recognition and additional income through the EU's Guarantees of Origin system. It's surprising that, despite there being additional income on the table, most renewable energy producers do not take advantage of this option. Especially since there are simple solutions available, such as Soldera, that make it easier than selling electricity.
What is a Guarantee of Origin?
In Europe, a Guarantee of Origin is a document that proves the electricity consumed is produced from renewable sources. It acts like a green energy birth certificate, allowing electricity producers to show that the electricity they produce comes from solar, wind or other renewable sources. These certificates are critical because they allow producers to participate in the green energy market, where there is a growing demand.
For example, when you buy electricity on a plan that markets itself as a 'green energy package', you may wonder how this electricity reaches your home. It's impossible to distinguish electrons in wires, and the electrical grid mixes everything like an ocean. To solve this, an additional system was created for the European electricity market - certificates proving the origin of electricity. Electricity producers across Europe receive Guarantees of Origin from a designated government-affiliated body, usually the country's TSO. Producers can then sell these certificates separately to earn extra money. The system of Guarantees of Origin is regulated at the level of European directives and is managed by an organisation named the "Association of Issuing Bodies" or "AIB." They ensure that Guarantees of Origin produced anywhere in the system can be bought and sold across Europe.
Guarantees of Origin were created to promote the production and use of renewable energy. They ensure transparency and reliability of the energy source and in many EU countries, there are auditing systems which help consumers verify that their energy was green. Guarantees of Origin are important for consumers, businesses and organisations who want to be sure that their energy comes from renewable sources. This helps fight climate change, increase the demand for green energy and encourage investment in renewable energy projects.
Who consumes Guarantees of Origin and why?
The main consumers of Guarantees of Origin are companies and organisations that want to showcase their dedication to environmental sustainability and fulfil their green objectives, often related to ESG (Environmental, Social and Governance) goals. Additionally, there are a number of support schemes and certificates that require the use of renewable energy. In many countries, the government might, for example, subsidise people buying electric cars but only on the condition that the car is charged using renewable energy.
Guarantees of Origin are also used by electricity retailers who want to offer green electricity to their customers. By consuming or purchasing Guarantees of Origin, companies and organisations can demonstrate their support for the production of renewable energy, thereby contributing to the transition to cleaner energy and reducing their carbon footprint.
Solutions for managing Guarantees of Origin
Soldera provides a software-based solution that simplifies the management and sale of Guarantees of Origin. It automates the process of certificates of origin and aggregates renewable energy producers to give them a more favourable selling position on the market.
Capacity traders also trade Guarantees of Origin but may not always want to engage with small producers as they have significant compliance and transaction costs involved with onboarding new counterparties.
Summary
European renewable energy producers have a unique opportunity not only to support the green transition but to financially benefit from it. Guarantees of Origin play a central role in this process, as they ensure transparent and reliable proof of the benefits of renewable energy. Soldera is an important component of this system, providing an efficient and simple way to manage Guarantees of Origin and offering producers new benefits from their renewable energy.
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