Nord Pool pilots hourly GOO market in UK

Energy exchange Nord Pool and start-up Granular in the third quarter plan to kick off an auction system for hourly guarantees of origin (GOOs) as part of a pilot project in the UK aimed at fostering 24/7 renewable energy matching.

The companies are finalising the market design for the demonstrator and expect to launch a registry for hourly renewable certificates in the second quarter before moving to an auction test phase, representatives from Nord Pool and Granular announced during a webinar on 26 January. A 12-month operational auction phase will follow suit, involving real money and the physical delivery of hourly GOOs.

Participating companies would be able to issue hourly certificates for renewable generation and storage output that would be traded and cancelled against consumption. The centralised trading venue, Granular Exchange, would allow over-the-counter bilateral deals and exchange-based transactions. Nord Pool would act as operator and clearing house for the exchange.

Unicorn Systems, the software company that operates the Norwegian GOO registry, will provide and operate the Granular certificate registry for the project.

To avoid double counting the certificates, the scheme would be linked to the renewable energy guarantee of origin (Rego) mechanism managed by energy regulator Ofgem, the issuing body in the UK. Ofgem, however, is not a partner in the initiative, Granular co-founder Bruno Menu said during the webinar.

Regos and GOOs imported from the EU are redeemed annually and used in power suppliers' mandatory fuel mix disclosure. The UK Department for Business, Energy and Industrial Strategy (Beis) launched a consultation last year to seek evidence and views on, among other themes, the extent to which annualised retrospective renewable energy matching under the current framework acts as a barrier to transparency.

Even though the Rego system is annual, certificates can be issued on a monthly basis, Menu said. Two options for the issue of hourly certificates are being explored now: either they would be issued before the corresponding Regos were issued and as close as possible from the electricity generation; or generators would issue monthly Regos that would be blocked by Unicorn Systems with hourly certificates then issued afterwards.

Depending on the solution, auctions could work on a day-ahead basis, similar to power markets, or take part once a month, Menu said. The decision will be made based on consumer willingness and the technical feasibility of what can be currently achieved in the UK.

Ofgem's Rego and Nord Pool/Granular's systems would run in parallel to avoid the double counting of certificates, Nord Pool's strategy and business development director, Julien Cosse, said. "Most of what we will develop in Great Britain will be also re-used in other countries. It is a project that could be replicated somewhere else," he said.

Toby Ferenczi, another Granular founder, said the lack of a time stamp in current GOOs and the annual matching basis of the system means consumers can, for instance, claim to use solar energy produced in the daytime in the summer at night time in the winter. "This is actually a mispricing, as it values renewable energy at the same price regardless of time of day and availability," he said.

Granular's founding team is also behind the EnergyTag non-profit initiative launched in 2020 that aims to develop an hourly tracking system for GOOs. It has more than 200 members, including transmission system operators, governments, utilities and large power consumers.

By Juan Weik