GOO growth requires greater trade efficiency: report

Growth in the European guarantees of origin (GOO) market needs to be accompanied by an increase in trade life cycle efficiency, according to a report published this week.

Demand for GOOs in Europe could rise tenfold to 8,000TWh by 2030, according to a study by x-markets consulting and commissioned by trade processing platform Cerqlar. The key driver of this increase would be if certificates are issued for new energy types including natural gas, nuclear and renewable plants. Nuclear GOOs are mostly only issued in the Swiss, Swedish and Dutch markets.

"Processing 900 million GOOs currently brings market participants to their limits. Most registries use outdated platforms, and the Association of Issuing Bodies (AIB) hub platform is operating at its limit," the report said. Most registries do not allow for transfers, imports, exports and cancellations using API feeds. Instead, these are manually processed through web interfaces.

The majority of trades are currently completed over the counter through manual settlement processes that can be prone to error. In the UK in December 2021, Ofgem found suppliers trading in Renewable Guarantees of Origin (Regos) had incorrectly calculated their total supply.

Market participants should assess their current infrastructure, skills and capacity in the GOO trade process. This will enable them to prepare for and realise the benefits of greater amounts of GOOs.

European GOO demand in the AIB hub was 726TWh last year, up from 659TWh a year earlier and 648TWh in 2019, according to AIB data.

European GOO prices have risen sharply this year — current year Nordic hydro GOOs rose above €2/MWh this week, according to Argus data, while the equivalent 2021 product was just over €0.50/MWh at the same time last year.

By Emma Tribe