The Guarantees of Origin regulation provides renewable generators with an additional source of income and consumers with an opportunity to demonstrate the source of any electricity consumed. However, the scheme is controversial and the future development of both the market and the associated regulatory framework is uncertain.
A Guarantee of Origin is a certificate showing where and when a unit of power (MWh) was produced. All generators are entitled to obtain certificates for their power generation. These Guarantees of Origin can be sold to power suppliers or end consumers that want to demonstrate their support for renewable generation. Power suppliers that claim to supply renewable power must document this through the purchase of Guarantees of Origin.
We follow developments in the market for Guarantees of Origin and analyse their supply and demand. Market analysis and price forecasts covering developments in the Guarantees of Origin market are also included in our Green Values report. See also Green values.
The market for Guarantees of Origin affects the profitability of renewable power generation, it interacts with government support schemes for renewable power generation and thus also affects the development of the power market. Understanding the Guarantees of Origin market is therefore important to analyse new renewable generation investment and power market developments more generally.
The Guarantees of Origin scheme has served small and large Norwegian generators well. However, the Guarantees of Origin regulation is controversial. While Norwegian renewable generators profit from the sale of Guarantees of Origin to consumers, primarily in other countries, Norwegian industry points to the fact that Norwegian generation is dominated by hydropower generation to document the renewable nature of the power used and its associated low carbon footprint. Continuing to sell the renewable characteristics of Norwegian renewable generation twice is going to be difficult going forward, and the Norwegian authorities will then be forced to choose between the interests of Norwegian generators and Norwegian industry.
Based on our general market knowledge, socio-economic expertise and knowledge of both the regulatory framework and the interaction between policy and the market, we analyse the importance of the Guarantees of Origin scheme as a support mechanism for renewable generation. Current questions include the following examples:
- Are policy decisions on Guarantees of Origin merely about distributing the value associated with renewable generation between generators and consumers, or does the scheme also provide socio-economic benefits?
- Do Guarantees of Origin support a more efficient transformation of the energy system?
- Do Guarantees of Origin give consumers a false impression that they are using renewable energy?
- How to Guarantees of Origin interact with government support schemes?
- How should the Guarantees of Origin market be regulated?