What is the voluntary renewable energy market
The electricity industry prior to liberalization gave little choice to the final consumer of electricity. The consumer could not choose the supplier of their electricity and was often forced into paying a specific tariff for their electricity negotiated between the electricity supplier and the government. Liberalization of the electricity market changed this and forced the electricity market to become more competitive and eventually cost-efficient. This led to energy supply companies trying their best to attract customers with low-pricing or high-customer service. These market reforms brought with it something else as well. At the same time the consumer gained the ability to choose their electricity supplier, they also gained the ability to choose the originating location of the electricity that a supplier delivered to them. Through the use of electricity tracking systems the consumer was able to choose if they wanted a specific electricity product and if the additional benefits of that product was worth the additional costs.
Electricity tracking systems essentially detach the physical electricity flows, the electrons, from the attributes contained within that electricity source. These electricity attributes are nothing more than factual information regarding the production location, carbon-dioxide emission intensity, and overall quality of the electricity the consumer receives. These electricity tracking systems allowed consumers to choose specific electricity products and make proper claims about their electricity usage, based on the factual information given to them through the tracking system.
The electricity tracking system is needed to trade electricity attributes because electricity cannot be followed from production site to end-user. Quite literally, electrons leave the power station enter the grid and can no longer be accounted for. Energy contract agreements like Power Purchase Agreements (PPAs) can never deliver a specific energy product, they can only deliver the guarantee from an electricity producer that electricity will be placed on the grid and later taken off by a customer. If the consumer wants to know what type of electricity they have taken from the grid the consumer must make use of an electricity tracking system. With electricity tracking systems the consumer benefits by being able to track specific electricity attributes from production to consumption regardless of physical flows.
The European directive 2009/28/EC, known in the electricity industry as ‘The Renewables Directive’, defines the Guarantee of Origin (GO) in article 15 as being the mechanism for, “proving to final customers the share or quantity of energy from renewable sources in an energy suppliers energy mix”. In simpler terms, the GO is the tool in Europe used by the electricity tracking system to deliver electricity attributes to the consumer.
The GO can only carry with it factual information about the electricity production site and can only be owned by a single end-consumer. Since end-consumers are willing to purchase the GO certificate in numbers larger than there are GO certificates available for purchase a market has been created. This market uses the principles of supply-and-demand to provide the GO certificate, the carrier of European electricity attributes, with a price. This supply-and-demand market for GOs is known as the voluntary market. The members of RECS International work together to increase the transparency and accessibility of electricity claims to the general public by strengthening this market.
At RECS International we believe in the principle of informed consumers – those who make informed decisions about which energy product is right for them.
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