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The new RES instrument that will appear in Poland in 2013!
According to the European Commission requirements, members of the EU are obliged to implement a system in which the production of electric power is based on renewable sources of energy will be reliably verified by a system of guarantees of origin. Regarding the statements of the Ministry of the Economy, on 1st January 2013 the controversial "RES law" will come into force. One of its key objectives is to complete the modification of a functioning supporting system for renewable energy. According to the above points, over the next few years, the Polish system will transform and, alongside the "quota system" (green certificates / certificate of origin), there will appear a completely new system called "Guarantees of Origin" (GoO).
In connection to the multitude of challenges and opportunities for the Polish energy sector, in light of the new system of Guarantees of Origin, we organised the first specialized seminar in Poland entitled "The new system of Guarantees of Origin for renewable energy (GoO)" Procedures, obtaining, trading – these issues were the topic of the seminar that was held on 3rd October 2012 in the Golden Tulip Warsaw Centre. The seminar was prepared by the CBE Polska Team in cooperation with the Association of Issuing Bodies (which has created a European standard and associates all the European organizations issuing the above mentioned guarantees), RECS International (the organization that associates energy producers and traders of GoO) as well as E-Control (Austrian regulatory office – an organization which is similar to the Polish ERO, and which has successfully implemented a GoO system in Austria). The organizers have prepared over fifteen professional meetings dedicated to the RES energy support systems topic, and this time invited a few dozen experts from Poland and from the whole of Europe, who for the whole day intensively discussed aspects connected to Guarantees of Origin. The partners in the seminar were Amsterdam Capital Trading - experts in trading GoO and CO2 emission allowances and Statkraft AS – the European leader in energy, specializing in renewable energy.
GoO genesis and functioning of systems in particular countries
In the beginning, the function of a GoO was given an explicit financial value. The European Commission's main reason for implementing the system was to create a system for EU member states to measure their compliance with voluntary targets proposed by Directive 2001/77/EC (the RES Directive). The fact that the GoO had no set financial value made it more stable and it showed the progress of each country in achieving the target for "green energy" production and use. In the beginning , GoO were predominantly issued for hydropower, followed by wind and biomass, and " the lifetime" of a GoO was unlimited (in accordance with the new regulations it will be 12 months). According to Diane Lescot , Member of the Board of the AIB, the RES Directive didn't strictly indicate the way of implementation the system in particular countries. There were only some basic rules relating to the system. The RES Directive provides a degree of flexibility of implementation, and in order to encourage cross-border trade in GoOs it does not link disclosure of the source of electricity delivered to consumers with achievement of the (now mandatory) targets for renewable energy production or state subsidy schemes. . The EU Member States design their GoO system in different ways, but take into account the requirements of the Directive to enable transfer of guarantees between member states - said an expert.
As a result, several "schools of implementation" were created. One of the most interesting and effective is the Austrian model implemented by E-Control. At the seminar on October 3, Angela Puchbauer-Schnabel, Senior Specialist for Renewable Energy at E-Control, was speaking about this implementation. She was pleased to announce that "since 2003, we have registered 80% of the national production facilities that produce energy and trade GoO. There are about 250 suppliers and traders active in the database, 14,000 production facilities and 140 grid operators. The system of transferring guarantees of origin is clear and transparent. For use of data on the domestic market we do not make any charges – only for cross-border trades. "- She added. E-Control and other competent authorities for GOs and disclosure are involved in a project called RE-DISS (reliable disclosure systems for Europe) which aims at harmonising the implementation of article 15 of Directive 2009/28. They have agreed on a set of Best Practice Recommendations that Diane Lescot presented (for more information on the topic see www.reliable-disclosure.org).
The harmonization and standardization of the system
At the event, Phil Moody, Secretary General of AIB, emphasised that the organization has developed and continues to refine standard to harmonize the issuing, transfer and cancellation of GoOs, including a new inter-registry telecommunications Hub, to facilitate transfer of GoOs between European countries. As Mr. Moody said: "AIB develops norms and standards to make rules for all GoO system administrators to play the same game. I can confirm that GoOs will be able to be used for only 12 months. We have also introduced stringent requirements to avoid double counting and fraud. In the UK, electricity suppliers must provide evidence of the supply of renewable energy by means of GoO under the threat of losing their supply licenses".
It is extremely important for national regulations to be designed in compliance with a standard, and preferably with the recommendations of AIB. Situation such as that which occurred in Spain should be avoided, where the GoO system does not meet these standards, and hence Spanish GoOs cannot be transferred within the EECS system. The consequences are severe for the country because international GoO trading is not easy. European countries are less likely to buy Spanish guarantees, because they do not comply with these requirements. Poland is currently in the process of designing the rules and must necessarily take into account such mistakes. Peter Niermeijer, Secretary General of RECS International, another speaker of the seminar, also emphasised the importance of system standarization and the introduction of standards. His answer: "One of the reasons for the creation of Guarantee of Origin is their potential transparency. RECS International is trying to motivate governments to implement common rules, as tracking energy in particular the countries must comply with the standards of network. In order to provide a guarantee to customers, you need to create a coherent regulatory framework " - He added.
What is the GoO and how to obtain it?
According to the definition in Directive 2009/28/EC, the Guarantee of Origin is an electronic documents that defines at least: the energy source from which the energy was produced and the start and end dates of production; whether it relates to electricity or heating or cooling; the identity, location, type and capacity of the installation where the energy was produced; whether and to what extent the installation has benefited from investment subsidies, whether and to what extent the unit of energy has benefited in any other way from a national support scheme (and the type of support scheme); the date on which the installation became operational; the date and country of issue; and a unique identification number.
As mentioned by Diane Lescot: "The Guarantee of Origin of energy produced from renewable sources is connected to "green energy", and the main purpose for it is to confirm that the energy is environmentally friendly. In the European Union, the consumer is becoming more and more "environmentally conscious", and very often wants to purchase renewable energy. The GoO consists of detailed information about the type of power plant that has manufactured the energy; proving from where, when and in what way the energy was produced. The expert emphasised that Article 15 of Directive 2009/28/EC introduces the obligation to issue GoOs to producers, and for these to be transferable to other electricity market parties; while article 3 of Directive 2009/72/EC introduces the obligation on electricity suppliers to provide the information to final customers and constitutes the requirement of implementation of labeling format for energy mix".
As Phil Moody, Secretary General of AIB, confirmed: "The GoO is the instrument that enables energy suppliers to compete This introduces the possibility pf proving to the final customer that the energy is environmentally friendly. Furthermore, he added that the most complicated process is to obtain the GoO for CHP. He mentioned also that issuing guarantees connected to heating and cooling is not common at the moment and, under the EECS scheme, it is currently restricted to Denmark..
Cross-border aspect of GoO
The most interesting, from the point of view of the RES sector is the fact that GoO can be traded across Europe (this distinguishes them from "green certificates" related to national support schemes, which are mostly only traded within a specific country). The transfer of Guarantees of Origin is Europe-wide, except where an importing member state has concerns about their reliability, veracity or accuracy, so properly obtained GoOs are a trade instrument in all the Member States, plus those states linked to the EU. At the moment in EECS (European Energy Certificate System) there are such countries as: Norway, Sweden, Finland, Denmark, Germany, Netherlands, the United Kingdom, Iceland, Belgium, Luxemburg, France, Spain, Switzerland, Austria, Italy, Portugal and Slovenia. Poland is one of the countries applying to the system. After the implementation, Polish producers will be better able to trade their green energy with the countries mentioned above.
How to earn money on GoO?
According to Sebastiaan Ratha, Executive Director in the Dutch Amsterdam Capital Trading brokerage company, at the same time a partner of the seminar, Poland is one of the countries that seems to be the most prospective, among other applicants. At the moment, he sees big interest of foreign consumers in Polish GoO, because of the competitive price. The largest amount of Guarantees of Origin is being bought by Netherlands, Belgium and Germany. About prices, this expert added: "For every MWh there is a price, the value of that prices is defined by the buyer, demand and supply... The Buyer and the Seller want to distinguish from many others. The same product, but electric power remains the same, actually...There are consumers on the market that care about their image." - according to the Director of ACT, the price of energy that comes from renewable sources can be even 500% higher and "GoOs offer an additional quality, the label increasing the value of the energy to which it is assigned". Then Sebastiaan Ratha emphasised the fluctuations of the prices of GoO caused by i.e. weather conditions in a particular period of time. As an example, he said about the lack of rain in 2011 which affected the market and caused decrease in hydropower production in Scandinavian countries and decreased the turnover potential. He added that the nuclear disaster of power plant in Fukushima influenced the GoO market as well. The clients did not want to purchase nuclear power, the prices of it went down, and other prices went up. The prices of various guarantee types always increase rapidly and go down slowly. The next year will be for GoO rather a Year of the Bear for GoOs (there will be a tendency for prices to decrease) than a year of the Bull (which is defined by long-term increase, which is normally connected to purchase of documents)".
Because of emission requirements, Poland is also attractive as the output market. Especially Scandinavian countries show an interest in Poland. The statement can be confirmed by the fact that after the seminar there was held the Networking Meeting sponsored by Statkraft – the European leader in RES. The Networking Meeting was an integral part of the seminar and was held on 3rd October, just after the lectures part. During the Meeting a few dozen of people could make business connections with foreign partners that trade GoOs.
Forecast - GoO in Poland
According to Maria Przekopowska from CBE Polska, the Organizer of seminar: "The first impression is that GoO will be really valuable for Polish companies from 2020 year. Because currently national "certificates of different colours" are a serious competitor for GoOs, as the former can be traded with a bigger profit. Should the systems of support certificates terminate, or the regulations limit their prices, then Polish producers will start to be interested in Guarantees of Origin and trade in them. However, starting from 2012, energy with foreign GoOs will be appear in supply offers to Polish consumers. According to declaration of our clients, the number of enquiries connected to GoOs has been increasing from the beginning 2012. Especially consumers with foreign capital are interested in them. Additionally, sales expansion is being planned by European leaders of RES and it is very likely that it will stimulate both the market and supply".
By CBE Polska Team
Because of the big interest in the GoO topic, we would like to invite you to the next meetings on the topic of development of GoO system in Poland. For more details, please check www.cbepolska.pl
