What are guarantees of origin?
Guarantees of origin (GOs) are certificates within a system set up by the European Union (2009/28/EC). This system is designed to promote the use of renewable energy sources and to reward companies that produce electricity from renewable energy sources. The idea behind the system is to give the holder of the GOs, the right to claim the renewable attribute of his electrical usage. The certificate has a financial value, and this value supports the development of renewable or green energy production, which is why GOs are often referred to as green certificates in everyday speech. With this system, those who produce energy from renewable energy sources are allowed to produce two products, electricity and GOs. The GOs are an independent commodity.
Why buy a guarantee of origin?
Many companies, especially in production and manufacturing, want to be responsible for the CO2 emissions they cause. One of the things they can do is to purchase GOs and thus reduce their CO2 footprint, as well as support further development of renewable energy sources.
Individuals can use the system as well if they want to achieve the same goals.
Who seeks guarantees of origin?
Those who purchase GOs are mainly large national and international companies that want to be environmentally responsible. The GOs are a useful and positive tool when measuring CSR (Corporate Social Responsibility) and/or ESG of various companies’ operations.
How does trading of guarantees of origin work?
GOs are issued upon request from an electricity producer. The GOs can be used for up to 12 months from the time of production. When an end consumer requests a certification of his energy use, the holder of the GOs cancels the same amount of GOs corresponding to the consumer usage. Following the cancellation, the National Energy Agency (NEA) is notified that a customer has certified renewable electricity consumption.
Trading of GOs can take place between parties within AIB (https://www.aib-net.org/). Electricity producers, portfolio managers and brokers can trade them as needed, before the GOs are finally used to certify electricity consumption within the system. It is therefore possible to use Icelandic GOs to certify electricity consumption abroad and vice versa.
Does HS Orka sell guarantees of origin?
Yes. HS Orka sells GOs, mainly from its own production. Those GOs have not been cancelled on behalf of customers which have requested or contracted certified renewable energy purchases from HS Orka.
What happens if an electricity consumer does not buy guarantees of origin?
Electricity consumers who are not accounted for in the cancellation statements to the NEA receive a very similar composition of electricity in their books as the other 28 member countries of the market for GOs, the European Attribute Mix. This composition has nuclear power and fossil fuels as energy sources, as well as renewable energy.
Who is in charge of maintaining guarantees of origin for Iceland?
Landsnet, the public transmission operator, oversees the issuing and cancellations of GOs for Iceland as well as import and export. NEA surveys the usage to ensure that those individuals and companies that have secured GOs can prove that they are using certified electricity.
Are certificates’ systems a step in the right direction?
We believe so. Guarantees of origin are a well-functioning attribute in the market, it is a voluntary market that plays an important role globally. It is the only existing way to certify renewable energy usage 100%. At the same time the cost of developing new renewable resources is increasing since many of the more accessible sources have already been harnessed. With guarantees of origin, the economics of new renewable plants are improved.
The number of countries within AIB is increasing and no country has left AIB. Outside of Europe there is even more growth in the use of I-REC (International Renewable Certificates).
New certificates’ systems have appeared recently, for example in green hydrogen and green gas. Various certificates’ systems are developing worldwide, and they can contribute to the energy transformation of the future.