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Second GOs spot auction sees increased market interest – 262 per cent rise in trade

The second exchange-based pan-European spot auction for Guarantees of Origin (GOs) took place on 26 October 2022 in Paris, France – with 69 gigawatt-hours (GWh) traded throughout the auction session. A total of 69,326 MWh was traded with GOs from the production period of January 2022 to September 2022. The first auction took place in September with 19,171 MWh of certified green energy traded – showing a rise in the volume of 262 per cent, in comparison to October’s figures.

In particular, the growing interest is supported by a strong representation of market participants.

Similarly to the first auction, the market activity was truly pan-European: all available technologies were traded (wind 23 per cent; hydro 74 per cent; solar 3 per cent) whilst certificates from 5 countries were exchanged. Market clearing prices range from 5.76 euros/megawatt-hours (MWh) to 5.89 euros/MWh, reflecting adequately the market and weather conditions of the production period.

Unique of its kind, the market design of this new pan-European spot auction features order submission according to different levels of specificities tradable across three dimensions:

  • power production technology (hydro, wind or solar),
  • issuing country within the framework of the Association of Issuing Bodies,
  • subsidy regime.

According to the press release, the auction meets the increasing demand for specific GOs from market participants while accommodating some buyers’ need for more generic GOs: buyers can bid for either specific GOs (for example, German wind) and fully or partially generic GOs (for example, any renewable energy produced anywhere or French renewable energy). Both specific and generic bids are then matched via a pay-as-clear algorithm. When submitting generic bids, buyers can leave it to the algorithm to find the most cost-effective set of GOs to match their bids. Besides simplifying the bidding process for market participants considerably, this matching process has multiple advantages: first, it increases the overall liquidity of the market; second, it makes the market more competitive at all levels (between buyers and also between countries and technologies); and finally, it generally improves the executed quantities and prices of the orders.

The main objective is to determine the optimal matching which maximises social welfare and traded volumes and to compute the market clearing price for different levels of specificities. The performance of the algorithm has been confirmed already from the first auction. The technical setup fulfils today’s market requirements while also being ready for future evolutions.

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