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HomeTradingSuccessful start of pan-European spot market for Guarantees of Origin

Successful start of pan-European spot market for Guarantees of Origin

The European Power Exchange (EPEX SPOT), the European Energy Exchange (EEX) and the European Commodity Clearing (ECC) jointly launched a pan-European market for Guarantees of Origin (GOs).

It is the first secondary market for GOs, involving no primary allocation by states but only trading of previously emitted certificates. The first spot auction took place on 28 September with 26 market participants registered, with 19,171 megawatt-hours (MWh) of certified green energy being sold. The order book of this new spot auction reflected a strong market interest on the buy-side, with over 4.5 terawatt-hours (TWh) of buy orders registered.

This is a promising outset for the upcoming auction, which will further cover all completed production months of 2022.

The GOs spot auction is held once a month and operated by EPEX SPOT, a leading European power spot exchange, under the exchange’s membership and market rules. Clearing and settlement are conducted by the clearing house ECC. EEX ensures delivery through its French GO registry. Since Wednesday’s auction, the post-trading chain has been completed successfully, GOs have been transferred and accepted by the buyers. This new market is part of EEX Group’s ongoing efforts to support the energy transition and decarbonisation with market-based instruments.

“EEX Group has a track record in operating registries for Guarantees of Origin and organising GO primary auctions on behalf of the Governments,” said Peter Reitz, Chief Executive Officer of EEX. “Through this launch, EEX Group is not only responding to a market need for a stronger and transparent price signal, but it’s also part of our efforts to fight climate change through a transition to renewable energy.”

“We are very proud of this successful launch, and of the overall market design we have developed jointly,” added Ralph Danielski, Chief Executive Officer of EPEX SPOT. “The innovative setup of the spot auction matches today’s needs of the market, but it is also fit for tomorrow’s evolutions. In the context of the energy transition, a well-functioning and exchange-based GOs market brings transparency on the traded products and the technologies that are most demanded in the market.”

“ECC will support the new trading products with its secure and reliable clearing infrastructure and its expertise in settling Guarantees of Origin”, commented Dr Götz Dittrich, Chief Operating Officer of ECC. “Our state-of-the-art clearing services fulfil the specific requirements of the GO market, providing security for all participants who want to become active in the new market.”

The monthly exchanged-based spot auctions with clear rules and securities pave the way to render the currently fragmented GOs market more transparent for market participants, creating robust price references and indices. The straight-through trading of both generic and specific GOs demand enables Europe-wide harmonisation of the operation of GOs. The overarching target of a functional pan-European GOs spot market would be for GOs to support the integration of renewables and ultimately replace costly national support schemes for renewable generation.

Guarantees of Origin are a tracking instrument that allows the confirmation of the origin of electricity and determines the quantity stemming from renewable production within the total of electricity that flows through the grid. This makes them an indispensable tool to promote the production and consumption of green electricity, by ensuring its traceability and enabling investments in renewables.

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