RED II: the benefits of auctioning GOs for supported energy & why auctions will help improve the system

Brussels, 9 October 2017 | New rules for Guarantees of Origin (GOs) for energy produced under RES support schemes are one important novelty of the Commission’s proposal for a recast of the Renewable Energy Directive, an integral part of the Clean Energy for All Europeans package.

The proposed amendment to Article 19 stipulates that no GOs shall be issued for energy receiving financial support from a support scheme, such as a feed-in tariff system. Instead, Member States shall issue such GOs and introduce them to the market through auctions. The revenues raised by the auction shall be used to offset the costs of renewable support.

Although the proposal has received some criticism and counter-proposals from various stakeholders, we support the amendment and believe that it helps to solve two major problems that currently exist:

  1. National legislation in some EU Member States explicitly prohibits the issuing of GOs for energy from support schemes altogether. This creates a “hole” in the disclosure process, and the supported energy is accounted for through the residual mix, which is undermining the GO system as a whole.
  2. EU State Aid rules are based on the assumption that support is determined by taking into account all sources of income. These should therefore also include revenues from GOs. However, forbidding the issuance of GOs altogether does not accurately reflect the actual state aid provided, as a potential source of revenue is being ignored. Auctioning GOs for supported energy will solve this issue in a transparent manner and lower the costs of support schemes.

Please read the full position paper below.