Powernext To Launch Monthly Auctions For Guarantees Of Origin In September

Powernext has developed an auction system for Guarantees of Origin (GOs) which will be launched in September 2019 .

In August 2018, the French Minister for an Ecological and Solidary Transition appointed Powernext as the sole operator of this auction system, and in addition extended Powernext’s mandate to operate the national registry for GOs in France. Guarantees of Origin help to promote the consumption of electricity produced from renewable sources by ensuring its traceability. The auction system developed by Powernext allows for price formation and increases transparency in the GO market.

The quantity of GOs to be auctioned each month will be defined by the ministry, who will be the only seller in the auction. The theoretical maximum of auctioned GOs in France corresponds to the total generation of renewable electricity benefitting from feed-in tariffs and market premium, and amounts to approximately 40 to 50 TWh per year. The smallest tradable unit will be 1 MWh (1 GO). The buy side will be represented by suppliers, who acquire GOs to be able to offer green electricity to end customers but also by other market participants. “With the new auction system, buyers of GOs will for the first time be able to specify preferences for the source of the renewable electricity. Powernext has designed an auction algorithm, which allows to specify the geographical location and the production technology, for example electricity generated from solar in Provence-Alpes-Côtes-d’Azur (PACA). This allows suppliers to offer green electricity generated by specific production devices,” explains Aude Filippi, Director of Growth Initiatives at Powernext.

The auction provides for a transparent price formation, which will correctly reflect market conditions. A price floor will be defined by the ministry ahead of the auction. To further promote transparency, Powernext will publish the auction results after the conclusion of the auction.

Future members of Powernext’s auction have to follow an admission procedure at Powernext and have to obtain a clearing membership with European Commodity Clearing (ECC), Powernext’s partner for clearing services, to participate in the auction. All auctions will be subject to specific market rules and will be monitored by Powernext’s market surveillance team. “With its long-lasting expertise as a market operator, Powernext ensures that the usual high standards on security and market integrity apply to the auctions of GOs”, says Egbert Laege , President of Powernext.

The new auction constitutes an important contribution by Powernext to the energy transition by promoting market-based mechanisms for green electricity. It marks another milestone in the diversification strategy of EEX Group, to which Powernext belongs. Just recently, EEX had announced the acquirement of Grexel Systems Oy, the leading provider of energy certificate registries in Europe.