← All news

French association proposes updates to monthly disclosure in France

Tuesday, 13 April 2021

Prominent French association QuiEstVert released a proposal yesterday (12 March 2021) proposing some key changes needed in the auction process of Guarantees of Origin (GOs) in France to ensure a more robust system that benefits all market players.

Since 1st January 2021, an update to the  French Energy Code (L'Article R314-66 du Code de L'Energie) launching monthly disclosure periods has been in force.  Part of the law states that to certify the renewable source of the electricity consumed, the Guarantee of Origin must come from production in the same month as the month of consumption that it certifies except in the case where the production does not reach the megawatt-hour threshold in that month.  

The purpose behind this voluntary regulatory change is to bring more transparency and accuracy in the declaration of electricity production and consumption, as well as reinforce the French GO market who auction roughly between 1-3 TWh of GOs on a monthly basis. 

While the non-profit association QuiEstVert expressed in its proposal that monthly disclosures in France would bring dynamism to the market, it further mentioned that this requirement could be more restrictive and risky for suppliers offering green electricity. It is on this background that the association suggested the following three proposals to make the auction process  more robust:

  1. Two auction sessions in one month: Unlike in the previous system where consumers had a whole year to balance their portfolios the monthly system could pose problems if needed volumes aren't secured. In order for consumers to limit their risk of being unable to acquire GOs for their monthly consumption QuiEstVert suggests the implementation of two auction sessions for one month of production. 
  2. Reduction of the gap between electricity production and sale of GO from three to two months: To allow producers enough time to report their production and subsequent issuance of GOs, there is a 3-month gap between the period of electricity production and related GO sales. The association suggests a reduction in this gap to allow consumers enough time to balance their portfolios especially at the end of the year should December production auction sales continue to take place mid-March in the following year leaving little time before 31 March disclosure deadlines.
  3. The possibility to purchase forward market GOs: Currently the State auction volumes of electricity already produced (spot auctions). QuiEstVert suggests that this doesn't allow electricity suppliers the incentive to make long-term commitments due to price uncertainty. The association further suggests that having the ability to purchase forward market GOs (at least 3 years ahead) could incentivize more companies to invest in renewable energy for the benefit and advancement of the energy transition.

It will be interesting to see whether we see the impact of monthly disclosures in the upcoming French Auctions this month (April 2021) as they will represent January 2021 production GOs.  It is important to note that the sentiment from some market participants so far is that it is a bit early to state whether or not an impact of this law will be seen so soon but in a few months could be expected.  

Meanwhile, some contacted market sources have mentioned their hesitancy towards monthly disclosures citing it might make the process of balancing company portfolios more complicated and might hinder some companies from the voluntary procurement process. 

The proposed changes by QuiEstVert seem to push for a system that allows suppliers and consumers enough time to be able to balance their consumption portfolios while suggesting the possibility of opening forward market French GOs to allow for long-term RE commitment to advance France's energy transition. 

The latest results of the French Auctions are available here


QuiEstVert (in French)