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:
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)