The guarantees of origin market is set to reach a value of 3.7 billion euros by 2030

Demand for guarantees of origin, which certify that electricity supplied from the grid was generated from renewable energy sources, is expected to outstrip supply, with the market reaching a value of 3.7 billion euros by 2030, according to research company Aurora. Prices are expected to rise gradually.

Research company Aurora expects demand for electricity guarantees of origin to increase by 80% by 2030. Supply, meanwhile, is expected to grow by only around 50%. Guarantees of origin, which certify to buyers that the electricity they draw from the grid comes from renewable sources, are one of the EU’s main instruments for supporting renewable energy production.

They provide producers with additional revenue, reducing the need to provide support through subsidies. Aurora’s researchers expect the guarantees market to grow, driven primarily by Europe’s increased decarbonisation ambitions, overall growth in electricity demand and the expansion of hydrogen production in Europe.

The market has seen a sharp fall in prices

Aurora expects the market, which has fallen to its lowest level in more than two years in recent months, to recover. Guarantees currently trade at around 1 to 2 EUR/MWh, down from a record 10 EUR/MWh at the end of 2022. According to Aurora, prices will become more fragmented in the future.

Higher prices are expected for guarantees that enable green hydrogen to be produced in line with the definition set out in European legislation. Companies that buy guarantees of origin to make their electricity consumption greener are also expected to have to pay more for guarantees from newer plants. Along with the declining share of renewable hydropower in the supply mix, this will also weaken the role of Nordic countries as price-setting leaders in the market.

According to the research, granular certificates will command the highest prices on the market. Granular hourly guarantees of origin will be key to accurately tracking electricity consumption and green hydrogen production. EU regulations require granular guarantees to be issued as one of three ways to classify domestic hydrogen production as green. Their introduction is therefore becoming a central element of the energy transition. At present, however, not all guarantees of origin registries are able to issue them.