Shedding Light on Green Claims: The Impact of a Closer Temporal Alignment of Supply and Demand in Voluntary Green Electricity Markets
Hanna F. Scholta and Maximilian J. Blaschke
June 2024
Consumers purchase green energy via certificates independent from the physical good. The system’s current structure, primarily based on annual volumetric matching, is critiqued for neither being transparent nor incentivizing necessary system improvements. By applying the pattern of European electricity demand and renewable electricity supply to the GO certificate market from 2016-2021, we test quarters, months, weeks, days, and hours as periods for a more granular matching. Our analysis reveals major shortages of green electricity due to seasonal and day-night volatility in generation. We argue that the current annual matching mechanism weakens market signals for investments in renewable energy and flexibility measures to cover under-supplied periods. We recommend a shift towards quarterly matching for the short- and hourly matching for the long term to balance the incentives of the matching mechanisms with system costs. Furthermore, storage solutions should be enabled to act as consumers and issuers of certificates.
Keywords: energy transition, market-based mechanisms, energy attribute certificates, green electricity, guarantees of origin, variable renewable energy integration