Certificates, certificates, guarantees are not only tools to support the development of RES, but also an important factor in business success in times of energy transformation. When a priority for the company becomes green Energy, certificates are necessary proof of origin. What are they and how are they different?
The replacement of energy from coal or gas from renewable energy sources as soon as possible is one of the biggest challenges facing developed countries worldwide. However, effective transformation is not possible without a support system that increases the cost-effectiveness of new RES installations. In the European Union, a number of solutions have been adopted to help with this - they make green energy more attractive, while reducing the cost-effectiveness of continuing to produce it from fossil fuels.
The main simplification consists of three elements:
- RES auction , which are a form of State aid in the form of compensation of price differences and guaranteeing a fixed price for the manufacturer
- certificates of origin which can be sold on the market, increasing the profitability of investments,
- guarantees of origin , confirming the source of energy production.
Read more about the RES auction design on our blog: https://ozeos.pl/auctions-oze/
Show where your energy comes from
Any RES energy manufacturer may obtain a certificate of origin. This is a transferable property right with a certain market value. They are awarded by the Energy Regulatory Office - energy production certificates are converted to certificates.
Renewable energy producers are entitled to one certificate for each 1 MWh introduced into the energy network. Energy can be sold to any recipient at an agreed price without losing the rights to the certificate. It may be the so-called obliged operator - a trading company operating in the area where the installation was established. In this case, the price is governed by law but calculated on the basis of the market rate. Certificates are therefore one of the two main sources of income for green energy producers.
The RES Act requires the production of green energy for energy companies and each energy producer - including coal. If it does not produce energy from the sun, wind, water or biomass, it must purchase an appropriate number of certificates of origin on the free market. If an energy company required to produce a certain number of certificates does not do so, it must pay a penalty fee. Thus, the State creates a supply for free certificates issued. In Poland, their turnover takes place on the Good Energy Exchange.
Three Ways to Certificate
There are currently three types of certificates - green, blue and white:
- Green certificates - renewable energy produced using wind, sun, water or biomass is awarded.
- Blue certificates They go to companies producing energy in biogas plants.
- White Certificates related to energy efficiency.
The latter differ slightly from green and blue - their essence is not to support production from RES, but to reward companies for energy-saving activities. A properly conducted audit allows to obtain certificate efficiency Energy. In another way, they force the behaviour of reducing the carbon footprint of companies, thereby reducing their impact on global warming.
The white certificate can be obtained for a variety of activities - from modernization of the building, exchange of lighting to modernization of heating networks, where energy loss decreases. Some entities, mainly industrial and energy, are required to produce a certain amount of white certificates.
The application for a white certificate shall be submitted to the ERO before the modernization begins. In order to do so, an energy efficiency audit is necessary.
A guarantee, which means sure?
The third type of energy transition support system is guarantees of origin. They are ultimately sent to the final recipient and are certified that the specific amount of energy it received comes from renewable sources. Importantly, they do not result from property rights as in the case of certificates.
Guarantees are issued by the President of ERO. But before that happens, it is necessary to submit an application to the energy network operator. It is on the basis of information from him that it is decided to grant a guarantee for each MWh produced in the RES source. In Poland, the digital record of this document is stored in the Register of Origin Guarantee. The new holder can be identified by the redemption of the guarantees.
As of 1 January 2024, the Act extending the scope of energy sources to guarantees of origin by biomethane, heat, renewable hydrogen, biogas, including agriculture, enters into force.
Important Environmental Thinking
Guarantees of origin are of particular importance for cPPA (Corporate Power Purchase Agreement). One of the main reasons for concluding such contracts - long-term contracts for the supply of green energy - is to demonstrate that there is a pro-ecological business. A PPA agreement with an energy manufacturer from the sun, wind, gas or biomass shall be concluded with guarantees of origin, which are of both image and business significance.
The ability to tell partners and contractors that green energy is being used is becoming increasingly important to the image of all companies. Transparency that they provide certificates green Energy and guarantees, builds trust. Mainly because buyers of services and products are becoming more environmentally conscious, which translates into their purchasing decisions.
Thus having a guarantee of origin translates into competitive advantages. It is also important as evidence that the so-called greenwashing is not used - misleading consumers about the environmental benefits of their services or products. Read more about this unethical practice here.
Forced by Law
The changing law on financial reporting will undoubtedly increase the importance of energy guarantees. Since 2024, the CSRD has gradually entered into force. It requires financial reports to include all large companies and companies listed on the stock exchange of green activities. Its scope will gradually expand. In 2024 it will include companies employing more than 500 employees, in the following year with more than 250 employees, and from 2026 all listed companies regardless of income or employment. This is a total of over 50,000 companies that will push their partners and contractors to act in a similar way to demonstrate green activities.
- Guarantees of origin will soon become necessary to show that there is a environmentally friendly business. And the PPAs are their natural source,” says Zbigniew Kinal, President of OZEOS.