The green energy markets are characterised by a certificate market where the electricity produced from renewable energy sources is traded separately from the physical production under the form of a certificate.
The Voluntary markets (or green power markets) are driven by consumer preference, who can choose what type of electricity they want to buy from the grid. The markets are characterised by a voluntary demand of green certificates from market operators buying for voluntary reasons and mainly for disclosure purposes.
The Directive 2001/77/EC that entered into force in 2001 set the basis for the concept of guarantee of origins. This directive required each member state to implement an electronic database for the issuing, transfer and cancellation of guarantee of origin. The 2001/77 Directive has been amended and replaced by the 2009/28 Directive, where the electricity mix to the final customer must be disclosed through the guarantees of origin system.
Guarantee of origins allows the tracking of the electricity produced from renewable energy sources such as hydro, wind, solar and biomass, which bring an environmental added value to the energy mix. The certificates can be traded separately from the underlying commodity (electricity).
This means that municipalities and large consumers can purchase green certificates independently from the physical electricity and thus “green up” their electricity mix.
Currently guarantee of origins are an important element in the trade of renewable electricity. They provide customers with transparency in green energy offerings and disclosure.
Together with the voluntary markets and the disclosure system, each member state is allowed to support the development of renewable power through the mandatory markets, which are characterised by national mandatory schemes and feed-in tariff schemes.
A quota obligation system defines a national support scheme based on a market model. Those systems can be characterised by fiscal exemptions or quota obligations schemes where certificates are traded in order to obtain the fiscal exemption or to full fill the quota obligation. In most countries with a compliance market, the obligation is imposed on the electricity supplier or electricity producers and importers.
A feed-in tariff scheme is a policy mechanism designed to accelerate investment in renewable energy technologies and based on financial support for renewable energy production. The feed-in tariff is usually implemented through:
Technologies such as wind power, for instance, are awarded a lower per-kWh price, while technologies such as solar PV and tidal power are offered a higher price, reflecting higher costs. Those feed-in tariff are backed by governmental agreements or governmental support.