The bearish trend in GO prices that began in mid-2023 continued through 2024 and extended into early 2025. The yearly average 2024 spot price fell to EUR 1.30/MWh – a 79 % drop compared to 2023. As the surplus supply expanded, prices steadily declined, falling from an average EUR 2.70/MWh in Q1 2024 to EUR 0.432/MWh by Q4 2024.
Despite declining prices, traded volumes rose 11 % year on year. The increase was particularly pronounced in Q4 2024, when liquidity surged by 40 % compared to Q4 2023, reflecting heightened demand for GOs at these lower price levels and hinting at a potential shift toward a seller’s market.
Furthermore, large auction volumes offered in the second half of December failed to drive prices lower than EUR 0.35/MWh. Instead, prices for the 2024 vintage stabilised around this level, indicating a potential price floor where renewable energy generators are unwilling to sell.
The increase in trading activity observed during minor price upticks reinforces the notion of resistance at these levels, signalling a gradual rebalancing of market dynamics. However, in early 2025, this resistance was breached, with prices falling below EUR 0.30/MWh.
In contrast, futures prices for 2025 and 2026 vintages showed a less pronounced decline, shedding 63 % and 54 % respectively year on year. This indicates market expectations of a gradual reduction in the accumulated surplus, which stood at an estimated 164 TWh at the end of the last disclosure period (31 March 2024).
GO auctions in the AIB brought 117 TWh of GOs to the market in 2024. Of these, 112 TWh were sold, an increase of 27 % compared to 2023.
The year-on-year increase in sold volumes was mainly driven by accumulated unsold volumes by Italian GSE in 2023 that were reoffered and sold in 2024. GSE sold 32.4 TWh worth of GOs in 2024, up from 10 TWh in 2023, as auction price setting was adjusted to reflect over-the-counter (OTC) levels better.
Throughout most of the year, auction volumes had a bearish impact on the OTC market. OTC prices often dropped in the days right before and right after large auctions in Italy, France and Portugal, especially on dates when the major auction sessions coincided.
While this bearish grip seemed to decrease towards the end of the year, GSE withheld GO volumes corresponding to power production from June 2024 onwards, in contrast to 2023 when GOs corresponding to October electricity production were offered.
As a consequence, according to Veyt’s estimation, up to 32 TWh in total (including the 3.1 TWh sold at the EEX auction held in week 3) could be offered via the scheduled auctions ahead of the 2024 disclosure deadline on 31 March 2025.
The AIB countries (excluding Ireland and Iceland) produced 1,191 TWh from hydro, solar and wind combined in 2024, up 87.2 TWh year on year. Beneficial weather conditions for renewable electricity generation were the main reason for this increase, with hydropower generation surpassing 2023 by 43.3 TWh.
However, 2024 also saw continued renewable capacity build-out which contributed to solar and wind generation reaching an increase of roughly 34.5 TWh and 9.4 TWh year on year respectively. The increase in solar production in particular reflected the continued growth in installed capacity.
The EU installed 65.5 GW of new solar capacity last year, reaching a new record. However, it is only a 4 % increase from 2023 and below the 70 GW annual additions needed to reach REPowerEU 2030 targets of 750 GW by 2030.
Solar Power Europe attributes the growth deceleration to slow rate of EU electrification, grid congestion and lack of storage, as well as permitting issues, among others.
The European wind industry faced similar challenges in 2024. The EU installed only 13 GW of new wind capacity (11.4 GW onshore and 1.4 GW offshore wind), well below the 30 GW annual target.
According to the Veyt Base Case, solar and wind will grow in 2025 to around 315 GW and 238 GW, respectively, in the AIB region, contributing with an increase of renewable electricity generation (wind, solar, hydro) to 1,310 TWh under average weather conditions. The total generation could grow to 1,468 TWh when biomass is included.
GO market balance to shrink
EECS GO issuance volume for renewable sources is expected to reach 915.8 TWh in 2024, up from 867.2 TWh in 2023 and 732.2 TWh in 2022. The steep rise reflects the sustained growth in renewable energy production and favourable weather conditions observed in both 2023 and 2024.
Despite this increase, we estimate that the cumulative balance will decrease by 9 TWh, following the main 2024 disclosure deadline on 31 March 2025, due to a strong growth in cancellations and a relatively high number of expired GOs. A total of 155 TWh EECS GOs from renewable sources are expected to roll over to 2025 following the disclosure period.
According to the Veyt Base Case scenario, which forecasts GO prices until 2040 for the AIB region, the issuance of EECS GO from wind and solar is expected to increase in 2025, while the issuance from hydro power will be at lower levels than 2024. Meanwhile, demand is expected to continue to grow in 2025, to the extent that the rolling surplus of GOs will decrease going into 2026.
Industrial economic recovery and data centres could boost electricity demand
According to Eurelectric, electricity demand has not recovered to pre-energy crisis levels primarily due to low industrial consumption. Power demand grew by less than 2 % year-to-year in 2024 to 2,731 TWh but remains lower than pre-2021 levels.
While some of this reduction can be attributed to higher energy efficiency and energy savings, more than 50 % is due to industrial downturn. This reflects the economic difficulties seen in Europe during this period, which have affected some sectors and countries more than others.
For instance, Germany saw its industry’s power consumption decrease by 13 % in 2023 compared to 2021 and is estimated to have slumped further in 2024 since industrial output contracted 4 % year on year. This has had bearish impact on the GO market by lowering the demand and the willingness-to-pay of industries that relatively recently have been incentivised (through different state aid schemes) to engage in the GO market.
The IEA projects recovery in EU electricity demand to accelerate in 2025 to 2.6 %, driven by the restart in production across many energy-intensive industries, greater electrification of the transport and heating sectors, as well as expansion in the data centre sector.
The latter is forecast to consume 150 TWh by 2026 from 100 TWh in 2022. Growth would be especially pronounced in Ireland and Denmark, where data centres could be responsible for 30 % and 8 % of domestic electricity consumption by 2026, respectively.
The European economy too, is expected to experience a positive dynamic over 2025-2026, averaging a 1.8 % annual growth rate, according to the IEA projections. We could see a boost in GO demand as a result of higher electricity demand and willingness-to-pay amid improved economic conditions.
A host of legislations are likely to affect the supply-demand balance on the market as GOs are increasingly used for GHG emission reduction management and RES-E consumption reporting.
The Corporate Sustainability Reporting Directive (CSRD) started to affect companies that are already within the scope of the Non-Financial Reporting Directive (2014/95/EU) in 2024 with first reports due for the financial year 2025 from large-listed companies.
As of 1 January 2025 (first reports in 2026) other large companies will need to comply with the CSRD. They must report using the European Sustainability Reporting Standards (ESRS), which reinforce market-based reporting and apply to 50,000 companies in the EU, with a bullish impact on the GO market.
We expect negotiations on the Green Claims Directive to resume in 2025. After the European Commission put forward a proposal in 2023, the EU Council and the European Parliament both finalised their positions in 2024. All three institutions recommend the use of the Environmental Footprint methods to back environmental claims, a lifecycle assessment methodology where EECS GOs can be used to report precision-modelled electricity consumption. If adopted, this has the potential to increase GO demand.
State aid schemes for energy-intensive industries continue to influence the demand side of the GO market: 1) for indirect emission costs, returning some of the costs incurred in the EU ETS, and 2) with reduced electricity levies. Beneficiaries can meet eligibility by sourcing GOs corresponding to no less than 30 % of their electricity consumption, inter alia.
Two State aid schemes for indirect emission costs run out in 2025 (Netherlands, Finland), whereas no new ones have been approved by the Commission in 2024.
However, we may see some new approvals this year. Another sector-specific legislative driver is the sustainable data centres legislation applicable from 2024, where total energy and renewable energy consumption need to be reported.
Data centres need either bundled or unbundled GOs to report on therenewable energy consumption. The IT sector was the top corporate PPA offtaker in 2024, signing 3.1 GW across 22 deals, according to Veyt’s PPA database.
In 2024, 14 final National Energy and Climate Plans (NECPs) have been submitted to the Commission, indicating higher renewable energy build-out ambitions, which upon realisationhave a bearish impact on the GO market.
In contrast, the Commission indirectly confirmed the impact on the GO market under the Renewable Fuels of Non-biological Origin (RFNBO) framework through the approval of RFNBO certification schemes in December 2024 (e.g.CertifHy). All approved schemes require cancelled GOs when these have been issued for the corresponding electricity production.
The extent to which the renewable electricity capacity build-out and RFNBO targets affect the GO market will ultimately depend on Member States’ ability to promote such electrification of the economy. Current trajectory, which is taken into consideration in our long-term forecast, indicates that the EU will fall short of these targets, in particular with respect to hydrogen production.
The declining prices and regulatory incentives are expected to boost demand and counterbalance the record of GO issuances in 2024. While we still expect cancellations to fall short of tipping the market balance scale, GO expiries should support cancellations, resulting in a marginal decrease of the cumulative balance, following the main disclosure deadline on 31 March 2025.
Still, we expect 2024 contracts to remain around current levels, reflecting the higher certainty of supply compared to demand, at least leading up to the main disclosure deadline.
The uncertainty of cancellation and expiry numbers for 2024 are expected to also weigh on 2025 vintage prices in the short term. But we expect a bullish impact on 2025 vintage prices on an annual basis with a volume weighted average price (VWAP) of EUR 1.06/MWh for the year under average weather conditions. However, weather sensitivities under our long-term forecast indicate that there can be large movements in prices.
We expect continued growth in both supply and demand in 2025, but demand is expected to grow at a faster pace under average weather conditions.
Regulatory incentives to use GOs, such as the expanded scope of CSRD and conditional support to trade-exposed industries, are expected to drive demand to new highs. This is in turn expected to reduce the cumulative balance further, providing a bullish impact also on future contracts.
As we move through 2025, when uncertainties of the 2024 rollover fade, we expect prices to increase to reflect a tightening in the market balance in the coming years. Our long-term model forecasts VWAPs spot prices for the 2026 vintage that is almost double the current levels for 2026 contracts.
Veyt specialises in data, analysis, and insights for all significant low-carbon markets and renewable energy.
