Interest in coupled electricity and GO delivery to rise in Germany

Background 

In 2018, the so-called optional coupling of electricity and GOs was introduced in Section 16 Paragraph 3 of Germany’s Implementing Ordinance of Guarantees of Origin (HkRNDV). The aim was to provide a framework for linking the electricity generated by a specific plant directly to the electricity supplied by a supplier, creating a credible green electricity product.

The coupled delivery - the parallel delivery of the electricity and the associated GOs - is stated in the GO after a confirmation by an environmental expert.  While the optional coupling existed on paper, the rule that the electricity generator, the supplier and the end customer had to be registered in the same balancing group to simplify tracking, limited the uptake for such a product.

A balancing group is a group of entities such as generators, consumers, suppliers etc. that are responsible for balancing their electricity supply and demand in real time. 

The introduction of the new article 30a from 1 January 2023 streamlined the process further, allowing the tracking of the delivered electricity to happen via two balancing groups – the generator's green balancing group and the supplier’s or end consumer’s balancing group.  

State aid rule change 

A separate change to the state aid rules for indirect emission costs also implemented from 1 January 2023 created conditions for further uptake of this product.

German energy-intensive companies can qualify for compensations if they cover at least 30 % of their electricity consumption from carbon-free sources, among others. Buying unbundled renewable GOs or securing renewable electricity via PPAs with bundled GOs are both ways to fulfil the 30 % renewable electricity consumption requirement.

However, 80 % of the GOs must come from Central Western European countries (Germany, Austria and Luxemburg). Furthermore, from reporting period 2023 onwards state-aid beneficiaries have to procure coupled electricity with GOs when the electricity is generated in Germany. The rule does not apply when procuring GOs from abroad. 

After a public consultation on the topic earlier this year, Germany’s Federal Environment Agency (UBA) recently came out with detailed guidelines on the practical implementation of article 30a. As a result, the first GOs coupled with the electricity delivery were submitted by German environmental verifier GUTcert for cancellation at the end of July 2024.  

Coupled delivery guidelines 

The delivery is tracked by environmental verifiers on a monthly basis. Data must prove that the same amount of electricity consumed by a given customer was produced by an unsubsidised renewable generator in the given month. 

The environmental verifier confirms the requirements for the coupled delivery at the end of the supply chain and on behalf of the electricity supplier. The electricity producers initially apply for regular GOs which are then transferred to the supplier who can hire a verifier to trace back the coupled delivery. After the verifier confirms its environmental assessment in the GO registry’s software, the coupled GOs can be marked as such and cancelled. 

There are two options to track coupled delivery: 

Option 1: generator, supplier and end consumer are registered in the same balancing group 

This must be the balancing group from which the supplier supplies its end consumers. As a rule, the end consumer's withdrawal points are registered there. Non-renewable energies can also be balanced in this balancing group. The balancing group does not have to be managed by the supplier itself. The decisive factor is that the electricity deliveries to the supplier's end consumers are balanced there. 

Option 2: generator and end consumer are part of two separate balancing groups 

The electricity generation plant is registered in balancing group 1 (comprising only renewable producers) and feeds into the grid at a precise metering point.  Balancing group 2 could be a balancing group from which the supplier supplies its end consumers and the given consumer is registered as a point of withdrawal within the same group.  

Or it can be a balancing group directly managed by the end consumer whereby only the same end consumer’s consumption points are registered in it (this option would be less popular since not many end consumers are balancing group coordinators).

The electricity generated is delivered from balancing group 1 to balancing group 2 according to a schedule. The coupled GOs do not have to be transferred directly from the plant operator's GO registry account to the electricity supplier's account. The supply chain of the GOs in the registry can have a different path (the diagram below shows this by involving a trader). 

Special cases

Coupled GO delivery can also be cancelled for electricity supply within a prosumer network. As this is an independent network not connected to the grid, there are no balancing groups that can be used to track the electricity supply.

At the same time, when electricity is generated and consumed within such a network, it is relatively certain that the electricity has actually been delivered.Therefore, the verifier must only ensure that the same GO volume issued to the generator has also been supplied for electricity consumption in the same period.

UBA’s guidelines also shed light on how to track electricity delivery across control areas (grid zones) operated by different transmission system operators (TSOs) since in these cases more than two balancing groups need to be involved (often applicable for delivery of offshore wind electricity). 

Market impact

Demand for coupled delivery of electricity and GOs is likely to surge in Germany as a result of the new state aid rules. However, given that a coupled GO is not a stand-alone tradable product, it could mean that a certain amount of regular GOs could be diverted from the traded market to be cancelled as coupled with the electricity delivery.

On the other hand, demand for regular GOs that could have been driven by state-aid receivers would not materialise. This suggests that supply and demand drivers for tradable GOs related to this policy are balancing each other out.

Germany’s local GO issuance has been steadily rising since 2021 but demand (cancellations) far outstrips supply due to the country not issuing GOs to supported producers.

As issuing body, UBA is yet to publish the number of coupled GOs that have been cancelled so far as well as the number of electricity suppliers that are able to provide the service. 

It is likely that only the large suppliers with the corresponding portfolio can currently offer coupled delivery. Internal processes would have to be adapted because the specifications for coupled delivery are not common practice, according to a GUTcert representative.

Setting these up would come at an additional cost to the supplier, thus potentially adding a premium on the stand-alone price of the coupled GOs within wider electricity delivery contracts. 

Utility RWE recently held a tender to secure up to 3 TWh of renewable electricity for 2025/2026 delivery amid increased demand from corporate clients (most likely industrials receiving state aid). While coupled delivery was not explicitly mentioned, it is likely that RWE will be offering this service to its customers via the PPAs the utility is expected to sign.

When a physical PPA is negotiated either by the industrial consumer or a utility then an additional clause on the requirements for coupled delivery (of full or partial volumes) would have to be added to fulfill the article 30a criteria.

While this extra step may need additional planning/resource, it may tip the scales for some renewable project investors to opt for a PPA instead of government support via the EEG scheme as the value of the coupled GOs could carry a premium price within the contract.  

UBA has commissioned a research project to carry out statistical evaluations of coupled GOs with results likely to be published in early 2026, once enough cancellation data has been gathered, according to a UBA representative.

The agency has also looked into studies examining the impact of renewable electricity procurement focusing primarily on the influence of hourly GO granularity compared to annual granularity (assuming that electricity can flow from the renewable plant to the electricity consumer). These conclude that green electricity procurement with hourly granularity leads to fewer emissions in the energy system while at the same time increases the costs of that system.

“Coupled GOs seem to be the first step. They ensure that there is actually a flow of electricity between electricity producers and electricity consumers. Therefore, they are a necessary building block to achieve the positive effect expected from hourly granularity found in the studies,” said the UBA representative.