German GO demand

Demand for GOs has been increasing in Germany in the last few years, reaching cancellations of 203.7 TWh GOs during the 2023 disclosure period. For the 2024 disclosure period, Germany moved the disclosure deadline to 1 July but cancellation data within the AIB for the period will likely lag for months.

In the absence of complete cancellation data, a good indicator of the German GO demand is the sum of the production issuance statistics for a given year and the net import for the corresponding disclosure period. A look into the historical data since 2021 indicates that the final number of cancellations in each disclosure period is a number close to the sum of these two figures.

The challenge with the AIB data is that we only have complete or close to complete data for 2024 issuance, which in the latest AIB data records stands at 45.5 TWh.

German net import data during the 2024 disclosure period is only available until 31 March 2025. It stands at 130.4 TWh and it seems accurate when cross-checking with 16 national registries that publish detailed export and import data with Germany.

Of these registries, the Norwegian, which typically provides 75 % of German net imports, records a net export to Germany of 7.75 TWh during 1 April to 30 June 2025. If assuming the typical ratio of 25 % that goes via other registries, we could see another 2.6 TWh net import from other countries during the period.

The Spanish, Swedish, Hungarian, Belgian (Federal and Flanders), Irish, Icelandic, Lithuanian, Latvian, Luxembourgian, Serbian, Croatian, Italian, Danish and Dutch registries, which all have detailed records of destination country, record a net export to Germany of 1.35 TWh.

It would leave 1.25 TWh of net imports to Germany from other countries, including France. This would bring the total net import to Germany during 1 April – 30 June 2025 to 10.3 TWh. This assumes no changes in the general import-export patterns during the German 2024 disclosure period.

The registries in Finland, Portugal, Slovakia, and France have reported a total export of 27.2 TWh GOs but information about the export destination is missing. Of these, France is generally a popular country of origin for GOs cancelled in Germany (see, for instance, E.ON’s 2024 electricity labelling under the Energy Industry Act).

For the registries in other AIB countries like Greece, we miss public data, but volumes are likely low.

If assuming that there is a 1:1 relation between German cancellations and the sum of German issuance and net import, we would see a drop of 17.5 TWh to 186.2 TWh in cancellations between 2023 and 2024. However, final cancellation numbers will likely deviate from these numbers, due to the methodological difficulty of assessing the actual cancellations in Germany.

We might also see changes in the trade balance for different countries, such as France. Considering the increasing demand we have seen in other countries, because of the relatively low GO prices for the 2024 maturity and the first rollout of rules under the Corporate Sustainability Reporting Directive, we expect higher cancellations than 186.2 TWh in Germany during the 2024 disclosure period.

Our medium-term model is updated, accordingly. Taking into consideration the average increase of cancellations in Germany during the first five months and the shorter period for the 2024 disclosure, it now forecasts cancelations of 208.7 TWh GOs for 2024 in Germany, with a confidence interval of ± 10.8 TWh. This is a 2.5 % increase from last year, but an adjustment downward in our forecast.

Market impact

A plateauing German GO demand could have a bearish impact on the GO market as the rollover of 2024 GOs to 2025 affects the availability of GOs in the current year, in particular for countries with no temporal matching requirements.

However, the overall demand in the AIB would, with the new German cancellation forecast, still see a year-on-year growth for the 2024 disclosure period, although more modest than our previous assessment.

In the entire AIB, our medium-term model now forecasts an increase for 2024 of 46.8 TWh GO cancellations compared to an increase of 44.2 TWh in GO issuance. This brings the 2024 market balance and rollover to 2025 to a historical high.

However, our model forecasts that the market balance will contract for 2025, as electricity production from renewable sources have gone down so far this year.

The market is currently weighing the rollover from last year against a tight 2025. The impact of a weaker-than-expected German GO demand depends, under these circumstances, on the conditions for renewable power production in 2025 and the demand growth in other countries.