The total market demand for renewable electricity documented with Guarantees of Origin increased from 367 TWh in 2016 to 471 TWh in 2017, an impressive 28.3% increase. Although the growth is more evenly dispersed than earlier, the large countries still play an important role. Germany and France are both showing significant increase in customer uptake, and Germany has for the first time surpassed 91 TWh in total demand.
“The renewable electricity market in Europe continues to grow steeply,” says Tom Lindberg, Managing Director in ECOHZ, commenting on statistics from the Association of Issuing Bodies (AIB).“The market is also more robust and more balanced than ever before.”
Market value in 2017 two to three times greater than 2016
European consumers and corporates are increasingly fulfilling their green energy intentions by documenting their renewable purchases. Current market prices are reflecting this growing interest as the market reaches new levels of maturity. With the balance between supply and demand continuing to improve, the prices in the wholesale market have increased steadily compared to prices just a year ago.
With even the lowest prices hovering around EUR 0.65 for a standard, unspecified Guarantee of Origin in the wholesale market, the total market value has reached new levels. When also including volumes from markets using non-EECS Guarantees of Origin (150-180 TWh), the value of the European market is conservatively estimated to be EUR 450 million. This is more than two to three times higher than a year ago.
Wind and solar with greatest increase in market consumption
Although hydro power still is the largest source of renewable electricity available, the fastest increase in consumer uptake is experienced from wind and solar sources. It is likely that the share of wind and solar would be even higher if countries like Germany and France did not limit the issuing of Guarantees of Origin from power plants that have received support. As many of these power plants are either wind or solar, the result is a constricted supply from the newest technologies.
Total supply continues to increase
Compared to the same period in 2016, 2017 has experienced a higher supply of issued Guarantees of Origin to the market. The total supply is per date 410 TWh, but will likely increase with at least 100 TWh as the 2017 statistics are further updated in 2018. This confirms a lower growth in supply than in demand, and is comparable to the 2016 supply of 509 TWh.
Prices will most likely continue to increase
Although renewable power production (hydro, wind & solar) in Europe will continue to vary, and thus impact the volume of issued Guarantees of Origin, there are strong signals indicating that demand will continue to grow faster. This will continue to put pressure on today’s market prices.
“With new multinationals joining the global RE100 initiative, we are confident that renewable demand will continue. Although prices are higher than ever before, they still are not reflecting the actual marginal value of renewables compared to fossil alternatives. We can thus expect the prices to be further pressured upward the next few years,” says Lindberg.