Germany’s System for Guarantees of Regional Origin (GRO)

Germany has a very successful supporting system for renewable electricity with one small flaw: As a consequence of the prohibition of double marketing plant operators could not sell supported renewables as such. Consumers receive the supported renewable electricity in their disclosure on a statistical basis in relation to the amount they have paid for it per kilowatt-hour of consumed electricity. So, consumers so far could not explicitly buy electricity from supported plants even if they wanted to consume the electricity produced from a windmill in their neighborhood. 

Electricity from renewable energies, which is financially supported by the EEG, cannot be marketed directly to electricity customers as green electricity due to the prohibition of double marketing. (The green electricity privilege under the Renewable Energies Act (EEG) as a direct marketing method was abolished in 2014.) The last amendment of the EEG 2017 offers a new possibility to link a consumer with electricity provision from a renewable electricity production plant that is supported with the market premium. This is done by the “Guarantee of Regional Origin” (GRO) that proves the electricity production of a supported plant inside the region of the consumer for the electricity disclosure of regional renewable electricity. A paper by the Federal Ministry of Economics and Energy (only available in German language) from 11 March 2016 explains in more detail the mechanism behind it.

The aim of this regional green electricity disclosure is to increase local acceptance of the energy transition in the electricity sector that is accompanied by installation of new renewable electricity production plants. . The legislator intends to promote the identification of consumers with renewable electricity installations in their region, in particular to avoid negative attitudes to the expansion of renewable energies. Potential customers should be able to purchase electricity from certain renewable energy plants in their region.

The GRO is an electronic document very similar to a guarantee of origin. It only verifies the regional origin of electricity from renewable energies – whereas the GO according to the European Directive 2009/28/EC proves the supply with renewable electricity. 

If an electricity supplier wants to sell regional renewable electricity, it must show this in its annual electricity disclosure and thus prove the regional characteristics of the electricity to it’s customers. The supplier is entitled to disclose the regional characteristic via cancellation of matching GROs. This share of “regional renewable electricity” in the disclosure is limited to the share of "renewable energies financed by the EEG support".

A GRO is being issued upon request to any plant operator whose plant receives the so called market premium for its electricity production. One kilowatt hour corresponds to one GRO – an obvious difference to GOs according the European Directive and a consequence of the predominantly small amount of consumption. The GRO can only be traded along the electricity trading chain which ends at the electricity supplier. The supplier can purchase the electricity and the GROs that need to be cancelled for the respective customer, if this customer lives within a radius of 50 km around the respective plant. With GROs the customer can purchase electricity from a well-known installation, maybe because of passing by there on the daily way to work.

The customer, or more precisely the postcode area in which the customer lives, opens up the region. A radius of 50 km is drawn from the edges of this postcode area. All postal code areas that are touched belong to the customer's region. That means a region in the sense of the GRO is determined on the basis of postal codes. The electricity supplier who wants to sell regional electricity to a consumer has to check in which postcode area the customer lives. All installations within this defined region can supply this consumer with regional renewable electricity.

Ultimately, every cancelled GRO is reflected in the electricity disclosure and proves to the consumer the regional origin of the renewable electricity. This instrument for increasing the acceptance for the expansion of renewable energies must satisfy the highest credibility standards. No more regional renewable electricity may be disclosed than actually has been produced. The tasks of issuing, controlling the electricity trading chain, cancellation and verifying the electricity disclosure have been entrusted to the German Environment Agency who is already the issuing body of European GOs in Germany (HKNR). The team of HKNR has established a special register for GROs, which meets the same standards as the German GO Register, namely fraud and tampering protection. The regional register is optically and procedurally closely based on the existing GO register, the partners for the production data deliveries (distribution system operators) are identical. Differences exist in the proof of the electricity trading chain, in the fact that GROs are issued per kWh and in particular the role of the postcode in the cancellation procedure, which ensures the regional attribute of the electricity on delivery. For this purpose, the costumer postal codes has to be specified when cancelling GROs. Thus, a reliable verification of the regionality takes place.

GROs are to be used only on a national basis and for electricity disclosure in Germany. In contradiction to European GOs they are not internationally tradable. These are two completely separate systems and instruments – the GRO for the supported electricity part in the disclosure scheme and the European GO for the voluntary renewable electricity in the disclosure. These instruments should not be mixed even if they are administered by the same issuing body in the same database and technically they cannot be mixed.

It is still hard to see what impact regional renewable electricity products will have on the German electricity market. Nevertheless, in the first few months of register operation, we see an increasing demand for registration in the register of GROs. As the register of GROs started in the beginning of 2019 we will receive information on this in November 2020 (date for electricity disclosure for the purchase of 2019).