Spain's Certificates of Origin in practice – the merchant and PPAs

​In a nutshell:

Spain has adjusted regulations regarding certificates of origin – certificados de origin – in a bid to simplify their trading but also to make them more unique and, thus, more valuable.

As of 18/04/2018, the Spanish government issued a revised version of "Circular" 1/2018 regarding the regulation on certificates of origin Garantias de Origin - GO) so as to bring Spanish law into line with the European law amendments in this area.

Among other things, the regulation lays down new rules for participating in trading organised by the Association of Issuing Bodies (AIB) and determines which market players are entitled to trade in GOs in Spain and abroad.

 
The price for GOs has increased 8-fold in the last two years but it should be noted that the initial prices were very low. According to GO Trader ACT Commodities, the price is currently 0.25 EUR/MWh.

GOs can be claimed by renewable energy producers as soon as they register for the specific remuneration for renewable power plants (Sistema de Liquidación del régimen retributivo específico de la CNMC). Once they are registered they can transfer GOs to traders in Spain or export them to other European countries or to a country with which the EU has concluded a respective agreement. But the certificates may be transferred or exported exclusively to a so-called "Comercializadora", i.e. a direct seller who has registered in the country of destination. If the certificates are traded via AIB all transaction participants must be listed there. In addition to being transferred to traders, GOs can be sold to energy end consumers. Comercializadoras are only allowed to sell GOs to their end consumers.

On principle, all renewable energy producers receive the respective GOs for each 1 MWh they generate; but power plants that receive incentives under RD 423/2014 (the successor to RD 661/2007) in Spain may only export these GOs if they waive the incentive. This is not yet economically reasonable.

When concluding a PPA, IPPs should remember to check whether the "route to market" section, i.e. the section regulating market access via the direct seller (Comercializadora), contains an exclusion of the automatic transfer of GOs so as to ensure that their ownership continues to lie with the IPPs. Direct sellers normally include the profit from (sale of the) GOs in their market access fees charged to the IPPs (0.5 – 1€/MWH). It should be born in mind that deadlines for filing an application for the issuance of GOs are relatively short and that GOs expire after only 12 months. 

IPPs (or a group company) must reinvest profits from the sale or the transfer of GOs in the form of measures aiming to improve profitability of existing renewable energy plants or in the form of research activities aiming to improve the global climate.