The progression of Guarantees of Origin trading in Croatia amidst the European framework

Abstract

This article explores the progress and development of Guarantees of Origin trading in Croatia, specifically focusing on the regulatory framework implemented by the Republic of Croatia. The responsibility for issuing Guarantees of Origin for electricity and managing the Registry of Guarantees of Origin lies with the CROATIAN ENERGY MARKET OPERATOR Ltd. (HROTE). The Croatian Registry of Guarantees of Origin was established in 2014, and full implementation commenced in February 2015 with the registration of the first users. In alignment with the Law on Renewable Energy Sources and Highly Effective Cogeneration, HROTE, as the leader of the ECO Balance Group for incentivized electricity production, began selling a portion of the energy produced on the trading platforms of CROATIAN POWER EXCHANGE Ltd. (CROPEX) since the beginning of 2019. This shift towards market-based electricity sales created an opportunity to establish a system for trading Guarantees of Origin, specifically for electricity produced by eligible incentivized producers and sold on CROPEX markets by HROTE. The issuance of Guarantees of Origin for relevant power plants occurs within the Croatian Guarantees of Origin Registry, where they are sold to market participants based on market principles through Guarantees of Origin Auctions. CROPEX organizes these auctions using a specially developed IT auction trading platform. Once an auction is successfully completed, the raised funds are transferred to the incentivized system fund, and the sold Guarantees of Origin are transferred from HROTE's account in the Guarantees of Origin Registry to the user accounts of the auction participants. Overall, Guarantees of Origin empower end customers to determine the source of their supplied electricity, enabling them to make informed choices. This energy certification process verifies that consumers have purchased energy from renewable sources. Guarantees of Origin also serve as effective tools for promoting the use of renewable energy sources and attracting investments in renewable energy generation. Consequently, they contribute to achieving targets related to renewable energy utilization. The article also delves into the background and development of Guarantees of Origin trading in Croatia, positioning the country as a leader in this domain within the European context. It includes a comparative analysis of the Guarantees of Origin market in the United Kingdom as a reference point, with consideration given to the impact of Brexit on Guarantees of Origin markets. Additionally, the article explores the segregation of Guarantees of Origin auctions based on specific technologies and their characteristics. For instance, Guarantees of Origin from biomass power plants are sold through two different auctions based on the plant's installed capacity, while Guarantees of Origin from wind power plants are also sold through two auctions, but contingent on the commissioning start date. These distinctions lead to varying prices depending on the technology's age or installed capacity.