RED III: what is in and what is not? (part 2)

In the previous part of our article, we discussed several important amendments in the RED III such as fast-tracking the permitting process for renewable projects and the introduction of sectoral targets for renewable energy use. In this second part of the article, we will delve into further updates and shed light on two points that were omitted from the final version of the Directive but are pivotal for the guarantee of origin market in Europe.

Greater GO granularity

Greater granularity is allowed though smaller fractions of the standard 1 MWh GO size. This could enable 24/7 matching of consumption and generation through timestamped GOs for interested market participants.

Extension of GO schemes

RED III extends the scope of GOs to encompass renewable fuels of non-biological origin (RFNBO), such as hydrogen.

Green label

Before the end of 2025, the Commission will release a report evaluating potential approaches for creating a union-wide green label designed to promote the use of renewable energy produced by newly commissioned installations. Suppliers are expected to utilize the data found in GOs to demonstrate their adherence to the criteria specified for this label.

What is not in?

Mandatory full disclosure on EU level

Full consumption disclosure refers to electricity users proving the origin of every MWh of the renewable and non-renewable power they consume by cancelling GOs. This practice enhances market transparency and empowers end-consumers to make informed decisions regarding their energy purchases, encouraging them to shift towards renewables. At present, Switzerland, Austria, and the Netherlands, all members of the Association of Issuing Bodies (AIB), have implemented mandatory full disclosure. However, mandatory full disclosure on EU level was not in the final version of the RED III, which is perceived by some stakeholders as a “missed opportunity” for complete market transparency.

GOs for all renewable energy generation won’t be regulated by the EU

The European Commission’s 2021 proposal sought to mandate GOs for all renewable energy generation, which would have removed the discretion of Member States in issuing GOs to electricity generation benefiting from financial support, such as feed-in tariffs or market premiums. Nevertheless, this provision was not included in the final text, leaving the decision on whether to issue GOs to generators benefiting from production support in the hands of Member States.