The European Energy Exchange (EEX), a leading energy and commodity exchange and IncubEx, a specialist environmental commodity and climate risk product development firm, announced today the launch of a new suite of Guarantees of Origin (GO) futures contracts on 2 September 2024.

EEX will list four new GO contracts:

• EEX European Renewable Power GO Future (any technology GOs: Hydro/Wind/Solar/Biomass)
• EEX European Hydro GO Future
• EEX European Wind GO Future
• EEX European Solar GO Future

GOs are a key component of the energy transition as they provide transparent tracking of origins of renewable energy within the EU and help facilitate investment into renewable energy projects. The verified certificates, each representing 1 MWh from renewable energy sources, can be traded and used across Europe. The new standardised EEX futures contracts will allow market participants to hedge these markets.

“EEX offers the most liquid power market in Europe today, therefore listing GO futures is very complementary to our existing power, natural gas and environmental market offerings,” says Peter Reitz, EEX Chief Executive Officer. “GOs and registry services are central to our efforts to support the energy transition, and these new products are another important step of this journey. The evolving environmental markets require product innovations, and we are excited to respond to this need with new products while looking forward to further building this market by leveraging our long-standing experience.”

“We have seen massive growth in the European GO market in recent years with activity that reflects the broader push towards renewables along with macro impacts from the energy crisis and climate events such as droughts,” adds Dan Scarbrough, President and COO of IncubEx. “Participants from the utility sector to corporates are looking for ways to hedge their exposure and expand the flow of investment capital, which makes GO futures a valuable product set as further evidenced by the significant development of the renewable energy certificate futures market in the U.S. over the last 15 years.”

Over the past several years, the supply and demand for GOs has increased significantly, driven by renewable energy policies and more corporations decarbonising their operations via the purchase of GOs. The volume of GOs issued in Europe has grown 46% to 987 TWh over the past five years (2019 – 2023), while the number of physical GO transfers has risen 60% to 1,409 TWh, according to the Association of Issuing Bodies.

The new physically delivered GO futures offer participants standardisation, price transparency with capital efficiencies via clearing on European Commodity Clearing (ECC), which also reduces counterparty risk. The GO contracts also complement the GO spot auction platform, offered by another EEX Group company, EPEX SPOT, as well as EEX’s registry services. GO futures will be listed and cleared alongside power, natural gas and European emission allowances (EUA) futures and options.

EEX and IncubEx have a proven track record in building environmental markets. Since November 2018, Nodal Exchange, an EEX subsidiary and IncubEx have worked together to develop and list the broadest suite of futures and options contracts on Renewable Energy Certificates (RECs), carbon and renewable fuels. Nodal also offers the largest set of North American REC futures, which is a close proxy to the GO market in Europe.

Source: EEX