Use cases for Hourly EACs beyond traceability

Energinet, the Danish TSO which is also responsible for the Guarantee of Origin (GO) system in Denmark, recently announced that they will allow Danish electricity producers to get hourly GOs in a brand new system developed jointly by Belgium, Germany, Danish and Estonian TSOs called EnergyTrack&Trace. Importantly, these are not hourly certificates managed by a third party – as we’ve seen elsewhere – but actual hourly GOs. The system is ready, it’s just missing a change of law which is already in motion and planned for May. We expect to see hourly certificates being generated later this year, perhaps even by the summer.

Granular has been testing the platform in partnership with Danish energy supplier Reel and a few large Danish consumers. And our conclusion is that it’s a game changer for traceability, but more importantly that it opens up a lot of other opportunities. This article describes why.

The current GO system...

Is limited by some of its innate characteristics:

• Uses Unique GO Production Device ID for generator identification, that are not necessarily linked to grid meter points
• Is only focused on generation. In most countries, the cancellation of a GO doesn’t need to be allocated to a specific consumption. And even if that’s the case, it usually doesn’t require to identify the grid meter IDs of the consumers
• Time-granularity: GOs are usually issued monthly, but can be used against any consumption in the same year (or even sometimes the year after)

Whereas Energinet's new hourly GO system...

Benefits from a number of design choices:

• All certificates are hourly (and the system can be moved to 15 mins certificates if needed)
• The system covers every generation and consumption in the country that is connected to the grid, at any voltage level
• Generation gets issued GOs (actually called "GGOs", for granular GOs), but consumption also gets issued hourly certificates. In order to cancel a GGO, you need to match it against a consumption certificate
• Every GGO is linked to the meter ID of the generator and every consumption certificate is linked to the meter ID of the consumption point.

Use cases beyond "greenness" of electricity

Since all cancellations are tied to meter IDs for both consumption and generation, you could use this system as the basis for the calculation of network charges: people that use “local” electricity which doesn't make use of the long distance network could get reduced network charges, and vice-versa. This would actually provide a price signal to reduce network congestions.

Matching Component Of Network Charge(consumer C) = NC1 * MWh(P1) + NC2 * MWh(P2)

In a lighter touch system, it could be used for energy communities and collective self-consumption (i.e. multiple consumers “consuming from” a local generator) schemes instead of the rather complicated ad hoc systems that many EU member states have implemented.

To get the most benefit, the ideal would be to move all the country to this system and make it mandatory. But this could even work on a voluntary basis, with network charge discounts available for people matching locally, and a slight increase on the others not participating to compensate.

This kind of dynamic approach to network charges is also aligned with the newly released European Union Agency for the Cooperation of Energy Regulators (ACER) recommendations to Member States on network tariffs, which includes the creation of location-based signals in network tariffs.

At a time where the UK is considering moving to nodal pricing – which would take at least five years and would involve significant implementation cost for debatable savings – a system like EnergyTrack&Trace to replace the existing REGO system entirely in a way that would:

• Not impact the existing power markets. This means less impact on existing business models, which is the main issue flagged by detractors (increase of risk and hence cost of capital)
• Deliver a price signal to consume locally and reduce congestion, which is the aim of the move to nodal.

In short it could provide similar benefits to nodal pricing, but without any of the downsides.

The Granular Energy team will be actively testing the EnergyTrack&Trace system and watching with interest as it starts to roll out more broadly.