What are Guarantees of Origin?
Known as Guarantees of Origin (GOs) in Europe, these are quite simply electronic certificates that prove the electricity bought and consumed by an end-user comes from a certain type of generation i.e. renewable source. (The equivalent market in the US is Renewable Energy Certificates).
The value of a GO is the premium an electricity consumer is willing to pay for the attributes of electricity generated from a renewable source when compared to undisclosed electricity (usually a mix of fossil fuel, nuclear and renewable).
One GO certificate corresponds to 1 MWh of generation.
GOs' are traded on spot and forward contracts in OTC markets on a voluntary basis.
A GO is physically used, or consumed via the cancellation process, which is the method of allocating specific electricity to a single end-user. Cancelling a GO from the relevant national registry is the only way to remove a GO from the market and redeem its benefits. This is effectively the physical use or consumption of a GO.