Interview on German GOs with Nils Kompe, Lichtblick

Tuesday, 07 January 2020

Nils Kompe is the Head of Power Portfolio Management at Lichtblick SE, and has been that since January 2012. His work primarily revolves around Power & GoO Procurement, Private & Business Costumer Pricing, and Product Development.

In the following interview, we asked Nils for his thoughts on trends and preferences in the German GO market.

There is a disconnect between people’s willingness to pay for renewables and actual number of people buying renewable electricity. What are the ways to minimize this gap?

To bring more transparency within the green energy market in Germany. The consumers, who have chosen a green power product, are aiming for additionality and an extraordinary engagement for sustainability of its power supplier. So, our challenge is to make it even more clear, what kind of impact the specific green power product they have decided for has on the energy transition. This is quite difficult within the current subsidy regime and regulatory framework, where client to assets solutions are hardly possible. Here we see Green PPAs as a perspective solution to strengthen the connection between green consumers and renewable assets.

A German Market Research report said consumer increasingly prefer solar over wind power? Have you observed this trend?

Yes! We conducted interviews with over 1 200 of our private customers who ranked Solar and Wind power at first and second place respectively, followed closely by Hydro. We think it is important to bring Wind and Solar power into the green energy market.

Where do you see the prices for German origin GOs for different technologies? What are the reasons behind current high prices for German origin GOs?

The market for German Wind and Solar GOs is developing right now for both, Wind GOs from Post-EEG projects and Solar GOs from new projects realized out-of-subsidy. We expect prices here to be higher than for German Hydro GOs. Regarding the latter, prices are higher than Nordic Hydro due to three reasons. First availability is limited without any substantial growth perspective, second markets are not liquid and last suppliers try to set German Hydro as premium power product.

As of 2021, the first production devices that received EEG-subsidy will no longer be eligible for support. Since production devices can receive support for a 20-year period, each consecutive year will bring additional GO volumes to the market. How do you assess the impact of these assets on the GO market?

Up to 2025 approximately 10 – 12 TWh Wind GOs will enter the German GO market. This is a substantial number. However, with respect to the 100TWh which are currently cancelled annually in the German market this would represent only a small share. So, it is fair to say the German green power market structure will change, but the general set up with a high dependency on European GOs will remain in the mid-term.

What are your expectations regarding future prices of German origin GOs?

If consumers wish to have a substantial impact in the energy transition, this should also manifest in increasing Wind and Solar GO prices, as those projects entail a remarkable additionality. For Hydro the question is, if the mark-up for German qualities remain or those prices tend to approach to European Hydro.

What is Lichtblick's plan for the post EEG assets?

We think the future of the energy transition in Germany is based on creating smart links between producers and consumers. LichtBlick supports its customers here. On the one side we want to help the wind farm operators to make sure they have a financial coverage after the EEG-subsidy and on the other hand help our customers to fulfill their needs of green wind Power from Germany.

Unsubsidized merchant renewable plants are built in Germany. What volumes do you expect in the future (until 2025)?

We see this trend and expect this to accelerate as LCOEs for Solar are likely to stay at low levels. Nevertheless, the realization of those projects is strongly related to market price levels. If those remain at current prices of 50€/MWh we estimate a substantial increase of merchant projects, resulting in some additional TWh GOs.

Registrations for regional GOs (RNR) in Germany were possible from the 1st of January 2019. What is the current situation for regional GOs? How do you see the adoption of regional certificates going forward?

In our view the RNR system is complex, difficult to communicate to customers, not very operational, delivers less incentive for operators participating and most importantly, does not really cover customer needs. As such, there is less interest from both consumers and energy suppliers/producers.