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Guarantees of origin and competition in the spot electricity market

Author

Listed:
  • Mario Blázquez
  • Isabel Hovdahl
  • Malin Arve
  • Endre Bjørndal
  • Mette Bjørndal

Abstract

We study the effect of introducing a market for green energy attributes on the market for the energy itself. In Europe, renewable energy producers receive Guarantees of Origin (GOs) that they can sell to consumers who wish to declare their electricity consumption as “green”. We introduce GOs in a model of the spot electricity market with price competition and capacity constraints. As GOs are issued only for dispatched electricity, we find that the GO market has a pro‐competitive effect on the spot electricity market, leading to reduced electricity prices. Importantly, this pro‐competitive effect disappears if the GO market were to be restricted by the transmission capacity in the spot market.

Suggested Citation

  • Mario Blázquez & Isabel Hovdahl & Malin Arve & Endre Bjørndal & Mette Bjørndal, 2026. "Guarantees of origin and competition in the spot electricity market," Scandinavian Journal of Economics, Wiley Blackwell, vol. 128(2), pages 272-307, April.
    • Handle: RePEc:bla:scandj:v:128:y:2026:i:2:p:272-307
    DOI: 10.1111/sjoe.70006
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    2. Sayed-Ahmed, H. & Toldy, Á.I. & Lappalainen, M. & Himanen, O. & Bajamundi, C. & Santasalo-Aarnio, A., 2025. "Strategies and challenges for reducing green hydrogen cost: Operation mode and revenue streams," Renewable and Sustainable Energy Reviews, Elsevier, vol. 223(C).

    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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