Monday, 15 August 2022
On July 22nd, the AIB published its Annual Report for the year 2021, alongside the (almost) final 2021 statistics for EECS Production and Transaction.
Please be aware that these results do not fully reflect the 2021 demand, given that we used Production and not Transaction statistics, for the comparison with the Supply side.
Although the figures might slightly evolve in the weeks to come, we have decided to provide you with a summary of the 2021 statistics and what is our take on this, in the light of the first seven months of 2022 and of the markets’ movements.
This analysis will be divided into three parts: we first focus on the Supply side (Issuances), then the Demand side (Cancellations) and we end with the Interactions between Supply and Demand, both within a country or between two countries (imports and exports).
This is the second part of the Analysis, the Demand side (read our first part on the Supply side here).
We first discuss the ‘global’ cancellations levels, then adopt a month-by-month approach. Finally, we focus on each technology trend.
Production cancellations have decreased in 2021, according to AIB statistics. In 2021, more than 593 TWh of Renewable GOs were cancelled, compared to 638 in 2020 and 569 in 2019. Therefore, the amount of GOs cancelled decreased by 7.06% in 2021 compared to the previous year but increased by 4.18% when compared to 2019.
Demand is still strong, and one should bear in mind that these figures might still be adjusted in the weeks to come, at least for 2021 figures. Thus, it is not impossible that 2021 cancellations will overtake 2020 ones in volume.
Let’s now zoom in on the month-by-month cancellations, at a global level still.
Monthly breakdown
Unsurprisingly, 2021 cancellations followed more or less the same pattern: high cancellations in the first three months of the year, drop in April (after the end of the previous compliance period for most countries), pick up in May and then decrease. Nonetheless, it seems that in 2021, the last months of the year (Q4) saw very low cancelations volumes. This is not surprising since, as we’ve underlined before, some figures (especially the last months) might still evolve at the margin, due to reporting issues at the AIB level. We will make sure to update our figures as a consequence.
When we look more closely at the monthly cancellations for the years 2019 to 2021, i.e. the percentage of cancellations for a given month (as a percentage of the year’s cancellations), we remark that the trend is a bit different for 2021 compared to 2019 and 2020 trends. 2021 has seen an increase in cancellations for the first three months of the year: in 2019, they represented 25.75% of the year cancellations, 25.70% in 2020 but 32.03% in 2021, illustrating that buyers are more and more considering the disclosure deadlines in March while planning their cancellations.
In 2021, the first seven months were ‘performing’ above 8.33% or 1/12 (the share for a month if all cancellations were equally distributed, with the three best months of the year being January (10.96%), February (10.65%) and March (10.43%).
In comparison, the months above this threshold for 2019 and 2020 weren’t showing any pattern, except that November and December were quite high in cancellations, for both years.
Now that we have seen the year-to-year and month-by-month evolutions, we can look for more granularity and focus on the cancellations per technology, with a special spotlight on Hydro cancellations.
For this section, we have divided renewable technologies into five main blocks: biomass, hydro, solar, wind, and other.
First fact to note: only biomass and solar did increase its cancellations, by very little. Since hydro represents most of the cancellations (66.88% in 2019 and 64.52% in 2020), its drop of 11.13% in 2021 put the 2021 cancellations total below the 2020 level.
The biggest decrease in value (TWh) is for Hydro, going from 411.83 TWh in 2020 to 366.01 TWh in 2021 (+45.82 TWh or -11.13%). Hydro is still, by far, the most cancelled technology, with a 61.70% share. But this share has been decreasing at a fast pace as we stated above. This is due to a major increase (in % at least) in the amount of Wind GOs cancellations, which increased by over 22% in the 2019-2021 period (from 108.83 to 132.93 TWh), reaching a 22.41% share of cancellations in 2021.
Though still low, Solar GO cancellations have increased by 51.60% between 2019 and 2021.
Focus on Hydro cancellations
Hydro is the most important technology both in terms of issuances and cancellations.
In 2021, 366.01 TWh of Hydro GOs were cancelled. This represents 61.70% of GOs cancellations of GOs. The biggest Hydro GOs canceller was Germany (as in 2019 and 2020), with 98.14 TWh, or a 26.81% share. Second ranked is France (45.85 TWh) and then Switzerland (44.57 TWh).
The main months for Hydro GO cancellations in 2021 were the first months of the year (January, February and May being 1st, 2nd and 3rd).
This was the second short report on the latest AIB statistics for the year 2021, focused only on cancellations. We will soon release a third and last one on countries’ interactions (imports and exports).
For any questions on this report or on Greenfact’s platform and data services, do not hesitate to contact me at leo@greenfact.com