French auction – estimates of GOs eligible for export to the UK

Background

Monthly auctions for French GOs will be launched from September by the French energy exchange Powernext. The quantity of GOs to be auctioned each month will be defined by and sold on behalf of the French energy ministry. The theoretical maximum of auctioned GOs in France will be the total generation of renewable electricity benefitting from feed-in tariffs and market premium and amounts to approximately 45 TWh per year. The expectation of increasing supply of GOs has weighed heavily on GO prices in 2019 and created uncertainty in the GO-market. However, we expect the actual impact of French auction on GO prices to be lower than anticipated for 2019, due to couple of reasons:

1)      For 2019, the actual upper bound for GOs to be auctioned is estimated to be 25 TWh. The reason for this is that production volumes from January and February 2019 will not be included in the auctions, while production from October to December will be auc...