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Glossary · Energy industry & energy transition

Cancellation of Guarantees of Origin

Cancellation of guarantee of origin Guarantees of origin Green power certificate electricity labelling Carbon footprint

Cancellation of a guarantee of origin refers to the registry process in which a guarantee of origin is permanently allocated to a specific electricity supply. The certificate thereby leaves the tradable stock. The attribute documented in it, such as electricity from wind power, hydropower or photovoltaics, can afterwards neither be resold nor used a second time. A comparison helps: cancellation resembles stamping a ticket. Beforehand it is transferable; afterwards it is used up and tied to exactly one journey.

Under EU law, a guarantee of origin by default represents one megawatt hour. At most one certificate may be issued for each unit of energy produced. According to the definition in the Renewable Energy Directive, it serves exclusively to demonstrate to final customers a share or quantity of renewable energy. It therefore does not describe the physical path the electricity takes through the grid. It records an accounting attribute of the generation. This separation is necessary because many plants feed into the grid at the same time and many consumers draw electricity at the same time. Which power plant the electricity at a particular socket comes from cannot be determined physically.

Legal framework in the EU and in Germany

Directive (EU) 2018/2001 sets the time frame for electricity. Guarantees of origin are valid for transactions for twelve months from the production of the relevant energy unit. Certificates that have not been cancelled lose their validity at the latest 18 months after production. For disclosure purposes, energy companies must cancel certificates at the latest six months after the end of their validity. Issuance, transfer and cancellation take place electronically.

In Germany, cancellation runs through the guarantee of origin registry of the Federal Environment Agency (Umweltbundesamt). The key provision is above all § 30 of the Ordinance on the Implementation of Guarantees of Origin and Regional Certificates (HkRNDV). Under it, guarantees of origin may be used only by an electricity supplier and only for electricity labelling. The supplier declares to the registry that it is using the certificate for electricity it has supplied to final consumers within the territorial scope of the EEG. It may use the certificate only once it has applied for cancellation and the registry administration has granted the application. For cancellation, the quantity of electricity supplied is rounded up to whole megawatt hours.

This corrects a widespread notion: in Germany, an industrial or commercial customer does not itself cancel guarantees of origin in the registry. Its supplier does so, and only for its own electricity supply. In the cancellation application, the supplier may specify a particular electricity product or the customer's name. For natural persons, it needs their consent for this. If electricity is used for the production of green hydrogen under § 26 of the Energy Financing Act, the supplier must additionally name the electrolysis plant precisely at cancellation.

The temporal allocation is also regulated. A guarantee of origin may only label quantities of electricity that the supplier delivered to final consumers in the calendar year in which the certificate's production period falls. A certificate from 2024 generation can therefore not be used for deliveries in 2025. Since 2026, every supplier must report data on the previous year to the registry administration by 1 July. This includes the total quantity of electricity supplied as well as the quantity and share of renewable electricity with guarantees of origin that is not supported under the EEG. The registry can thus reconcile cancellations with deliveries. It rejects an application if the supplier already knew at the time of purchase that the underlying renewable electricity had not been generated.

A German particularity is the ban on double marketing in § 80 of the Renewable Energy Sources Act (EEG). Anyone who receives a payment under the EEG for their electricity, such as a market premium, may not pass on guarantees of origin for it. Conversely, the EEG payment lapses if certificates are passed on. Guarantees of origin therefore come mainly from plants without EEG payment, such as plants whose support has expired, new plants without support, or plants abroad. For EEG-supported electricity there are regional certificates instead. This bar expressly does not apply to them.

Distinction from purchase, supply and physical electricity flow

Purchase and cancellation are two different steps. Anyone with an account in the registry, such as a trader or a supplier, can acquire and further transfer certificates without yet using them. As long as a certificate has not been cancelled, it is not determined which supply it will be attributed to. Purchase merely provides access to the certificate. Only cancellation establishes a reliable claim.

Cancellation also does not mean that the electricity consumed physically comes from the named plant. A household in southern Germany can, in accounting terms, obtain electricity from Norwegian hydropower without any energy from that plant reaching it. Likewise, cancellation must be separated from the supply contract. In a power purchase agreement, the contract does refer to a specific plant. However, the renewable claim is only complete once the associated guarantees of origin have been transferred and cancelled for the supply to the offtaker. In Germany, this cancellation is carried out by the electricity supplier.

Protection against double counting

The most important function of cancellation is protection against double counting. If the same megawatt hour were sold several times as green electricity or counted in several climate accounts, the system would lose its credibility. The registry chain makes every step verifiable: generation, issuance, transfer, cancellation for a specific supply. A related mechanism is the residual mix. Renewable attributes that have already been allocated via cancelled certificates are removed from the residual mix. Anyone who does not use certificates therefore cannot additionally claim these attributes.

Significance for climate accounting

In market-based Scope 2 accounting under the GHG Protocol, guarantees of origin count as contractual instruments. Among other things, the Scope 2 Guidance requires that such an instrument be the only one to carry the emissions attribute of the respective quantity of electricity. It must also be tracked and cancelled by or on behalf of the reporting company and come from the same market as the consumption. For suppliers, cancellation for the customers is meant in this sense. For the part of consumption not covered by such instruments, a residual mix factor is provided for.

The Scope 2 Guidance is currently being revised. In a public consultation draft from 2025, the GHG Protocol proposed, among other things, aligning market boundaries with the actual deliverability of the electricity and matching generation and consumption more closely in time. A recognised system for tracking and cancelling certificates remains mandatory in this context, in order to prevent double counting within and between markets. Which rules ultimately apply should be checked by users against the version currently in force.

What cancellation does not prove

Cancellation proves the exclusive accounting allocation. It does not prove that additional plants were built as a result of the electricity purchase. For this question of additionality, further characteristics matter: plant age, support status, contract term and whether electricity and certificates are obtained together from a new plant. A cheap certificate from a decades-old hydropower plant formally leads to the same labelling as a long-term contract with a new wind farm. For the expansion of renewable generation, however, the two have very different effects.

The statement is also coarse in terms of time. In Germany, certificates and deliveries only have to match within the same calendar year, not hour by hour. A claim of 100 percent green electricity therefore says little about whether consumption on a windless winter evening was covered by renewable feed-in. This question is addressed by temporal matching, that is, the hourly matching of generation and consumption. It is closely linked to flexibility and the load profile of a consumer. Likewise, cancellation says nothing about grid bottlenecks, available capacity or security of supply.

In brief

  • Cancellation permanently removes a guarantee of origin (standard size 1 MWh) from trading and allocates it to an electricity supply.

  • EU framework: twelve months of validity for transactions, expiry at the latest 18 months after production.

  • Germany: only electricity suppliers cancel, only for their own electricity labelling and only for deliveries in the calendar year of generation. Product or customer can be named in the application.

  • For EEG-supported electricity, no guarantees of origin may be passed on (ban on double marketing).

  • Cancellation is necessary for credible green electricity and Scope 2 claims. However, it does not prove additionality or simultaneous coverage of consumption.

Sources

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Edited by eCMS on 12.11.2026 05:05

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