Standard Contracts

Standard EECS GO Contract

The standard contract for trading EECS GOs (European Energy Certificate System Guarantees of Origin), created by RECS International is available here.

Standard EFET Contract

Electricity Master Agreement Annexes are available here.

Standard UK REGO Contract

The standard contract for trading UK REGOs is available here.

Master Renewable Energy Certificate Purchase and Sale Agreement (USA)

Developed by the Renewable Energy Resources Committee and Special Committee on Energy and Environmental Finance of the American Bar Association’s Section of Environment, Energy and Resources, the Environmental Markets Association, and the American Council on Renewable Energy here.

Standard RTMA Contract

The standard Renewable Obligation Certificate (ROC) Trade Master Agreement is available here.

Standard El-Certificate Documentation

General Terms and Conditions for El Certificate spot trade (“Generelle Vilkår for spothandel med elsertifikater”) here.

Form of confirmation for el certificate trade (“Sluttseddel for elsertifikatkontrakter”) here.

RECS GOOD Practice

RECS International has established the Renewables Good Practice (ReGP) guidance document in order to support electricity end-users, market players, policy makers and stakeholders when procuring renewable electricity. It is RECS International’s goal to ensure that all renewable electricity is procured reliably with clarity relating to the associated claims. The document contains recommendations made by RECS International and its members. It is the opinion of RECS International that claims can only be reliably made when the attributes of a specific technology are reliably owned and disclosed by a single end-user. As electricity markets around the world permit the procurement of renewable electricity the principles which form the basis of reliable procurement have become more important. The ReGP guidance document has been established by global renewable energy market participants and provides simple solutions and good practices for international renewables procurement.



Jared Braslawsky

Tel. + 31 (0) 631 306 257

GO Auctions

Here you can find links to the relevant webpages for GO auctioning platforms which may include:

– Data
– News
– Application Forms
– Calendars
– Terms and Conditions
– Results

France – powernext
– Information here.

Italy – Gestore Mercati Energetici (GME)
– Information here.

Luxembourg – Institut Luxembourgeois de Régulation (ILR)
– Information here.
– Login here.

United Kingdom – e-POWER
– Information here.

Market Blog

Below you will find articles contributed to by market participants.

If you have a piece you would like to submit, get in touch!

Force Majeure or Change in Law?

Published: 18th March 2018

Today we look at the question whether legislative or administrative actions changes to the issuance, transfer or acceptance of guarantees of origin should be dealt with under change in law or force majeure clauses.

To begin with, in my view there is no general ‘right’ or ‘wrong’.  As the say, it’s a case of horses for courses.

By way of example,  the EFET standard documentation provides in seemingly similar circumstances a different approach. The EFET Allowance Appendix does not contain a change in law clause, whereas the EFET EECS Appendix does provide a change in law clause. Both deal with commoditised environmental benefits, both are created by EU regulation. So why is the approach different?

To understand this and to select the better option in each circumstance, one needs to revisit the key elements and consequences of force majeure and change in law regimes on the basis of a few examples

A certificate issued for generation country A will be used in country B to demonstrate renewable energy consumption.  Party A sells the certificates to country B. After contract conclusion:

  1. Country A changes the law or its administrative practice so that no more certificates are issued.
  2. Country B changes the law or its administrative practice so that country A certificates are no longer accepted for country B energy consumption.
  3. Country A changes the law or its administrative practice so that the process of obtaining or delivering certificates is more expensive for party A.
  4. Country B changes the law or its administrative practice so that taking delivery of certificates or their use to demonstrative consumption is more expensive for party B.

Force majeure operates on the concept that an intervening event outside the control of a party occurs which makes an obligation for an affected contract party impossible to perform at the time agreed. It then suspends the obligations of the affected party until the performance of the suspended obligations becomes possible again. To avoid uncertainty on whether the obligation will be performed, it is common to provide for a long-stop date by the parties can walk away from the transactions.

Force majeure generally provides relief in scenario 1 above.  In certain circumstances, it may also be able to provide relief in scenario 2. For example, if a change makes it impossible for party B to accept delivery because the account in to which the certificates would be electronically transferred does not longer exist would likely meet the conditions for force majeure. However, in this case the delivery obligation of party A would need to extend to the crediting of the certificates in party B’s account.

Force majeure would not  generally provide relief in scenarios 3 or 4, because the transaction is economically impaired, but it is not impossible. Moreover, if the law changes in a way that certificates are no longer issued, the suspension remedy provided by force majeure is likely to be inappropriate. Why wait until the long-stop date if it is already clear now that the law change will have enduring effect beyond the long-stop date? Also, often a change does not fully impair the delivery. Mostly, it changes the way in which it can be done, and a contractual adjustment may allow the parties to continue their transactions, which may be the more appropriate remedy and be closer to the interest of the parties than a termination at a long stop date as provided by force majeure.

For these reasons, agreements for renewable energy certificate transfers like GoOs trade agreements often contain a separate change in law clause. The change in law clause is usually broader than the impossibility of delivery or acceptance due to a change in law. It also covers scenarios where there is a material change in circumstances with a material cost effect. Remedies under change in law clauses come in two major forms.

One is that the parties have a good faith or reasonable efforts obligation to negotiate an amendment to the agreement. If they cannot agree, the parties have a ‘clean break’, i.e. they terminate the agreement and walk away from the transaction without liability.

The other is that the parties set out a priory a number of principles and inputs that define an ‘economic equilibrium’ or a similar concept defining the commercial bargain between the parties. In this case, the parties are obliged to amend the agreement to maintain the economic equilibrium.  It is also common to provide for expert determination if the parties cannot agree the necessary adjustment.

This second approach is driven partly by the non-recognition of good faith obligations or agreements to agree (e.g. under English law) and partly by the interest in a firmer obligation to reach a particular result, than simply and obligation to negotiate.

Where contracts provide for a change in law and a force majeure clause, it is common to give priority to the change in law clause, so that an event that would classify as either is to be treated in accordance with the change in law clause.

But compared to force majeure, a change in law clause in the two forms outlined above is not in all circumstances the better solution for either party to deal with legislative changes which economically impair the transaction or make it impossible.

First, it is worth noting that change in law and force majeure clauses can kick in at different times. A change in law clause can already require the parties to negotiate an amendment before the delivery is due and any party is affected. A force majeure clause will generally only kick in if the impairing event persists at the time the relevant delivery obligation.

Second, most change in law clauses do not deal with legal impossibility cases in the same clear and structured way in which force majeure provides (temporary) relief. Rarely do change in law clauses provide for an explicit recognition that during the negotiations the delivery obligations of both parties are suspended, in the same way that force majeure would provide for suspension.

Third, it is also worth noting that in scenarios 2 and 4, a seller will usually be better off if the buyer’s impairment would be dealt with by force majeure rather than a change in law clause. More broadly, there is a school of thought that dealing with legislative changes under force majeure provides for a clearer regulatory risk allocation, i.e. before delivery an change in law impairing delivery is the seller’s regulatory whereas after delivery the regulatory risk is the the buyer. This is one reason why EFET, in contrast to ISDA for instance, does not included change in law clauses in many of its General Agreements.

Lastly, force majeure provisions can of course be drafted in a way that they can address most of their short comings which proponents of change in law point to. It is of course possible to exclude illegality events from the suspension and provide for immediate termination. It is also possible to add contract negotiation as an alternative remedy or an obligation during the suspension period. If the bargain is still of interest to both parties despite the change in law, the parties are likely to voluntarily agree on changing to the contract to address the change in law, if it is not, a good faith or reasonable efforts obligation under change in law is unlikely to provide for a different result.

In many ways, the perfect clause to deal with change in law scenarios is not a one or the other, but a combination of both concepts and the respective remedies to provide for a more flexible structure for the different change in law scenarios. For instance, the closure of the UK LEC scheme for foreign generation has shown that neither of the customary force majeure or change in law provisions have been able to deal with all the constrained delivery scenarios and obligations appropriately.

The key considerations above hopefully provide some guidance on approaching and improving change in law and force majeure provisions when it comes to regulated markets like the ones for renewable energy certificates. There are clearly a myriad of variations, often also driven by the definition of characteristics and the transfer method of the certificate in question. Rather than just copying the mechanisms from other contracts, it is well worth spending a little time to go through the main regulatory risks and change scenarios to adjust the change in law and force majeure clauses to the specific certificate trade deal in question.

Certificates vs Blockchain

Published: 13th March 2018

Today we look at the role of blockchain in the transfer of renewable energy attributes.

Can blockchain replace the current certificate based system to transfer renewable energy attributes?

Blockchain’s main commercial pitch is, simply put, to provide an alternative means of tracking transactions (in the chain) and to achieve transaction cost reduction by avoiding the ‘middle man’ which currently organises and oversees the transfer tracking and market function. In the eyes of blockchain proponents, it replaces central administrators such as the central bank or a commodity exchange. Or in the case of renewable attribute tracking, the current issuer of certificates or the central administrator of the scheme.

In other words, through blockchain renewable energy market participants could verify the authenticity of the transactional chain from the source of generation, and thus whether renewable energy attributes and associated benefits have been transferred in each case to the buyer.

So can it replace administrators of the renewable energy tracking markets, e.g, the Association of Issuing Bodies currently tasked with operating the centralized system for renewable energy attribute tracking, or its individual national issuing bodies?

Whilst recognising the logic and sense in this simple commercial pitch, for structural and legal reasons I am sceptic that it will materialise, at least in this way and in the short to medium term.

First, the blockchain commercial pitch does not consider that states increasingly (wish to) participate in the commercial benefits of issuing renewable energy certificates, e.g.  guarantees of origin in Europe. In case of EU emission allowances, revenue from auctioning to the allowances can be significant. Just like renewable energy certificates, EU emission allowances represent an environmental benefit.  From this perspective, states also want to create revenue from the issuance of renewable energy certificates. Whether this justifies a similar treatment is a topic for another blog. Blockchain cannot conceptually provide for this.

Second, blockchain would track the transfer of renewable benefit together with the transactional path for the transfer of the electricity, to which it relates. It is therefore naturally subject to the market and grid constraints. Blockchain trial project where renewable energy is sold between participants currently happen in local environments, e.g. in closed grids between residents in a complex or on a distribution grid, where these constraints do not matter. However, for a large scale tracking on the transfer of renewable benefits, it is easy to see that his quickly hits the buffers. The tracking would be confined to the ability of parties to trade electricity contemporaneously in the respective half hour.

The conceptual approach of certificates is rather different. It seeks to transfer renewable energy attributes independent of the physical flow and the transaction path of the underlying electricity to which it relates. I the extreme case this allows an international transfer between continents where no physical link to transfer electricity exists. This is also not without issues – again a topic for another blog. In practice, therefore, statutory requirements and related regulatory guidance, e.g. to have cross-border renewable energy transfers and GoOs recognised in Britain for exemption from feed-in tariff levelisation, or commercial good practice guidelines, e.g. the 2017 good practice guidelines issues by RECS International,  now operate on hybrid concepts where some market limits are drawn in which the certificates can be transferred freely without a connection to the underlying transfer of electricity.

In other words, certificates systems are more flexible to overcome the physical and market limits to tracking contractual and transactional paths for renewable energy.  Blockchain does currently provide no answer to this, in fact, it would set up limits to this flexibility because it does not decouple the renewable energy benefit from the underlying transaction.

Third, there is a psychological element to commoditising the otherwise difficult to grasp notion of the renewable benefit and to attach a value to it. Issuing something tangible like certificates helps to overcome this. In the case of GoOs for instance, the seller transfer to the buyer the GoO which has a value in the European markets, and could at least in theory be sold by the buyer, even if the buyer bought it with the view to using it for corporate or legal compliance, e.g. for fuel mix disclosure. Blockchain tracks the transfer of renewable benefits purely on the basis of confirmation through the  ledger, which does not play to this psychological element in the way certificates like GoOs do.

I recognise that in the corporate PPA market, some buyers accept to have the transfer of renewable energy attributes only secured by due diligence and contractual provisions on the transaction path and respective back to back representation and warranties in the underlying contracts.  This usually does not tally up with the tracking obligations of the corporate PPA buyers in relation to their statutory obligations or good practice guidelines or programmes they have committed to for proving their renewable purchase, e.g. the 2017 RECS guidelines or the RE100 programme.  It demonstrates that the psychological approach to commoditising  the renewable benefit would need to change back to transactional tracking to facilitate transfer of the renewable energy benefit through  blockchain.

Fourth, blockchain currently offers no answer to the verification element enshrined in the issuance and the retirement of certificates. For example, AIB regulations provide for a number of requirements to be met before a GoO can be issued by a national issuing body. Their objective is to make the certificates reliable and to avoid that certificates are claimed fraudulently. I accept that even the GoO issuing system relies on a significant amount of information which is provided by the generator and which is not continuously monitored or checked by the issuing bodies. However, this underlines the fundamental issue in relation to blockchain. Who verifies that renewable source electricity sales confirmed in the ledger are really what they claim to be? And who can the buyer rely on if this turns out to be wrong. In certificate systems, there is legal recourse to the issuing bodies if certificates have been issued wrongly? But this form of initial verification does not happen in a blockchain system.

Hand in hand with this goes the questions how blockchain demonstrates that the renewable benefit has been ‘redeemed’ and is not longer available for transfer. In the contractual chain for renewable energy certificates, there are rules that determine when the renewable benefit is ‘consumed’ through cancellation fo the certificate. In other words, the renewable benefits is passed on through the contractual chain until that point. Blockchain does currently provide no answer to how the consumption the renewable benefit is achieved. If tied to the underlying transaction, it would have to be deemed consumed by the purchaser in the relevant settlement period, and could not be traded on.

Fifth, blockchain and related smart contracting is build on simple transactions or requires a specific set of rules outside of the basis contractual terms confirmed through smart contracting. In contrast, current renewable energy certificate transactions and the respective contracting consider the specific rules for individual statutory or voluntary compliance schemes were the certificate  are redeemed. They also address the ‘if’ and ‘how’ of renewable energy attributes tracking and whether they can be claimed for periods when the particular generation type is not producing.  In other words, renewable energy benefit transfer terms are often rather bespoke, whereas blockchain and smart contracting relies on a create consistency of transaction requirements. A good comparator are also corporate PPAs without certificate transfer, which create a transactional renewable attribute tracking path like blockchain would, but which are generally so bespoke that it would appear difficult to replicate this through a blockchain and smart contracting mode.

I hope this blog does not give a too negative impression on this topic. I believe it is important that the use of blockchain for renewable energy attribute tracking is thoroughly explored.

And perhaps spelling out the impediments and areas where the commercial pitch of renewable energy attribute tracking through blockchain does not match that of renewable energy certificates helps to refine the approach for blockchain options.

There are clearly areas and situations in which the system of registration and issuance of guarantees of original is cumbersome and geared towards large scale generation. The certificates denomination of 1 MW is a good example. Decentralisation with smaller scale generation will create a demand for a renewable energy attribute tracking that is simple, electronic and reliable to support small scale sales of renewable energy attributes. If blockchain can the successfully address the issues discussed above, it would have a clear business case in this area.