The ambition of a unified European energy market is facing a significant test. Under proposed revisions to the Greenhouse Gas Protocol Scope 2 Guidance, the rules governing how corporate energy buyers prove their renewable electricity claims are set to tighten. This regulatory pivot centers on the concept of geographic and temporal deliverability, which aims to ensure that the clean energy a company claims to consume could physically have flowed to its facilities through an interconnected grid and that energy was consumed around the same time as it was produced.

For multinational corporations, this shift represents a major challenge. The days of buying cheap, unbundled environmental certificates from one corner of Europe at any given time to offset high-emission electricity consumption in another are drawing to a close. To maintain credible, audit-proof carbon accounting, businesses must prepare to align their long-term Power Purchase Agreements (PPAs) and Flexibility Purchase Agreements (FPAs) with strict regional bidding zone boundaries.

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The Move Toward Geographic Deliverability

Historically, European energy tracking allowed companies to purchase Guarantees of Origin (GOs) from any country within the Association of Issuing Bodies (AIB) framework to claim zero-emission power. This allowed a factory in Germany or Italy to purchase hydro certificates from Norway to claim carbon neutrality.

However, grid transmission bottlenecks mean that electricity generated in northern Scandinavia cannot always physically reach southern Europe. The Greenhouse Gas Protocol Scope 2 Technical Working Group is addressing this limitation by proposing that market boundaries be drawn along physical grid boundaries. In Europe, this means splitting the market into more than 40 separate bidding zones. Under the draft rules, a company can only use certificates generated within the same bidding zone as their physical consumption, unless they can prove explicit ownership of physical cross-border transmission rights.

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The Move Toward Temporal Matching

Similar conditions apply for the date and time of GOs, which typically have a 12 month lifetime based on the production date, after which they expire and can no longer be used or transferred. Based on annual volumetric matching principles, companies could claim to be "100% renewable" if the total volume of GOs they purchased over a calendar year matched their total electricity consumption for that same year. This means that companies could use cheap solar from the summer days to ‘offset’ their electricity consumption during winter nights, which in reality came from fossil fuel powered electricity.

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Why This Matters for Renewable Projects and Corporate Buyers

This impending market fragmentation has raised concerns among clean energy developers. Renewable energy projects operate on tight financial margins, especially as developers face rising capital pressures. Between 2022 and 2024, the levelized cost of energy for onshore wind rose by 31 percent, while utility-scale solar increased by 43 percent.

At the same time, wholesale electricity prices have declined across Europe, and intermittent price cannibalization continues to squeeze spot revenues. Consequently, developers rely heavily on the revenue premiums from environmental certificates to secure bankability for new assets. If geographic deliverability rules prevent producers in hydro-rich regions, such as Norway, or solar-rich regions, such as Spain, from selling GOs to high-demand northwestern markets, their revenue streams could decline, stalling the wider European energy transition. From a temporal perspective, this means that solar producers might see less demand on certain seasons since they will have fewer qualifying customers.

For corporate buyers, the risk is equally high. If your current green energy claims rely on unbundled, cross-border certificates, those claims may soon be classified as non-compliant, leaving you exposed to restated Scope 2 emissions and accusations of greenwashing. In addition, especially for large power consumers, additionality of renewable energy projects should be proven to mitigate concerns related with leakages. This additionality requirement that can be realized with PPAs is already a concept integrated in some upcoming national policies (e.g. Germany, Greece) and new data center strategies.

For producers and offtakers, these also entail that they will need to invest in flexibility solutions. To counterbalance the intermittency of renewable energy, both sides will need to develop or finance storage solutions - which can be supported by flexibility purchase agreements. (this section can be detailed further)

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Explaining the Bidding-Zone Carbon Rules

Under a geographic deliverability framework, corporate carbon accounting is calculated by strictly separating consumption and contracted clean energy by individual bidding zones.

To determine a company's adjusted emissions, the volume of clean energy contracted through a power agreement is matched only against the physical electricity consumed within that exact same bidding zone and hour. Any clean energy generated outside of that specific zone or time is excluded from the calculation.

For example, if a company operates a manufacturing facility in Germany but signs a clean energy agreement with a wind farm in Spain, the Spanish generation cannot be used to offset the German facility's footprint. The company must report its emissions using the standard grid factor of the German bidding zone and must claim renewable energy produced during the time the company consumes the electricity, meaning only localized clean energy agreements with time stamps can legally reduce its carbon footprint.

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Designing a Compliant PPA Strategy with AFS Energy

To mitigate these regulatory risks, corporate procurement teams must transition from unbundled, cross-border certificate purchases to localized, high-impact physical agreements paired with storage solutions. Securing long-term PPAs that bundle physical electricity with GOs within your specific bidding zones and electricity consumption hours ensures both long-term price stability and compliance with evolving carbon accounting standards. Pairing these with BESS will also guarantee supply in times of low renewable energy production.

Navigating a fragmented market with more than 40 bidding zones requires specialized regional knowledge and direct market access. Designing and executing a contract that aligns with localized grid constraints is a highly complex process.

AFS Energy acts as a trusted intermediary in the European renewable market to simplify this complexity. Our advisory team helps organizations structure customized Power and Gas Purchase Agreements (PPAs and GPAs) and FPAs tailored to their specific operational footprints. By leveraging our extensive supplier network, we negotiate contracts that ensure your green energy is sourced from the appropriate technology and region, protecting your organization from regulatory changes and market volatility.

To learn how to align your green procurement strategy with regional bidding zone limits, explore our Power and Gas Purchase Agreements (PPAs and GPAs) and FPAs solutions page and connect with a specialist today.