The price of electricity produced from renewable energy sources is significantly higher than an average price of electricity produced in conventional power plants. For this reason the Directive 2001/77/EC of the European Parliament and the Council on the promotion of electricity produced from renewable sources in internal electricity market binds every EU member state to legally define a support mechanism.

Two most usual support mechanisms used nowadays in Europe are: feed-in tariff system or pricing system and system quota obligations.

Feed-in-tariff system defines the following obligations:

• TSO and DSO obligation of connecting eligible producers to the network,
• obligation to purchase electricity produced from renewable energy sources,
• obligation to implement a tariff system for producing electricity from renewable energy sources.

This support mechanism is currently the most common in Europe, in states where the largest number of facilities using renewable energy sources are present (e.g. Germany, Spain, Denmark, the Netherlands, France, Portugal).

System quota obligation is a legally defined energy entity’s obligation to produce or off-take a specified amount of electricity generated from renewable energy sources. The quota fulfillment is supervized by a responsible body authorized and registered by the state.

Green certificates can acknowledge the fulfillment of the prescribed quota. Prescribed quotas are fulfilled when an energy entity shows proof of purchasing an appropriate number of green certificates to a responsible body. Green certificate market is parallel to electricity market. A producer of electricity from renewable energy sources sells its produced electricity for a market price in parallel with selling the green certificate gotten/awarded for each MWh of electricity produced from renewable energy sources. This additional green certificate sales income enables covering most of its larger production expenses which a producer might have in comparison with other producers.

Green certificates are issued by a body responsible for certificate issuing, authorized and registered by the state. Since a green certificate represents an electronic record containing all required data including “the guarantee of origin”, it is necessary to introduce a single register for keeping record of green certificates in order to provide a transparent and non-discrimatory market. Green certificates have a certain “life cycle” which includes the process of their issuing by a responsible body, certificate trading – since the same certificate can change several owners - and finally its utilization in case when the electricity amount covered by a certain green certificate has been sold to the end-customer. Such support mechanism is market oriented and has been applied in only six European states: Great Britain, Sweden, Belgium, Italy, Romania and Poland.