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    Annual Report 2019


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    Contents Contents Management Board report 3 Foreword 3 Who we are & what we do 5 Our strategy 9 Our results 11 Looking ahead to 2020 17 Financial Statements 19 Financial instruments and risk management 24 Notes to the balance sheet 25 Notes to the profit and loss account 28 Appendix 31 Other information 34 Independent auditor’s report 35 Annual Report 2019 CertiQ 2


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    Foreword Management Board report Management Board Report Foreword At CertiQ we notice that both consumers and businesses expect transparency around the origin of the energy they consume. This is why, as the transition to renewable energy speeds up and the amount of certified non-renewable electricity continues to grow, CertiQ’s role is becoming more important. It’s in this context that we can define 2019 as an eventful year for CertiQ: we responded proactively to market developments and successfully built on regulatory changes. Most notably, we worked hard to ensure a smooth implementation of Full Disclosure – the obligation that all electricity supplied in the Netherlands, both grey and green, must be certified – which will help providing clarity and insight to businesses and consumers on exactly where their electricity comes from. We witnessed a steep increase in the volume of certified non-renewable electricity: CertiQ issued grey certificates for the equivalent of 38,5TWh in 2019, up from only 8,9TWh in the previous year. We continued investing in improving and expanding our IT systems. In 2019, we took a next step towards the certification of the green electricity generated by small-scale ‘prosumers’ through their rooftop solar panels. This type of dispersed production – known as decentral green – is not officially registered or represented in renewable electricity data. We aim to capture this ‘lost green electricity production’. Together with various stakeholders – Engie, Vattenfall and Alliander – and IBM, we developed a platform that enabled prosumers to certify the electricity they feed into the grid. We also focussed on enhancing our system’s efficiency, an important priority in our IT roadmap and strategic plan for the period 2018-2023: we’ve started to rebuild our system’s frontend and backend focussing on a safe, secure, user-friendly and easy to maintain IT system. With regard to the certification of heat, we maintained the reduced processing time of measurement reports. This is a crucial step towards faster issuing of GOs for heat: as producers receive their certificates faster, they will also receive clarity on their final government subsidy more quickly which will lead to a smoother functioning of the energy market. Collaboration as well as sharing knowledge and best practices with stakeholders, consumers and industry players is key to addressing new and ongoing developments. In 2019, we worked closely with our partners, including our participants’ council, the Ministry of Economic Affairs and Climate Policy, the Netherlands Authority for Consumers and Markets (ACM), Netherlands Enterprise Agency and various representative bodies of the Dutch energy sector. Thank you for supporting CertiQ’s mission of providing reliable, secure and user-friendly certification of electricity and heat. In 2020, we will continue to build on developments in technology, regulation and the markets. Thank you to all of our stakeholders, and of course a thank you to CertiQ’s own people, for your commitment and hard work! Arnhem, 20 maart 2020 Marieke ten Cate, Max Laven & Ivo de Vries MT CertiQ Ben Voorhorst Chief Operations Officer Tennet TSO B.V. Annual Report 2019 CertiQ 3


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    Who we are & what we do


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    Who we are & what we do Management Board report Who we are & what we do Who we are Our mission and vision We are a subsidiary of state-owned body TenneT TSO, which is tasked with providing trusted information about where energy comes from and how it is generated. Our job is to first verify the sources of energy production, and then certify the source and volume of energy produced. The energy market is accelerating faster than ever, and as the transition to renewable energy moves beyond borders, we are committed to playing an active role in developing and strengthening the European energy market. We ensure transparency by issuing certificates for energy generated by sustainable sources, including the sun, wind, water and biomass, as well as conventional sources, such as fossil fuels and nuclear sources. Our standardised Guarantees of Origin (GOs) – the only valid proof in the Netherlands that energy is sustainably generated – help the international market map production and consumption of green energy in Europe. Mission Reliable Transparant Sustainable Affordable What we do CertiQ operates a register of certificates, which shows how and where energy was generated, whether renewable or grey electricity, or renewable heat. These certificates may make the producer eligible for subsidies related to the volume of renewable energy. They can also be traded nationally and internationally – and CertiQ facilitates this trade. When certified energy is consumed, the relevant production certificates need to be cancelled and removed from the system. We provide this service in the Netherlands. Through energy labels on customers’ annual accounts, suppliers must show us where their electricity has come from, and several calculation methods have been agreed upon to ensure these labels are comparable. Throughout 2019, we were in a position to grant certification to all Dutch producers of grey electricity, although not yet legally obliged to do so. This furthers our aim of making the overall market as transparent as possible. Annual Report 2019 CertiQ 5


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    Who we are & what we do Management Board report Vision Vision Full Licence to International Disclosure operate Types of certificates We distinguish between grey and green energy with two different types of electronic certification: Guarantees of Origin (GOs) and Disclosure Certificates (DCs). From 2020 onwards, the Disclosure Certificates will be renamed to Certificates of Origin (COs). Once the certificates have been traded, industry watchdog the Netherlands Authority for Consumers and Markets (ACM) verifies that they have been cancelled and removed from the system. What the certificates are for: • Guarantees of Origin: Issued for sustainable electricity and heat. This is based on the 1998 Electricity Act and several ministerial schemes. • Disclosure Certificates: Issued for non-sustainable electricity, i.e. fossil fuel-based and nuclear energy. Trade Similar to internet banking, certificates are issued by electronically crediting the certificate to a trader’s certificate account. Traders are able to sell and transfer these certificates to another trader’s account or use them as proof of delivery of the origin of energy supplied to consumers. CertiQ’s certificates representing the origin of electricity may be traded throughout Europe. Trade GOs & DCs Certificates Trade Transparant Issues certificates - both Operates an electronic Trades can sell and transfer By certifying both green green (GOs) and grey (DCs) certificate register. certificates lacally and and grey energy, CertiQ - showing where and when One GO is issued for internationally. CertiQ works towards making the energy is generated. every 1 MWh produced. facilitates this trade. market more transparant. Annual Report 2019 CertiQ 6


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    Who we are & what we do Management Board report Proof of origin: from energy to certificates You can’t tell what kind of electricity comes out of a wall socket just by looking at it. Is it sustainably generated or not? It is CertiQ’s job to tell the difference regarding the supply of energy and pass this information on to you. This is how we do it: • An installation is established and registered. • The grid operator or the metering company measures the amount of electricity and heat generated by the installation. • The grid operator passes this information on to CertiQ, usually on a monthly basis. • The production figures are converted into certificates, which are credited to the certificate account of the producer’s designated trader. One certificate is issued for every 1 MWh produced. Organisation CertiQ, founded in 2001, forms part of TenneT, a leading European electricity transmission system operator (TSO), with activities in the Netherlands and in Germany. The Dutch Ministry of Economic Affairs and Climate Policy gave us the exclusive mandate to issue GOs for electricity and heat produced in the Netherlands. CertiQ is a member of the Association of Issuing Bodies (AIB), an international partnership of European Guarantee of Origin organisations. The AIB strives to standardise national certification systems to facilitate trade in sustainable and other forms of energy. CertiQ is financed on a cost-recovery basis by participants. Each transaction, be it issuance, trade or cancellation, generates a fee. On average basis CertiQ employed 15.1 FTEs over 2019 of which 10.8 FTE were employed by TenneT TSO B.V. and 4.3 FTE via third parties. Annual Report 2019 CertiQ 7


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    Our strategy


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    Our strategy Management Board report Our strategy Strategic ambitions for 2018-2023: • to consistently provide reliable, secure and user-friendly certification of energy, which underpins our licence to operate; • to facilitate Full Disclosure in the broadest sense, moving beyond just certification of all energy delivery. We see added value in the future for the certification of supply and production, centralised and decentralised, grey and green energy; • to include plant-specific information regarding CO2 emissions on certificates, and thereby enable more accurate data on the volume of CO2 emissions from production plants, such as that generated from old versus new coal-fired power stations; • to provide (near) real-time information on the production and use of sustainable electricity and heat and near real-time certifications, with the intention of bridging the gap between production and certification. Performance We made significant progress in implementing our strategic goals in 2019, the second year of our 2018-2023 strategic plan. Our key focus was to facilitate Full Disclosure. We made all the necessary arrangements for being able to issue certificates to all Dutch producers of grey electricity, advised Dutch lawmakers on the implementation of the Full Disclosure regulation, and shared our learnings with energy producers and other market participants about the introduction of grey certification per 1 January 2020. Mandatory certification of grey energy was initially set for 1 January 2019, but the Ministry of Economic Affairs and Climate Policy pushed out the deadline by one year. This allowed us, together with the Dutch Authority for Consumers and Markets (ACM), to make voluntary Full Disclosure possible, meaning that all supply of fossil and nuclear electricity could be substantiated with Disclosure Certificates. There was a steep increase in the volume of Disclosure Certificates. We issued grey certification for the equivalent of 38.5 TWh electricity in 2019, up from 8.9 TWh in 2018. Part of our ambition to realise Full Disclosure is providing certification of renewable electricity produced by the thousands of Dutch households through their rooftop solar panels. Using block chain technology, we made inroads into this ‘decentral green’ sector of the market in 2018. In 2019, we build on this through a pilot project. Together with various stakeholders (Engie, Vattenfall and Liander) and IBM, we developed a platform that enabled prosumers to certify their solar electricity production. The project was concluded successfully in Q3 2019. In 2020 we will take a next step in the certification of ‘decentral green’, focussing on a simple registration process for ‘prosumers’. By further streamlining internal processes, we maintained the reduced processing time of measurement reports for heat generated by biomass, solar and geothermal energy, a crucial step towards faster issuing of GOs for this segment of the energy market. As producers receive GOs faster, they will also receive clarity on their final government subsidy more quickly, all of which add up to the smoother functioning of the energy market. We continued investing in improving and expanding our IT systems, focusing specifically on enhancing our system’s efficiency, an important priority in our IT roadmap and strategic plan for 2018-2023. Most notably, we made a start with rebuilding the MyCertiQ frontend and backend, focussing on a safe, secure, user-friendly and easy to maintain IT system. Annual Report 2019 CertiQ 9


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    Our results


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    Our results Management Board report Our results Installations and traders At year-end 2019, a total of 23,171 electricity production installations were registered at CertiQ, an increase of roughly 25% compared to 2018. This can be attributed to a continued trend of a growing number of solar energy and non-renewable production installations being registered. The total capacity increased with 10 GW, primarily due to an increase in production installations for non-renewables, biomass (large co-fired plants) and solar. CertiQ also saw an increase in renewable heat, with 404 production installations for renewable heat registered at the end of 2019 (2018: 340). Electricity Table 1: Installations - electricity 2019 2018 Number Capacity (GW) Number Capacity (GW) Installations (electricity) Biomass 253 5.4 235 2.0 Hydro 15 - 16 - Solar photovoltaic (PV) 21,141 3.2 16,946 1.5 Wind 1,260 4.4 1,265 4.3 Non-renewable 502 15.3 276 10.4 Total installations (electricity) 23,171 28.3 18,738 18.2 Capacity in solar energy grew substantially (2018: 1,5 GW, 2019: 3,2 GW), mainly due to a growing number of larger solar PV plants .i.e. the actual number of installations has not doubled. The increase in biomass capacity is due to the steep increase in co-fired capacity, from 0.6 GW in 2018 to 4 GW in 2019. The number of production installations for non-renewable electricity doubled, as a result of the Full Disclosure legislation. Heat Table 2: Installations - heat 2019 2018 Number Capacity (GW) Number Capacity (GW) Installations (heat) Biomass 354 2.5 303 2.4 Geothermal 21 0.5 18 0.4 Solar thermal 29 - 19 - Total installations (heat) 404 3.0 340 2.8 Annual Report 2019 CertiQ 11


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    Our results Management Board report Solar thermal increased from 21 MW in 2018 to 43.3 MW in 2019.Geothermal increased slightly to 475 MW in 2019. Traders Table 3: Traders 2019 2018 Number Capacity (GW) Number Capacity (GW) Traders 196 n.a. 150 n.a. The number of traders on our platform increased with more than 30% to 196 at the end of 2019. Issuance Issuance: electricity Table 4.1: Issuance of GOs (TWh): renewable electricity 2019 2018 Biomass 5.4 4.6 Hydro 0.1 0.1 Solar PV 2.1 1.1 Wind 11.3 10.6 Total 18.9 16.4 The issuance of GOs for electricity from solar PV nearly doubled. Table 4.2: Issuance of Disclosure Certificates (TWh): non-renewable electricity 2019 2018 Natural gas 33.8 7.7 Domestic waste 0.6 - Coal 4.0 1.2 Other 0.1 - Total 38.5 8.9 The massive increase in issuance of Disclosure Certificates for non-renewable electricity is a result of the Full Disclosure legislation. Issuance: heat Table 5: Issuance of GOs (TWh): renewable heat 2019 2018 Biomass 5.1 4.3 Geothermal 1.4 1.1 Solar thermal - - Total 6.5 5.4 The issuance of GOs for heat increased by more than 20%. The issuance of GOs for solar thermal heat multiplied by eight and increased from 2 GWh in 2018 to 16 GWh in 2019. Annual Report 2019 CertiQ 12


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    Our results Management Board report Cancellations History of cancellations Table 6: History TWh 2015 42.7 2016 48.0 2017 49.4 2018 53.5 2019 55.8 Cancellations 60 50 40 30 20 10 0 2015 2016 2017 2018 2019 TWh The total number of cancellations for electricity rose from 53.5TWh in 2018 to a new historic record of 55.8TWh in 2019. 53TWh of cancellations are performed on our platform (MyCertiQ). Due to a court-rule, CertiQ accepts (since the beginning of 2019) ex-domain cancellations from the UK. These cancellations amount to 2.8TWh in 2019. Ex-domain cancellations from the UK are performed in the UK registry for use in the Netherlands. Therefore, these cancellations are not taken into account in our platform statistics. Annual Report 2019 CertiQ 13


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    Our results Management Board report Country of origin Table 7: GOs Country of origin (TWh) 2019 2018 Austria 0.3 0.3 Belgium 1.6 1.6 Croatia 0.1 - Czech Republic 0.6 0.4 Denmark 3.0 4.5 Estonia 0.5 0.6 Finland 1.2 1.5 France 1.6 0.8 Germany 0.5 0.5 Iceland 0.7 1.1 Ireland 0.3 0.3 Italy 10.0 11.5 Luxembourg - - Netherlands 14.1 14.8 Norway 2.9 6.0 Slovenia - 0.4 Spain 11.9 4.9 Sweden 3.7 4.2 United Kingdom 2.8 - GOs need to be imported as the quantity of green electricity consumed in the Netherlands is far greater than the quantity generated. Spain topped the import list, followed by Italy. Imports mainly consisted of wind GOs. Cancellations - split by energy source Table 8: Energy source (TWh) 2019 2018 Cancellations (GOs) Biomass 4.9 6.3 Geothermal - 0.1 Hydro 12.0 12.8 Solar PV 1.2 1.3 Wind 34.9 33.1 Total 53.0 53.6 Cancellations (ex-domain GOs) Solar PV 0.1 - Wind 2.7 - Total 2.8 - Total 55.8 53.6 Cancellations (disclosure) Non-renewable 0.6 - Total 0.6 - Consumers are increasingly choosing wind-generated electricity at the expense of hydro and biomass. Annual Report 2019 CertiQ 14


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    Our results Management Board report Users Table 9: Number of end users and cancellations by beneficiary type (TWh) 2019 2018 Number of end users 1,283 951 End users 19.8 17.0 Products 36.6 36.5 Cancellations in TWh 56.4 53.5 End-users’ cancellations increased substantially - by nearly 16.5% - while cancellations for products increased by 0.3%. The total of 56.4 TWh of cancellations includes ex-domain cancellations and non-renewable cancellations. Certificate activity Table 10: Certificate activity - electricity 2019 2018 2019 2018 Renewables (TWh) Non-renewables (TWh) Issuance 18.9 16.4 38.5 8.9 Import 50.7 46.1 2.5 - Increase certificate stock 69.6 62.5 41.0 8.9 Domestic transfers 12.0 11.9 4.6 0.6 Cancellations 55.8 53.5 0.6 - Issuance for electricity consumed on site 1.7 1.4 0.5 0.2 Export 7.3 7.6 9.3 6.2 Expired 0.7 0.4 6.0 0.4 Decrease certificate stock 65.5 62.9 16.4 6.8 Stock (01.01) 11.6 12.0 2.7 0.6 Movement certificate stock 4.1 -0.4 24.6 2.1 Stock (31.12) 15.7 11.6 27.3 2.7 There was an increase of 4.3% in cancellations (including ex-domain cancellations) for renewable electricity, building on the record of 2018, and a significant growth in non-renewables due to the run-up of the Full Disclosure legislation. Of the total number of certificates issued in 2019 (57.4 TWh), as many as 67% related to non-renewables. Non-renewables are marked for domestic use as well as for export. Export of non-renewable electricity certificates increased from 6.2TWh in 2018 to 9.3TWh in 2019 (+50%). Main destinations are Norway and Austria. The majority of the non- renewable electricity certificates are kept in stock for domestic use in 2020 (27.3TWh). Annual Report 2019 CertiQ 15


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    Our results Management Board report Financial results Financial results income and expenditure (x EUR 1,000) can be summarised as follows: 2019 2018 Revenues 2,982 2,508 Other operating income - 6 Total revenue 2,982 2,514 Operating costs 2,982 2,514 Results - - CertiQ operates under a mandate from the Minister of Economic Affairs and Climate Policy. This means, among other things, that the minister sets the tariffs, based on a proposal by TenneT/CertiQ. CertiQ prepares the tariff proposal on the basis of a multi-year budget and requests the advice of the Participants Council. The tariffs for 2019 (the issuance, cancellation, import, export, transfer, surcharge for biomass and heat and issuance of grey electricity remain unchanged. The following tariffs per MWh were applied in 2019: Issuance for electricity from wind/hydro/solar EUR 0.019 (EUR 0.019 in 2018) Issuance for electricity from biomass/heat EUR 0.043 (EUR 0.043 in 2018) Issuance for non-renewable electricity EUR 0.013 (EUR 0.013 in 2018) Cancellation EUR 0.019 (EUR 0.019 in 2018) Import EUR 0.019 (EUR 0.019 in 2018) Transfer EUR 0.008 (EUR 0.008 in 2018) Export EUR 0.008 (EUR 0.008 in 2018) The annual membership contribution has been suspended for all producers. The annual membership fee for traders amounts to EUR 500. Compared to 2018, operating costs increased by EUR 468,000, primarily because of higher personnel costs and higher amortisation of software. CertiQ works on a cost-recovery basis. Any difference between CertiQ’s invoiced revenue and operating costs is cleared by adjusting tariffs in later years, which is recognised in the financial statements in the balance sheet under ‘To be settled in tariffs’. Annual Report 2019 CertiQ 16


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    Looking ahead to 2020 Management Board report Looking ahead to 2020 Outlook and challenges CertiQ’s core business will change significantly in 2020 as Full Disclosure will be implemented in national legislation on the 1st of January. From 2018 onwards we have worked hard to ensure a smooth implementation of Full Disclosure and we are proud that our systems, processes and people are fully prepared well before the date of implementation. As a result of Full Disclosure, all electricity supplied (approximately 120TWh/year) should be corroborated with a ‘Certificate of Origin’ for non-renewable electricity or a ‘Guarantee of Origin’ for renewable electricity. Hence, our transaction volume will double compared to 2019. That is why our tariff structure is revised: tariffs for the issuing, cancellation and import are reduced substantially. Preparing for Full Disclosure was CertiQ’s primary focus in recent years. Now that these preparations have been completed it is time to shift our focus to other challenges CertiQ faces. The need to improve our certification system (MyCertiQ) in order to meet political, market and consumer demands is apparent. In 2020, we will continue to improve (and automate where possible) our processes for electricity from biomass and renewable heat, focussing on our legal duties. Secondly, as the new SDE++ subsidy scheme will come into force, we will (1) adapt our systems and processes to allow for certifying more heat options and (2) work, together with Vertogas, on a hydrogen certification scheme. Furthermore, we will take a next step in the certification of ‘decentral green’, focussing on a simple registration process for ‘prosumers’. As part of the Transforming TenneT process, CertiQ will become part of the TenneT Strategy and Partnership Unit. CertiQ’s legal status will, however, remain unchanged. The same holds for our long-term strategic goals for the period 2018-2023. Annual Report 2019 CertiQ 17


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    Financial Statements


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    Financial Statements Financial Statements Balance sheet for the year ended 31 December (x EUR 1,000) Assets Notes 2019 2018 Non-current assets Intangible fixed assets 1.1 1,368 565 Total non-current assets 1,368 565 Current assets Accounts receivable and other receivables 2.1 729 591 Associated companies 2.2 243 523 Total current assets 972 1,114 Total assets 2,340 1,679 Equity and liabilities Notes 2019 2018 Equity Paid-up capital 3.1 18 18 Total equity 18 18 Non-current liabilities To be settled in tariffs 4.1 1,158 1,500 Investment contribution 4.2 918 - Total non-current liabilities 2,076 1,500 Current liabilities Accounts payable 5.1 16 39 Prepayments received 5.2 50 - To be settled in tariffs 5.3 - 19 Investment contribution 5.4 102 - Accrued liabilities 5.5 78 103 Total current liabilities 246 161 Total equity and liabilities 2,340 1,679


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    Financial Statements Profit and loss account for the year ended 31 December (x EUR 1,000) Notes 2019 2018 Revenue Revenue 6.1 2,982 2,508 Other operating income 6.2 - 6 Total revenues 2,982 2,514 Operating costs Wages, salaries and social security costs 7.1 1,180 819 Amortisation of intangible fixed assets 7.2 166 30 Other operating expenses 7.3 1,636 1,665 Total operating costs 2,982 2,514 Operating result - - Financial income and expenses Interest received/paid 8.1 - - Result - - Annual Report 2019 CertiQ 20


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    Financial Statements General notes Nature of the business activities The Executive Board of TenneT, the Dutch transmission system operator and administrator of the national high-voltage grid, has been mandated by the Minister of Economic Affairs and Climate Policy to establish an electronic certificate register. TenneT established CertiQ B.V. and appointed CertiQ’s senior manager on the basis of a submandate to set up this system and implement the activities associated with it. CertiQ achieves this by facilitating trade of sustainably generated energy by issuing and managing production certificates. Production certificates, such as GOs, are issued for the production of energy generated from sustainable energy sources: solar, hydroelectric, wind, biomass and geothermal. Electronically issued GOs are the only valid proof in the Netherlands that energy has been generated in a sustainable manner. These certificates for sustainable energy may make the producer in question eligible for subsidies under the statutory scheme of the Stimulation of Sustainable Energy Production (SDE+). They can be traded nationally and internationally. On request, CertiQ can issue, import, export and transfer production certificates for energy generated from non-sustainable sources. All shares in CertiQ are held by TenneT TSO B.V. Estimates In applying the principles and regulations for drawing up the financial statements, CertiQ’s management makes various assessments and estimates that may be essential for the amounts shown in the financial statements. Where the nature of these assessments and estimates must be disclosed to offer the reader the level of understanding required under Article 2:362, sub 1 of the Dutch Civil Code, the notes to the relevant figures in the financial statements explain the nature of the assessments and estimates, including the corresponding assumptions. Principles for the valuation of the assets and liabilities General The financial statements are drawn up in accordance with the provisions of Title 9, Book 2, of the Dutch Civil Code, and the Accounting Standards for small legal entities, as published by the Dutch Accounting Standards Board. The valuation principles are based on historical cost and cost price. The amounts included in the financial statements are denominated in EUR x 1,000. Assets and liabilities are, in general, valued at the acquisition cost or manufacturing cost. Comparison to previous year The accounting principles remained unchanged compared to those used in the previous year. Intangible fixed assets The intangible fixed assets are valued at the original acquisition cost or production cost, after deducting linear amortisation based on the asset’s economic life. Expected long-term loss of value at the balance sheet date is taken into account. Each year at the balance sheet date, CertiQ assesses whether there are any indications that a fixed asset may be subject to an impairment. If such indications exist, the realisable value of the individual asset is determined. If it is not possible to determine the realisable value for the individual asset, the realisable value of the cash flow generating unit of which the asset is part will be determined. Impairment exists when the book value of an asset is higher than the realisable value; the realisable value is the highest value of either the net realisable value or the value in use. The value in use is determined with the aid of the active market. An impairment loss is directly recognised as a cost in the profit and loss account. Annual Report 2019 CertiQ 21


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    Financial Statements If it is determined that an impairment accounted for in the past no longer exists or has decreased, the increased book value of the asset concerned will not be recognised for a value higher than the book value which would have been determined if the impairment of the asset had not been accounted for. Current assets Receivables are valued at the fair value of the consideration. Cash and cash equivalents Cash and cash equivalents consist of bank balances with a term of less than twelve months and are valued at their nominal value. Non-current liabilities Long-term liabilities consist of items ‘to be settled in tariffs’and ‘investment contribution’. ‘To be settled in tariffs’ is the difference between turnover billed and company costs. In accordance with the implementation agreement we have with the Ministry of Economic Affairs and Climate, this amount can be between EUR 500,000 minimum and EUR 1,500,000 maximum.This means that only amounts which exceed the EUR 1,500,000 will need to be returned on short term. The current amount reflected in ‘to be settled in tariffs’ will therefore be settled through future tariffs in the longer term (over one year). Investment contribution have been withdrawn from the ‘to be settled in tariffs’ after approval of the Participants Council and have been used for investments in (intangible) fixed assets. Yearly an amount equal to the depreciation will be released, in favor of other income. The short-term liability of the investment contributions is included under current liabilities. Current liabilities Current liabilities are valued at nominal value. Annual Report 2019 CertiQ 22


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    Financial Statements Principles for the determination of the result Revenue Article 29 of the Regulation on GOs for energy generated from renewable energy sources and on high-efficient co-generation electricity states the tariffs that apply to recover the costs related to GOs. The tariffs are set by the minister after approval by the Executive Board of TenneT and in consultation with the Participants Council. The difference between the actual costs and invoiced revenue is adjusted in the tariffs of subsequent years and recognised in the financial statements under the account ‘To be settled in tariffs’. Other income comprises the annual release of investment contributions and compensation of the work carried out by CertiQ staff on various projects, such as projects for the AIB. Operating costs Operating costs are determined on a historical basis and allocated to the reporting year to which they relate. Amortisation of intangible fixed assets The amortisation of intangible fixed assets is determined in line with the asset’s expected economic life, using the linear method. Financial income and expenses Interest income and interest charges are allocated in proportion to time, taking into account the effective interest rate of the assets and liabilities to which they relate. Taxes Because CertiQ adjusts the difference between its invoiced revenue and operating costs in the tariffs of subsequent years, there can be no fiscal result. The tax to be paid is therefore nil at all times, as agreed with the Dutch Tax and Customs Administration. Annual Report 2019 CertiQ 23


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    Financial instruments and risk management Financial instruments and risk management Price risks CertiQ is not subject to any price risks due to the fact that any surplus or deficit is adjusted in the tariffs of subsequent years. Credit risks CertiQ does not have any significant concentrations of credit risk. The credit risk is very limited because the payment of invoices is a precondition for trading in certificates. The write-offs of receivables are negligible. Liquidity risks The liquidity risks for CertiQ are minimal due to the liquidity position of TenneT Group and the possibility to amend future tariffs. Annual Report 2019 CertiQ 24


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    Notes to the balance sheet Notes to the balance sheet as at 31 December 2019, after appropriation of profits 1. Fixed assets 1.1 Intangible fixed assets The website, the electronic certificate register (myCertiQ I), the sustainable heat system (myCertiQ II), BO reporting (data warehouse), the proof of concept Blockchain, SQL, automatic testing and Full Disclosure phase 1 are recognised under intangible fixed assets. An amortisation period of five years is applicable. The website was fully amortised in 2014, myCertiQ I was fully amortised in 2017, myCertiQ II and BO reporting were fully amortised in 2018. Fixed assets: the book value of intangible fixed assets can be specified as follows (x EUR 1,000): Intangible fixed Intangible fixed assets under (EUR million) assets construction Total Cost At 1 January 2018 3,182 - 3,182 Additions - - - Taken into service - Full Disclosure 462 - 462 Taken into service - Blockchain 40 - 40 Taken into service - Automatic Testing 66 - 66 Taken into service - SQL 15 - 15 At 31 December 2018 3,765 - 3,765 Additions - 51 51 Taken into service - Back-end CertiQ 338 - 338 Taken into service - Web forms 193 - 193 Taken into service - Decentralised Green 183 - 183 Taken into service - Trading module 94 - 94 Taken into service - ALM Refactoring 45 - 45 Taken into service - ALM Security & Audit 37 - 37 Taken into service - MyOwnIDP 27 - 27 At 31 December 2019 4,682 51 4,733 Amortisation and impairment At 1 January 2018 3,169 - 3,169 Amortisation for the year 30 - 30 At 31 December 2018 3,199 - 3,199 Amortisation for the year 166 - 166 At 31 December 2019 3,365 - 3,365 Net book value: At 1 January 2018 13 - 13 At 31 December 2018 565 - 565 At 31 December 2019 1,317 51 1,368 Annual Report 2019 CertiQ 25


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    Notes to the balance sheet 2. Receivables 2.1 Accounts receivable and other receivables Accounts receivable consist of all receivables with a remaining maturity of less than one year. As the credit risk is estimated to be negligible, no provisions for bad debts have been deducted from this account. 2019 2018 Accounts receivable 729 588 Other receivables - 3 Total receivables 729 591 2.2 Associated companies This entry contains the short term current account between TenneT and CertiQ. On this balance no interest is being calculated; the interest is zero rated. 3. Equity 3.1 Paid-up capital The authorised capital of the company amounts to EUR 90,000, divided into 900 shares of EUR 100 each. Of these shares, 180 have been issued and paid up. 4. Non-current liabilities 4.1 To be settled in tariffs This is the difference between turnover billed and CertiQ’s costs to be discounted for in future tariffs with market parties. The duration is more than one year. The tariffs are set annually by the Minister of Economic affairs and Climate after agreement with the management of TenneT and consultation with the Participants Council. In accordance with the implementation agreement between CertiQ and the Ministry of Economic Affairs and Climate, this amount can be between EUR 500,000 and EUR 1,500,000. This means that only amounts which exceed the EUR 1,500,000 will need to be returned on short term. 4.2 Investment contribution Due to upcoming high investments in 2020, CertiQ proposes to withdraw an amount of EUR 1,020K as of 31.12.2019 from ‘to be settled in tariffs’, which is already reflected in this annual report. This amount will be used to limit the impact of budgeted IT projects in 2020 on future tariffs. Each year, an amount will be released to offset the amortisation of the investments. We presume that IT projects will be completed mid of 2020 and amortisation starts. The amount necessary to offset the amortisation in 2020 is presented under current liabilities. The amounts related to subsequent years are reflected under non-current liabilities. Annual Report 2019 CertiQ 26


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    Notes to the balance sheet 5. Current liabilities 5.1 Accounts payable Accounts payable only comprise debts with a remaining term of less than one year. 5.2 Prepayments received ‘Prepayments received’ are the short-term part of the investment subsidies from the government. Current liabilities: the breakdown of the ‘Prepayments received’ post is as follows (x EUR 1,000): 2019 2018 Government investment subsidies 50 - Balance as at 31 December 50 - 5.3 To be settled in tariffs ‘To be settled in tariffs’ reflect the short-term part of the amount above EUR 1,500,000. 5.4 Investment contribution This amount relates to the short term part of the investment contribution which is expected to be necessary to offset the amortisation costs in 2020. More details are included in note 4.2. 5.5 Accrued liabilities These relate to annual leave to be paid and costs to be paid. Costs to be paid consist of: accrued liabilities for the annual report, hiring staff, holidays hours and consultancy services etc. Annual Report 2019 CertiQ 27


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    Notes to the profit and loss account Notes to the profit and loss account as at 31 December 2019 6. Revenue In the year under review, invoicing was done on the basis of pre-set tariffs. The amount needed to cover costs was EUR 2,794,000. The surplus of EUR 847,000 was added to the account ‘To be settled in tariffs’ on (the liability side of) the balance sheet. 6.1 Revenue The difference between realised revenue and costs will be settled with differences brought forward from previous years, recognised in the account ‘To be settled in tariffs’. Revenue: can be specified as follows (x EUR 1,000): 2019 2018 Memberships 98 76 Transactions 3,543 2,891 To be settled in tariffs -659 -459 Total revenue 2,982 2,508 Revenue from transactions: can be specified as follows (x EUR 1,000): 2019 2018 Issuance of certificates 1,272 773 Transfers/import/export of certificates 1,228 1,088 Cancellation of certificates 1,043 1,030 Total revenue from transactions 3,543 2,891 On request of the Ministry of Economic Affairs and Climate Policy, with effect from 2015, CertiQ has set the tariffs for heat and biomass at a cost-neutral level, by introducing a surcharge for these two specific energy sources. This ensures that CertiQ can further specify revenue from transactions by two types of work (× EUR 1,000). Revenue from transactions, type of work: can be specified as follows (x EUR 1,000): 2019 2018 Regular activities 3,255 2,649 Extra work for heat and biomass 288 242 Total revenue from transactions 3,543 2,891 6.2 Other operating income Other operating income comprises the release of the investment contribution for myCertiQ I in proportion to the amortisation of the asset for which the investment contribution is intended and other income. Other income consists of a contribution by the Ministry of Economic Affairs and Climate Policy for operational activities relating to the certification of renewable heat and the release of the subsidy for myCertiQ II. In addition, CertiQ is paid compensation for activities undertaken for the AIB. Annual Report 2019 CertiQ 28


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    Notes to the profit and loss account Other operating income: can be specified as follows (x EUR 1,000): 2019 2018 Other income - 6 Total other operating income - 6 7. Operating costs 7.1 Wages, salaries and social security costs The company does not employ any employees but hires personnel from other parties. In 2019, the average number amounted to: • hired from TenneT: 10.8 FTE (2018: 10.2 FTE); and • hired from third parties: 4.3 FTE (2018: 4.8 FTE). The increase in personnel costs is mainly due to changes in staff. An additional driver for the increase in costs is a lower capitalisation of external costs in 2019. 7.2 Amortisation of intangible fixed assets The amortisation of intangible fixed assets is higher in 2019 than 2018 due to projects taken into service during 2018 and 2019, mainly full disclosure, decentralised green and back-end. 7.3 Other operating costs Other operating costs consist of costs for process automation systems, office premises, memberships, consultancy, an external auditor, training, travel and accommodation. 8. Financial income and expenses 8.1 Interest received This account is nil and relates to the interest received on the balance of the current account with TenneT. Additional notes for 2019 Off-balance sheet rights and obligations Together with TenneT Holding B.V. and its subsidiaries, CertiQ forms part of a fiscal entity for company income tax and value added tax purposes. On the basis of the standard conditions as issued by the Dutch tax authorities when the fiscal entity was established, CertiQ is jointly and severally liable for the company income tax and value added tax liabilities of the whole fiscal entity. Arnhem, 20 March 2020 Management Board of TenneT TSO B.V. B.G.M. Voorhorst O.J. Jager CertiQ B.V. Utrechtseweg 310 6812 AR Arnhem Chamber of Commerce register 09122183 Annual Report 2019 CertiQ 29


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    Appendix


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    Appendix Appendix Stakeholders Direct Indirect Glossary of terms Ministry Ministry of ACM: Authority Consumer & Markets of Economic Economic Affairs and AIB: Association of issuing Bodies Climate Climate CBS: Statistics Netherlands Polici Polici RVO: Netherlands Enterprise Agency European ACM Commission TenneT AIB CBS Energy Measurement System Trader Supplier Users producer Company Operator Accountant RECS International Participants Council RVO Annual Report 2019 CertiQ 31


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    Appendix CertiQ works with … CertiQ has active partnerships with a range of stakeholders in the sustainable energy sector. These include: TenneT TSO B.V. TenneT TSO B.V., part of TenneT Holding B.V., is Europe’s first crossborder electricity transmission system operator. With approximately 23,000 kilometers of high voltage lines and approximately 41 million end users in the Netherlands and Germany, TenneT ranks among the top five grid operators in Europe. TenneT’s focus is to develop a northwest European energy market and to integrate sustainable energy. Under a mandate of the Minister of Economic Affairs and Climate Policy, TenneT established the electronic certificate register for sustainable energy. CertiQ manages this system, which is linked to TenneT’s electronic infrastructure, on behalf of TenneT. TenneT is the only shareholder of its subsidiary CertiQ. The Ministry of Economic Affairs and Climate Policy The Ministry of Economic Affairs and Climate Policy is responsible for such matters as policymaking in relation to energy and certification. CertiQ consults regularly with the ministry to align its policies regarding developments that affect CertiQ. The Netherlands Enterprise Agency The Netherlands Enterprise Agency implements government policies on innovation and sustainable development and is part of the Ministry of Economic Affairs and Climate Policy. The Netherlands Enterprise Agency manages, among other things, the SDE+ subsidy scheme. This subsidy for the generation of renewable energy is paid based on the GOs issued by CertiQ. The Authority for Consumers & Markets (ACM) ACM is the regulator for the Dutch energy sector. The duties of this independent governing body include overseeing the correct implementation of and compliance with the 1998 Electricity Act and statutory schemes which are executed by CertiQ. Statistics Netherlands (CBS) CertiQ sends statistics to CBS on the electricity generation it has certified on a monthly basis, in accordance with an agreement concluded between TenneT/CertiQ and CBS. CBS incorporates this data in its publications. The Association of Issuing Bodies (AIB) AIB is an international partnership of energy certification syste administrators, of which CertiQ is a member. AIB members issue GOs (that can be traded internationally). AIB seeks to standardise certification systems to facilitate international trade. To that end, it has developed a common standard: the EECS® Rules. Regional grid operators Regional grid operators are responsible for the transmission of electricity over the public electric grid. In relation to CertiQ, the grid operators are responsible for assessing applications to register production plants and for periodically submitting electricity metering data to CertiQ. Metering companies Metering companies are responsible for installing and maintaining meters, collecting the data for heat and electricity from the meters and submitting this information to the regional grid operator or CertiQ. Producers Producers generate electricity or heat and supply it to a grid or consume it on-site. CertiQ certifies the energy generated in order to make the origin of the energy transparent and traceable. CertiQ issues GOs for sustainable electricity and heat. CertiQ also voluntarily issues so-called ‘labelling certificates’ for electricity from non-renewable sources. Annual Report 2019 CertiQ 32


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    Appendix Traders Traders enter into agreements with producers for the purchase of GOs or other certificates. A producer informs CertiQ of the trader it does business with. CertiQ credits the corresponding certificates to the account of this trader. A trader can trade the certificates or use them as proof of supply to end users. Energy suppliers Energy suppliers are companies that purchase energy (including grey and green electricity) and sell it to commercial and private users. As such, it is the energy supplier who has the supply contract with the customer. Every energy supplier in the Netherlands that wishes to supply green electricity must have a certificate account with CertiQ. The Participants Council CertiQ established the Participants Council to ensure the best possible alignment with the needs of its participants. Its members represent the interests of all participants in the E-certification system. The Participants Council comprises producers, traders and representatives of several large energy suppliers. In drawing up its annual plan, CertiQ explicitly considers the Council’s advice. Auditors Each year, independent auditors retrospectively audit which fuels have been used by producers with biogas and/or biomass plants to generate energy. These audits provide additional assurance regarding the origin of renewable energy. Consumers You can’t tell just by looking at it whether the electricity coming from a wall socket is from a renewable source or not. CertiQ’s GOs provide consumers with reliable and transparent information on where their energy is from and how it was generated, thereby enabling them to make an informed decision on the energy they buy. European Commission The European Commission executes community policy and as such is responsible for implementing legislation relating to GOs. The legislative process for the Renewable Energy Directive II started last year, and EU institutions reached agreement on this new directive in 2018. RECS International RECS International represents market players, from generators, traders, wholesalers, suppliers and consumers, in a constant dialogue with national legislative bodies and European policymakers to further develop a standardised pan-European electricity tracking system. RECS International has worked since 2001 to improve and simplify the system of tracked electricity, the certificates used in that system and the claims consumers can make after their certificate purchases. CertiQ B.V. Utrechtseweg 310 6812 AR Arnhem Handelsregister: Arnhem 09122183 Annual Report 2019 CertiQ 33


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    Other information Other information Events after the balance sheet date No events have taken place after the balance sheet date that need disclosing in these financial statements. Annual Report 2019 CertiQ 34


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    Independent auditor’s report Independent auditor’s report To: the shareholder and management of CertiQ B.V. Report on the audit of the financial statements 2019 included in the annual report Our opinion We have audited the financial statements 2019 of CertiQ B.V., based in Arnhem. In our opinion the accompanying financial statements give a true and fair view of the financial position of CertiQ B.V. as at 31 December 2019, and of its result for 2019 in accordance with Part 9 of Book 2 of the Dutch Civil Code. The financial statements comprise: • The balance sheet as at 31 December 2019 • The profit and loss account for 2019 • The notes comprising a summary of the accounting policies and other explanatory information Basis for our opinion We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under those standards are further described in the “Our responsibilities for the audit of the financial statements” section of our report. We are independent of CertiQ B.V. in accordance with the Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence) and other relevant independence regulations in the Netherlands. Furthermore we have complied with the Verordening gedrags- en beroepsregels accountants (VGBA, Dutch Code of Ethics). We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Report on other information included in the annual report In addition to the financial statements and our auditor’s report thereon, the annual report contains other information that consists of: • Management board report • Other information as required by Part 9 of Book 2 of the Dutch Civil Code Based on the following procedures performed, we conclude that the other information: • Is consistent with the financial statements and does not contain material misstatements • Contains the information as required by Part 9 of Book 2 of the Dutch Civil Code We have read the other information. Based on our knowledge and understanding obtained through our audit of the financial statements or otherwise, we have considered whether the other information contains material misstatements. By performing these procedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil Code and the Dutch Standard 720. The scope of the procedures performed is substantially less than the scope of those performed in our audit of the financial statements. Management is responsible for the preparation of the other information, including the management report in accordance with Part 9 of Book 2 of the Dutch Civil Code and other information as required by Part 9 of Book 2 of the Dutch Civil Code. Annual Report 2019 CertiQ 35


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    Independent auditor’s report Description of responsibilities for the financial statements Responsibilities of management for the financial statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with Part 9 of Book 2 of the Dutch Civil Code. Furthermore, management is responsible for such internal control as management determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error. As part of the preparation of the financial statements, management is responsible for assessing the company’s ability to continue as a going concern. Based on the financial reporting framework mentioned, management should prepare the financial statements using the going concern basis of accounting unless management either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so. Management should disclose events and circumstances that may cast significant doubt on the company’s ability to continue as a going concern in the financial statements. Our responsibilities for the audit of the financial statements Our objective is to plan and perform the audit engagement in a manner that allows us to obtain sufficient and appropriate audit evidence for our opinion. Our audit has been performed with a high, but not absolute, level of assurance, which means we may not detect all material errors and fraud during our audit. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. The materiality affects the nature, timing and extent of our audit procedures and the evaluation of the effect of identified misstatements on our opinion. We have exercised professional judgment and have maintained professional skepticism throughout the audit, in accordance with Dutch Standards on Auditing, ethical requirements and independence requirements. Our audit included among others: • Identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error, designing and performing audit procedures responsive to those risks, and obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control • Obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control • Evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management • Concluding on the appropriateness of management’s use of the going concern basis of accounting, and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause a company to cease to continue as a going concern • Evaluating the overall presentation, structure and content of the financial statements, including the disclosures • Evaluating whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation We communicate with management regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant findings in internal control that we identify during our audit. Eindhoven, 20 March 2020 Ernst & Young Accountants LLP P.A.E. Dirks Annual Report 2019 CertiQ 36


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