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As 2025 comes to a close, we analyze the critical factors shaping the European Guarantees of Origin (GO) market while reviewing our assessment from Q3. You can select your favourite podcast platform to watch or listen to this episode here.
How to Access the Outlook
This quarter’s report includes all-new hydrology and reservoir predictive graphs for Norway, which will be a permanent fixture moving forward. 📊
As always, this discussion is based on our comprehensive in-app quarterly report available to Soldera members via the sidebar.
Looking Back at Q3 and Assessing Our Predictions
→ Market experienced unusually high volatility with 2025 vintage prices spiking in July before declining
→ Production estimates adjusted as Italian data corrections showed slower underproduction than initially forecast
→ Southern Norway reservoir levels critically low despite record-high northern reserves 💧
→ Summer trading activity exceeded expectations with significant hedging pressure
Norway Takes Center Stage 🇳🇴
→ Norway’s parliament votes to transpose REDD II into national law
→ Southern reservoir zones (NO2) at historically low levels affecting 2026 outlook
→ Northern zones (NO4) overflowing but transmission-limited from reaching demand centers ⚡
→ Market remains cautious on implementation timeline and actual demand impact
Critical Supply Dynamics
→ 2024 vintage oversupply continues pressuring 2025 spot prices below €0.50/MWh
→ End-of-year spot weakness follows typical seasonal pattern as traders rotate to 2026 vintage
→ Forecasted 4.8% reduction in 2025 GO issuance compared to 2024
→ Dunkelflaute conditions expected in Central Europe impacting renewable production 🌫️
→ First year since 2022 projected to reduce overall market surplus
Demand Outlook and Policy Developments
→ Germany’s 2024 cancellations up 2% year-over-year showing slower growth 🇩🇪
→ Italian Energy Release Scheme replacing government auctions from 2026 onwards 🇮🇹
→ Heavy industry receiving subsidized renewable energy in exchange for production commitments
→ Demand diversifying across Europe beyond traditional German dominance
→ CSRD guidance updates still pending clarity on corporate requirements
Strategic Market Considerations
→ 2026 forward prices commanding significant premiums reflecting improved market balance expectations
→ 2027 showing even stronger pricing as analysts anticipate continued oversupply reduction 🫗
→ Conservative hydro production anticipated through winter and spring affecting supply
→ Renewable buildout slowing across Europe impacting long-term GO issuance → Market positioning for multi-year improvement despite near-term weakness
Stay informed with our quarterly market updates to navigate the evolving GO landscape!
#GuaranteesOfOrigin #RenewableEnergy #EnergyMarkets #Sustainability
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit podcast.soldera.org
Transcript of the episode's discussion between Oliver Bonallack and Al William Tammsaar
[00:00:03]
Hey, everybody, and welcome back to another quarterly outlook for Soldera.
[00:00:07]
The Soldera Markets podcast runs quarterly outlooks on the GO and EAC ecosystem.
[00:00:12]
And I mean, there's been some big news in Q3.
[00:00:15]
I mean, I don't want to jump straight into it.
[00:00:17]
We should start with what we usually do, which is looking back at our previous predictions.
[00:00:20]
And we'll get to the exciting part later.
[00:00:21]
And I'm sure many of our listeners will, you know, they can take a guess.
[00:00:26]
Let's take a look back.
[00:00:27]
How did our last predictions hold up?
[00:00:29]
Hey, everybody.
[00:00:30]
So let's kick things off and talk about Q3,
[00:00:33]
how we actually did,
[00:00:34]
what we said,
[00:00:35]
what we said would happen,
[00:00:37]
what actually happened,
[00:00:38]
how everything played out.
[00:00:39]
I'd like to start this thing by saying we anticipated there being lower liquidity on the market.
[00:00:46]
Very interestingly enough,
[00:00:47]
I think we saw the biggest spike of activity on the market that we've seen this
[00:00:53]
year so far.
[00:00:55]
That was quite exciting.
[00:00:58]
Mostly that seemed to come down to...
[00:01:01]
unusually high hedging activity of wanting to close out prices and yeah that
[00:01:07]
translated into a large amount of geos being traded at prices which were
[00:01:14]
significantly better than a month before and significantly better than a month
[00:01:18]
after so somewhere in in the middle start end of july we we saw some really serious
[00:01:24]
activity on even 2025 geo prices doing excellence
[00:01:29]
Sadly, we've seen that come down ever since then.
[00:01:32]
Pretty heavy pressure.
[00:01:33]
We're currently now down to below 50 cents, which doesn't feel great.
[00:01:39]
Also,
[00:01:39]
we'll talk about it later,
[00:01:41]
but there's somewhat of an expectation of that's what a Geo trading season looks
[00:01:45]
like,
[00:01:46]
especially for Spock.
[00:01:47]
uh one thing that i did want to mention was last time we talked about uh the under
[00:01:52]
production compared to 2024 the estimates back then were significantly wider than
[00:01:58]
they are right now we did see summer go pretty well for everybody in terms of
[00:02:04]
renewable production we saw some data corrections get issued and by the end of it
[00:02:10]
We went down from maybe around 7% less to maybe 3% less than the previous year,
[00:02:16]
which is still a gap,
[00:02:17]
but it's definitely not as big as it looked at the start of summer.
[00:02:21]
Approaching the kind of area where we have more or less certainty on what's going
[00:02:25]
to happen for the rest of the year.
[00:02:27]
So it's interesting you brought up the price spike that happened in July.
[00:02:30]
So that's kind of a little bit customary for the sort of yearly trends that we've been seeing.
[00:02:34]
Do you want to quickly touch on that?
[00:02:36]
yeah so the price spike in july is not necessarily the customary part the customary
[00:02:41]
part is what happens after july so when we enter into september and very definitely
[00:02:48]
now that we are in october prices have a tendency especially on the spot prices of
[00:02:54]
uh trending down at the end of the year as people look to start trading the 2026
[00:02:58]
event so in the last quarter you usually end up seeing less interest in 25
[00:03:06]
for this year, more interest in 26, so next year.
[00:03:10]
That's generally how you see the trend work over a given year of spot trading.
[00:03:17]
On forwards, the trend doesn't really exist in the same shape.
[00:03:21]
So volatility can really come in anywhere.
[00:03:24]
While on the spot prices, they do end up being
[00:03:27]
a higher-ish at the start of the year,
[00:03:29]
slowly trending down over the year,
[00:03:31]
and then like this trend generally getting locked in for the last three months.
[00:03:37]
And when it comes to short-term drivers,
[00:03:39]
so looking at things that could potentially interrupt that final three months of
[00:03:43]
the year,
[00:03:43]
are we seeing anything that could make this trend not as expected or what's your
[00:03:49]
opinion?
[00:03:49]
One of these things before we get to the main thing, which is Norway,
[00:03:54]
A couple of things on,
[00:03:56]
for example,
[00:03:57]
the German energy production front,
[00:03:59]
there is an anticipation that there will be more of these the sun's not shining,
[00:04:04]
the wind's not blowing kind of days at the end here.
[00:04:07]
They even have their own special term for it, which is
[00:04:13]
Dunkelflaute.
[00:04:14]
I hope I pronounced that correct.
[00:04:16]
But yeah, we expect more Dunkelflaute in Central Europe and that could have an impact on supply.
[00:04:25]
It definitely will be noticeable,
[00:04:27]
I think,
[00:04:28]
more on electricity prices than it will be on geo prices.
[00:04:32]
But all of these things do have an impact on each other.
[00:04:34]
So they are quite connected at times.
[00:04:40]
But coming to our friend Norway.
[00:04:41]
So Norway is this recurring character on our quarterly discussions.
[00:04:49]
Well,
[00:04:49]
I think it's a recurring character across most geo discussions because of just how
[00:04:54]
big of an exporter they are.
[00:04:56]
The second biggest exporter is like half of their size.
[00:05:00]
So Norway just exports a major, measurable, feelable amount into the market.
[00:05:07]
So whenever Norway does something, the market does react to it.
[00:05:11]
What we're currently seeing in Norway in the short term is that they have an
[00:05:14]
interesting situation.
[00:05:15]
You could look at the reservoir levels,
[00:05:17]
which are a pretty good proxy for how are we expecting the Norwegian hydro
[00:05:22]
production to go for the foreseeable future.
[00:05:27]
While the north...
[00:05:29]
While the northern reservoirs are in an incredibly healthy situation,
[00:05:35]
in fact,
[00:05:36]
above historical records,
[00:05:39]
they're doing pretty well.
[00:05:40]
When you look into the south, you see something completely different.
[00:05:44]
disparity currently between the reservoir levels in the north so significantly
[00:05:48]
harder to arbitrage with the rest of the market where you see it in the south which
[00:05:53]
is very interconnected it has the connection with germany whatever you produce you
[00:05:57]
can find a buyer for it like there's more just activity in the south and it does
[00:06:02]
have just this one trading zone which is norway 2 does have the
[00:06:08]
I believe it's north of 35% of the entire capacity.
[00:06:12]
And that specific zone is not doing all that well right now.
[00:06:16]
Yeah, I'm interested.
[00:06:17]
So obviously,
[00:06:19]
besides the Norway news,
[00:06:21]
you're saying that the hydrology itself is actually,
[00:06:23]
you know,
[00:06:24]
potentially relatively bullish in the short term.
[00:06:26]
I think relatively bullish in the short term for geoprices, definitely.
[00:06:29]
Because if we got a repeat of last year,
[00:06:31]
I think we'd be in like a worse position overall in this sense.
[00:06:38]
because the reservoir levels are likely going to cause conservative hydro
[00:06:46]
production in the winter and spring and that's going to translate into just less
[00:06:52]
geos issued so overall if you kind of zoom out into the big picture the expectation
[00:06:58]
is that there's just going to get less geos issued there's going to be less geos in
[00:07:02]
the market and it's going to be big enough that it can be noticeable
[00:07:07]
essentially what we're waiting for is the end of october usually at the end of the
[00:07:12]
year why we are waiting for october is you do not see reservoir levels increase
[00:07:19]
significantly after that point mainly because just the water stops really moving
[00:07:24]
around it's frozen right
[00:07:26]
And because of that reservoir levels,
[00:07:29]
the inflows kind of stop while you keep using it over the rest of the period where
[00:07:35]
all of this water is frozen.
[00:07:37]
And because of that,
[00:07:38]
if you don't have enough,
[00:07:39]
you start being more conservative,
[00:07:41]
similarly to how you would if you look at a budget.
[00:07:45]
Your budget isn't looking that good.
[00:07:47]
Cash flow is not coming in.
[00:07:48]
You see money in the bank.
[00:07:49]
You're like, OK, I need to make sure that this money in the bank lasts me, right?
[00:07:53]
So similar kind of approach over here.
[00:07:56]
The bank account is like the burn rate of a reservoir.
[00:08:00]
Yeah, yeah, yeah.
[00:08:01]
So they really need to closely manage that this year is below average.
[00:08:06]
And because of that, we're going to see less production than we did, for example, last year.
[00:08:11]
Nice.
[00:08:12]
Something happened that I really couldn't even believe happened when somebody told me.
[00:08:17]
Norway's parliament actually voted to transpose Red 2.
[00:08:23]
And why that's super relevant for context is Norway is not strictly part of the European Union.
[00:08:31]
They have a lot more flexibility in terms of what laws they adopt,
[00:08:35]
what do they transpose,
[00:08:37]
how compatible are they with everything.
[00:08:40]
And one of the annoying parts about that,
[00:08:43]
especially from the perspective of the guarantees of origin market,
[00:08:46]
has been that Norway adopted REDD1,
[00:08:50]
created the concept of guarantees of origin,
[00:08:53]
but they have not adopted REDD2,
[00:08:55]
which really codifies that,
[00:08:56]
hey,
[00:08:58]
guarantees of origin should be used for consumer disclosure.
[00:09:01]
Before that point, it was
[00:09:04]
much looser in terms of what the requirements are.
[00:09:07]
While now we seemingly are entering a period of time where also in Norway,
[00:09:13]
according to Norwegian laws,
[00:09:15]
you couldn't go around and say,
[00:09:17]
hey,
[00:09:17]
I'm doing absolutely nothing about it,
[00:09:19]
but because I'm getting electricity from the socket,
[00:09:21]
that means the electricity is green.
[00:09:23]
while the government and the major hydro producers are exporting a large amount of
[00:09:29]
hydro out of the country not actually using it and then leading to a situation
[00:09:34]
where there's kind of two narratives narrative one is that these organizations in
[00:09:40]
the neighboring countries for example Germany are like our electricity is pretty
[00:09:44]
good it's pretty green while in Norway they're like yep same here for completely
[00:09:49]
different reasons but it's like you know
[00:09:52]
What Norway has managed to do in this market is the literal having your cake and eating it too.
[00:09:58]
They created a superposition of cake where it's, you know,
[00:10:03]
The cake is getting eaten, but it's also in another country.
[00:10:07]
But your stomach is full.
[00:10:08]
Everything's great.
[00:10:09]
And you're getting paid to eat the cake pretty much.
[00:10:13]
Yeah, exactly.
[00:10:14]
So it's a strange area in the middle that really shouldn't exist.
[00:10:20]
I don't think anybody should have really put up with this.
[00:10:23]
uh but that's kind of what what's happened in this market of course if you want to
[00:10:27]
opt out of the system you're more than welcome to do it if you want to say that all
[00:10:32]
of your electricity is green stop selling the rights to say that it's green to
[00:10:35]
another country then that's fine that's completely normal but being in this middle
[00:10:40]
area that's where all the problems come from so uh red 2 got uh got the vote got
[00:10:46]
passed to ratify it uh
[00:10:49]
So now it's going to get transposed into Norwegian law.
[00:10:51]
That hasn't happened yet.
[00:10:52]
So I guess there is some reason to be skeptical.
[00:10:57]
There's some reason to be in this wait and see phase of
[00:11:00]
How is that all going to play out,
[00:11:02]
especially knowing the history of how Norway's governments have behaved around this
[00:11:07]
topic?
[00:11:08]
As a country,
[00:11:08]
we're doing location-based reporting,
[00:11:10]
which means that we're not looking at what the market activity around that is at
[00:11:14]
all.
[00:11:14]
We're just doing location-based reporting.
[00:11:16]
We recommend doing location-based reporting.
[00:11:19]
You should only do market-based reporting if you really have to.
[00:11:23]
And that's...
[00:11:24]
And that's a very toxic position to have if at the same time you're the biggest
[00:11:28]
exporter of guarantees of origin on the market.
[00:11:30]
I mean, it's not even close.
[00:11:32]
Don't hear this and think, you know, they're slightly beating somebody out, right?
[00:11:34]
It's like, oh, you know, Norway has an edge on this market.
[00:11:37]
No, they are the dominant exporter.
[00:11:39]
So I think it's also important to be,
[00:11:41]
you know,
[00:11:41]
obviously,
[00:11:42]
credit where it's due,
[00:11:43]
you know,
[00:11:44]
you sorted your stuff out.
[00:11:45]
But Red 2 was, what, 2018?
[00:11:48]
Like, you're late.
[00:11:49]
Yeah.
[00:11:51]
I don't know.
[00:11:52]
The bar was on the floor.
[00:11:53]
Let's put it that way.
[00:11:54]
They've picked it up.
[00:11:56]
It's not something monumentous.
[00:11:58]
It's obviously great news for the market, but it's not like an incredible policy feat.
[00:12:01]
It's like the bare minimum, basically.
[00:12:04]
Yes.
[00:12:05]
I think that's a good way to put it.
[00:12:07]
And that's also why I was so surprised that it happened because my bar was
[00:12:12]
like underground at that point so uh big picture how this could affect the market
[00:12:18]
going forward conservatively bullish to very bullish depending on how everything
[00:12:23]
plays out but i think this is a thing that we're gonna have to observe over
[00:12:27]
multiple years i don't think necessarily we're all going to wake up tomorrow and uh
[00:12:33]
all
[00:12:35]
electricity providers in Norway are forced to substantiate all of their green
[00:12:40]
energy sales with guarantees of origin right like that's not going to happen
[00:12:43]
overnight there's going to be a period even after it gets passed that's going to
[00:12:47]
take some time I think also there's just on the just a point on the transposition
[00:12:51]
I'm already reading that there's going to be slight adaptations with regards to the
[00:12:56]
internal electricity market directive so
[00:13:00]
My understanding of that is like that's when and how a supplier has to disclose.
[00:13:03]
I mean, they still have to do it, but it's like there's a little bit of, you know, flexibility.
[00:13:08]
So we're going to see.
[00:13:09]
I think it basically comes down to how much granular insight the customers actually
[00:13:13]
get when they,
[00:13:15]
you know,
[00:13:15]
you purchase a utilities contract or something.
[00:13:17]
But yeah, we'll have to see how the adaptation plays out.
[00:13:20]
Hopefully there's no, you know, sneaky last minute news to come.
[00:13:25]
I think the market,
[00:13:26]
broadly speaking,
[00:13:28]
I can't say it moved majorly on this news,
[00:13:32]
which does point to me that everybody's going to have to see it to believe it.
[00:13:36]
And I think that's a healthy position to have here.
[00:13:39]
Yeah,
[00:13:40]
so now that we've got the mandatory Norway section of the episode out of the way,
[00:13:45]
let's look at short-term demand factors.
[00:13:49]
If you wanted to be the most predictable person in the market,
[00:13:54]
you would say currently that the prices are going to trend down.
[00:13:57]
I think that's broadly what you would expect at the end of the year,
[00:14:01]
especially when it comes to spots.
[00:14:03]
Broadly speaking, you do see the rest of the market weaken slightly as a consequence of that.
[00:14:08]
But it is generally isolated more towards, hey, 2025, it's going to go down.
[00:14:16]
It's going to keep trending down because usually that's what you see at this stage of market.
[00:14:22]
Sometimes it isn't.
[00:14:23]
There have been years where it doesn't.
[00:14:27]
There are reasons to think that this year might be different.
[00:14:34]
But I think on average,
[00:14:36]
the expectation is that we're not going to see massive trends upwards at the end of
[00:14:43]
the year for spot prices.
[00:14:45]
while we may see more positive movements realized maybe next year on...
[00:14:51]
Positive trends are just so dwarfed by the general sentiment,
[00:14:55]
basically.
[00:14:56]
Yeah, so a couple of things here.
[00:14:58]
One is that generally, this is the trend.
[00:15:01]
Generally speaking, you do see end-of-year weakening.
[00:15:04]
This year is a bit more special in that sense because of just how big the 2024
[00:15:11]
oversupply is,
[00:15:12]
just how much of it there is in the market.
[00:15:15]
i i think we will see at least some of the 2024 volumes expire i'm pretty
[00:15:21]
interesting interested to see how that's going to look like at the end of the year
[00:15:25]
what you generally have seen is the 2024 guarantees of origin so for the listeners
[00:15:33]
there's about one year after a guarantee of origin getting issued that you can use
[00:15:38]
it you can make claims with it against your electricity consumption
[00:15:43]
that creates this strange arbitrage situation where even though currently it's the
[00:15:48]
year 2025 you can use electricity certificates produced in 2024 to make claims
[00:15:53]
about your consumption this year do i think that's a good thing absolutely not i
[00:15:57]
don't think it's necessarily healthy for the market but it is what it is that's
[00:16:01]
kind of the reality we're dealing with now the situation for 24 is that the market
[00:16:08]
is in such a state
[00:16:10]
that you're almost giving away 24 certificates for free at this point so the
[00:16:14]
arbitrage is pretty major if you are one of these consumers willing to cancel 24
[00:16:19]
geos in in favor uh in favor of canceling 25 geos that functionally means you're
[00:16:27]
just getting a huge spread on that uh you're pretty happy
[00:16:31]
And yeah,
[00:16:33]
it's very cheap to be green this year is all I can say for many countries where
[00:16:37]
this is allowed.
[00:16:38]
While a lot of these volumes have already expired or been used or been moved
[00:16:43]
around,
[00:16:44]
there is this like last three month chunk that the market has yet to absorb,
[00:16:50]
that has yet to do something with.
[00:16:52]
And I think that's going to have a broadly negative impact on the spot market.
[00:16:59]
I don't think there's too much we can do about that.
[00:17:03]
There's just this last run out of the door as they become not almost worthless,
[00:17:10]
but actually worthless because you can't even trade them anymore.
[00:17:13]
You can't give them to somebody.
[00:17:14]
They're gone.
[00:17:16]
So while this run out the door for the 24 supply has kind of been happening for the
[00:17:23]
entirety of the year,
[00:17:24]
as it is usual and normal in this market,
[00:17:27]
you generally don't want to hold on to this kind of expiring supply for too long.
[00:17:31]
You want to sell it earlier because eventually it will go to zero.
[00:17:34]
You're better off just getting rid of it, in my opinion.
[00:17:38]
I don't think opinions vary on this based on historical information too much.
[00:17:42]
but uh yeah if you're currently still holding 24 supply you definitely do want to
[00:17:47]
get rid of it and in many markets you can instead of using 25 supply use 24 supply
[00:17:54]
and that's where all of the problems come in that's the situation on supply
[00:17:59]
There is that aspect that when we're talking about 25,
[00:18:02]
the reservoir levels,
[00:18:04]
as we talked about,
[00:18:06]
not doing all that well in Norway,
[00:18:08]
that will have an effect.
[00:18:09]
I anticipate this effect will more be towards the 26 kind of category than it will
[00:18:14]
the 25 kind of category,
[00:18:16]
but it will be there.
[00:18:18]
and the second part of that is these dunkelflaute as we've spoken about there's
[00:18:23]
also an increased risk of those this year we might see just like kind of lower
[00:18:28]
production on renewable energy over winter and all that taken together while most
[00:18:35]
geos that will be issued this year have been issued we still are in this end where
[00:18:41]
if there are any major these kind of
[00:18:47]
events of large amounts of buying happening with actually low amounts of production
[00:18:53]
you could see the prices move in a positive direction as well it can happen uh
[00:18:58]
there might be some volatility i wouldn't bet the farm on it right so how is demand
[00:19:04]
actually trending because we talked about the distinction between 2024 sets and 25
[00:19:09]
sets but
[00:19:11]
When it comes to actual current demand, what are we seeing?
[00:19:15]
I guess we're talking about one major player, right, which is Germany.
[00:19:18]
So the picture is quite interesting this year.
[00:19:21]
One of the things that we have seen is we weren't quite sure until the data came
[00:19:26]
out of how many geos did Germany actually end up canceling last year for last
[00:19:31]
year's consumption.
[00:19:33]
We have a broadly defined understanding of what that looks like now.
[00:19:38]
And that's about 2% more than they did the year before.
[00:19:43]
2% in context of them doing 8% one year or 4%, 2% is quite slow.
[00:19:50]
I guess we'll see how that translates into next year.
[00:19:53]
Currently, cancellation trends are looking pretty good overall.
[00:19:57]
So we have seen an across the board increase in cancellations for the last
[00:20:03]
compliance period,
[00:20:03]
but also for the upcoming...
[00:20:08]
for the upcoming disclosure period like the ongoing one we have seen increased
[00:20:13]
cancellation volumes across the board a lot of this might be just the fact that
[00:20:17]
because it's so early
[00:20:18]
you do have to cancel right now the 24 geos to essentially get rid of them that's
[00:20:25]
what we might be also observing in the data but cancellations broadly are up the
[00:20:30]
trend is looking good summary expectation of this year will be that we won't have
[00:20:36]
more supply circulating in the market by the end of this year than we did last year
[00:20:40]
which will be the first time this has happened since 2022.
[00:20:44]
So we had like 2023,
[00:20:47]
2024,
[00:20:47]
pretty high increases in the market overhang of like just how much geos are
[00:20:52]
circulating compared to how many are getting purchased.
[00:20:56]
So that's going to go down.
[00:20:58]
Just how much that's going to go down is still an open question.
[00:21:01]
It really will depend on this demand aspect.
[00:21:04]
But we are putting conservative estimates at around 30 terawatt hours or around that area.
[00:21:09]
It's interesting you mentioned that demand is kind of increasing across the board.
[00:21:13]
So it's stepping into longer term territory.
[00:21:15]
But are you interested in how that demand is diversifying?
[00:21:20]
So the market then becomes a little bit more interesting when you have...
[00:21:24]
you know more than two players to analyze right you're like okay well what are the
[00:21:27]
trends across the board how does the european level demand for geos look as opposed
[00:21:33]
to individual countries within europe uh very interested i think the trend is
[00:21:37]
broadly very positive i i think we'll have a harder job uh in the upcoming year
[00:21:43]
actually putting together these analyses since uh
[00:21:46]
If we do see other countries really pick up the slack,
[00:21:51]
start consuming more geos,
[00:21:52]
as you said,
[00:21:53]
it'll be a bit more
[00:21:55]
complicated to just go in and figure out like,
[00:21:58]
hey,
[00:21:58]
what's happening here and why has this changed?
[00:22:00]
How much rain has there been?
[00:22:04]
But I mean, it's good for market integrity, though, right?
[00:22:07]
I mean,
[00:22:07]
it makes the trader's job harder,
[00:22:09]
I mean,
[00:22:10]
or makes it easier depending on where you can find your edge.
[00:22:12]
I mean, who knows?
[00:22:13]
But I guess it's the longer moral equation is that the market gets healthier and
[00:22:18]
it's better at doing its job,
[00:22:19]
right?
[00:22:20]
If more people are treating it with the legitimacy that it requires.
[00:22:23]
Yep.
[00:22:24]
The second aspect I think about it is that because the geo prices are just so low,
[00:22:30]
if you're thinking about it from the perspective of a trader or like a utility
[00:22:36]
selling consumers this product of,
[00:22:39]
hey,
[00:22:39]
I'm going to make the electricity in your house renewable.
[00:22:43]
How much is that worth to you when you have that conversation?
[00:22:48]
From the utilities perspective, the answer is like borderline free at this point.
[00:22:53]
So any willingness to pay on the consumer end of, yeah, that's valuable for me.
[00:23:00]
there will be a price where that makes sense to many people.
[00:23:03]
I want to draw a parallel, just going back quickly to the topic of yearly matching.
[00:23:09]
If you look at something like international renewable energy certificates or IRX,
[00:23:13]
obviously they don't expire,
[00:23:15]
right?
[00:23:15]
And I think the logic there is that you take,
[00:23:18]
you give the market the choice to essentially decide,
[00:23:21]
you know,
[00:23:22]
obviously there's frameworks that support this but it's voluntary and people make
[00:23:26]
roughly intelligent decisions and this is my understanding because they're aware of
[00:23:31]
what looks good and what doesn't and I think when you have a dual layered market
[00:23:34]
where you give this sort of legitimacy almost to last year's certificates it's like
[00:23:39]
well
[00:23:40]
If we didn't do that, you know, either close it to a year or kind of open it all together.
[00:23:44]
But by putting these two layers in,
[00:23:46]
psychologically,
[00:23:47]
you're almost inviting people to choose the latter,
[00:23:49]
right?
[00:23:49]
That's kind of how I consider it.
[00:23:52]
But obviously, it doesn't make sense.
[00:23:53]
And I would say the Solidera's position is that not only would it be good for the
[00:23:57]
market,
[00:23:58]
but it'd be good for the optics and the perception and the uptake of the market as
[00:24:01]
well if we...
[00:24:02]
narrow that down to one-year consumption and less obviously most definitely i mean
[00:24:07]
there's so much uh talk about uh granularity and i know we keep harping away on
[00:24:12]
this every time the topic comes up we currently have a granularity of two years in
[00:24:17]
some places like uh getting it down to a year would already be great getting it
[00:24:21]
down to a month would be fantastic getting it down to 15 minutes i don't know dude
[00:24:25]
i do see there's so much potential to do more and uh
[00:24:29]
i really don't think we should let perfect be the enemy of good in that sense but
[00:24:34]
there needs to be some movement i mean we can't keep sitting on this option that
[00:24:38]
estonia essentially uses where uh there's a 12 month period where guarantees of
[00:24:44]
origin let's explain this then there's a six month period where you can't trade it
[00:24:50]
anymore but it's on your account so you can use it so total there's like an 18
[00:24:54]
month period where you could use it so then that ends up creating
[00:24:59]
strange situations very very strange situations where you could be using 2023
[00:25:04]
guarantees of origin for 2025 consumption and that does not sound reasonable i
[00:25:10]
don't think anybody listening here thinks that's reasonable if trading is
[00:25:14]
impossible but cancellation is possible is it possible to cancel on behalf of
[00:25:19]
somebody else and then be paid yeah so trading is possible
[00:25:25]
Trading is possible with extra steps, kind of.
[00:25:29]
But yeah, you could cancel them on behalf of somebody else.
[00:25:33]
And in that sense, yes.
[00:25:34]
But it won't be on somebody else's registry account.
[00:25:37]
I mean, it won't be exported to another country.
[00:25:42]
All of those things are off the table.
[00:25:44]
But they're still around.
[00:25:46]
They're still competing for the exact same demand.
[00:25:49]
It's very problematic.
[00:25:50]
Yeah, let's talk about Italy.
[00:25:51]
Which, for my own personal reminder, it's the energy release game, correct?
[00:25:55]
So the thing about the energy release scheme is it's something that the Italian
[00:26:00]
government proposed for heavy industry,
[00:26:02]
which is essentially,
[00:26:04]
hey,
[00:26:04]
if you give us this guarantee that you will invest into building out more renewable
[00:26:10]
energy,
[00:26:11]
we will give you subsidized renewable energy right now you can get it at a fixed
[00:26:15]
price we'll give it to you for the whole year and it'll be renewable energy so you
[00:26:20]
can take it up on your sustainability reports that's that what that is expected and
[00:26:27]
will be replacing in the year of 2026 is it will be replacing italian government
[00:26:33]
auctions for guarantees of origin which you've been listening to this podcast
[00:26:37]
you've heard this before
[00:26:39]
but it doesn't really seem like they're all that good at running those.
[00:26:44]
I mean, they tried selling 2024 Geo's
[00:26:50]
I think it was two weeks ago.
[00:26:51]
I don't even think they sold half of what they were trying to sell and the rest is
[00:26:55]
going to expire now.
[00:26:58]
So kind of a strange situation.
[00:27:00]
The auctions historically haven't been all that well run.
[00:27:03]
They've historically set minimum prices that have not been met.
[00:27:07]
Thanks to that, not all the supply has been put onto the market.
[00:27:10]
And then that's created this kind of cycle of fear where people see these large
[00:27:15]
amounts building up and building up and building up.
[00:27:18]
And then you're like,
[00:27:19]
oh my God,
[00:27:19]
somebody is going to put 20 terawatt hours onto the market in a single auction.
[00:27:23]
I think historically they've more been a source of fear of like,
[00:27:27]
oh my God,
[00:27:28]
it's either going to be a flop or they're going to flood.
[00:27:31]
So instead of flop or flood,
[00:27:33]
they're just going to be giving these guarantees of origin away to heavy industry
[00:27:36]
historically when you look at all of these nice CSRD reports we've been getting now
[00:27:42]
this year heavy industry isn't necessarily the biggest user of guarantees of origin
[00:27:46]
it's very expensive compared to just how much energy they use generally because of
[00:27:51]
that their willingness to pay is a bit lower I think that did unlock a new
[00:27:58]
user base for essentially guarantees of origin while taking all of that supply off
[00:28:02]
of this flop or flood kind of model that just caused uncertainty into the market so
[00:28:07]
overall i'd say this is a very positive development the strange auctions will cease
[00:28:12]
nobody will be looking at 20 terawatt hours and thinking like oh i wonder if that's
[00:28:17]
gonna hit the market in one day i think that's a general sigh of relief
[00:28:22]
explain the logic from the standpoint of the italian government right so they've
[00:28:26]
previously they've been taking uh geos from italian producers and they've been
[00:28:30]
running their own central auctions they realized it wasn't going very well and now
[00:28:34]
they've decided to pivot it into giving them to the heavy industrial base within
[00:28:37]
italy and it's a mandatory cancellation right they don't just get an account they
[00:28:41]
can't sell it they just have to use it and then i guess it's good optics for
[00:28:45]
everybody right
[00:28:45]
Yeah.
[00:28:46]
The second part about why are they doing that is so they would get more investments
[00:28:51]
into renewable energy build-out going.
[00:28:53]
So this is essentially part of the carrot for,
[00:28:58]
hey,
[00:28:58]
we really want you to invest more in renewable energy build-out,
[00:29:03]
like go enter into a PPA,
[00:29:05]
go support renewable energy production.
[00:29:07]
I think that'll be...
[00:29:10]
varying levels of complicated depending on how big you are because if your
[00:29:15]
consumption is quite low i don't know what the ppas really look like on a certain
[00:29:21]
size of consumer and i think there's a subtle understanding here i mean they can't
[00:29:26]
be doing this because they are tragically afraid of losing their beloved geo
[00:29:30]
auction scheme that nobody criticizes them for i mean they're probably happy to be
[00:29:35]
seeing the the
[00:29:36]
you know the end of it it's less work and maybe just better pay off for them than
[00:29:40]
what they've been doing so far okay nice um and i guess the other question off the
[00:29:43]
back of that discussion was the breakdown in consumption habits and why are we
[00:29:49]
seeing you mentioned that it's more skewed towards uh utilities right so what what
[00:29:54]
is what does that look like and
[00:29:56]
Also pulling the conversation back a little bit even further,
[00:30:00]
given that we know that Germany is the biggest consumer,
[00:30:03]
do we have an idea of why that is?
[00:30:05]
Is that mostly heavy industry or mostly utilities?
[00:30:07]
And yeah, let's touch on that sort of consumption breakdown.
[00:30:10]
It's very multi-pronged of why is Germany like that?
[00:30:14]
And part of the answer is that they have a lot of subsidy schemes.
[00:30:18]
Using renewable energy is what qualifies you for it.
[00:30:22]
The other part is there are a lot of...
[00:30:25]
of these sort of eco-labels,
[00:30:27]
but not eco-labels for guarantees of origin,
[00:30:29]
eco-labels for the product that require you use renewable energy when producing
[00:30:34]
something.
[00:30:35]
These kind of things do contribute to the guarantees of origin consumption side.
[00:30:41]
And then there are some government level requirements on what utilities have to do,
[00:30:47]
pressure around that side.
[00:30:48]
They have a very multi-tiered system around that.
[00:30:52]
so they have these regional guarantees of origin they have their own internal thing
[00:30:57]
then they have a subsidy scheme and then they have guarantees of origin that are
[00:31:01]
imported into the country and then these all form this kind of complicated tapestry
[00:31:06]
of what a utility has to report to their energy consumers yeah that all is a very
[00:31:13]
long way to say there's not one reason it's been adopted better in Germany across
[00:31:19]
various sectors
[00:31:22]
And that's also why...
[00:31:24]
it's usually quite hard to pin down why are you seeing an increase in consumption
[00:31:30]
in some country.
[00:31:31]
Because while,
[00:31:32]
yes,
[00:31:33]
you could say it was all a certain subsidy scheme,
[00:31:36]
often the picture,
[00:31:37]
if you start looking at it closely,
[00:31:39]
is quite varied,
[00:31:40]
quite complicated,
[00:31:41]
right?
[00:31:41]
Like the CSRD scheme, for example.
[00:31:43]
Large corporates do have to report their use of renewable energy.
[00:31:47]
But on the other hand,
[00:31:48]
they do have to also go down their supply chain and figure out what that looks
[00:31:52]
like.
[00:31:52]
So not one answer.
[00:31:54]
quite complicated actually it's because it's this uh market by a thousand cuts kind
[00:32:00]
of situation but it all adds up uh in the big picture so it's like this pattern of
[00:32:06]
conditionality relating to geo use it's like you know what you get as a result what
[00:32:11]
you're allowed to participate in yeah exactly and sometimes the answer is just a
[00:32:14]
good feeling
[00:32:16]
But broadly speaking,
[00:32:18]
there are many reasons why you would do it,
[00:32:20]
starting from optics,
[00:32:22]
ending at financial benefits if you do so.
[00:32:25]
The final sort of segment to touch on is our expectations for the market.
[00:32:30]
A big reason why you do see prices differ year to year in the geo market is that
[00:32:39]
there is this expectation that next year is going to be better.
[00:32:43]
So we do see that play out in what the current prices look like.
[00:32:49]
2026 is a lot more valuable than 25.
[00:32:53]
27 is a lot more valuable than 26.
[00:32:55]
What that comes down to is a calculation in supply and demand.
[00:32:59]
Are there more guarantees of origin getting created than there are consumers for it?
[00:33:04]
If there is,
[00:33:05]
what's the difference, right?
[00:33:06]
So if you project this out long enough,
[00:33:09]
your expectation is,
[00:33:10]
especially considering our renewable energy build-out is kind of slowing down a
[00:33:15]
bit,
[00:33:15]
that this dynamic is changing.
[00:33:18]
So I don't know if this is necessarily positive news for the world from the
[00:33:24]
the guarantees of origin markets perspective we have to kind of look at it in
[00:33:29]
perhaps a different light european renewable energy build out has been slowing down
[00:33:33]
in terms of just the velocity uh the government uh tenders for hey come and build
[00:33:40]
an offshore wind uh wind farm over here uh those kind of things have not been doing
[00:33:45]
great all around europe and at the same time uh grid congestion is an issue in many
[00:33:51]
of these areas and the thing is just uh
[00:33:53]
Yeah,
[00:33:55]
in some areas we just have perhaps already a bit too much renewable energy as
[00:34:01]
opposed to the ability to move it into tomorrow instead of having to use it today.
[00:34:07]
I don't think storage build out has been fast enough to really address the problem,
[00:34:13]
but we're seeing wild price swings even within a day sometimes.
[00:34:19]
and that does affect the unit economics of hey if you're looking at i don't know i
[00:34:23]
want to build a solar panel over here i want to build a thousand of them you're
[00:34:30]
looking at that math the math might look significantly different than it did four
[00:34:34]
years ago three years ago somewhere in that area
[00:34:37]
with a policy tool with a stated intention of tracking renewable electricity it's
[00:34:43]
it's widely understood you know i've said it i said in previous episodes but the
[00:34:47]
elasticity of the geo as an instrument is designed to make this market more
[00:34:50]
attractive and hopefully you know there's a there's a period where people can enjoy
[00:34:54]
a geo market which has potentially better implications for them as producers and
[00:34:58]
that will itself curve into better production um dynamics
[00:35:01]
As solar prices get worse,
[00:35:05]
you do see that the guarantee of origin aspect of it does make a bigger and bigger
[00:35:10]
part of what their profit margin is.
[00:35:12]
so having that part under control and managing it making sure that you're actually
[00:35:17]
getting value out of it it is important i mean we have met so many customers where
[00:35:24]
after they're onboarded you have a look at what they've been doing so far and then
[00:35:27]
you just realize that they haven't even applied for getting guarantees of origin in
[00:35:31]
some situations in some situations they've just kind of been sitting around
[00:35:36]
expiring on the account
[00:35:37]
And then you're just doing the math in your head and going like,
[00:35:40]
oh,
[00:35:40]
wow,
[00:35:40]
if you just on an ongoing basis sold these,
[00:35:43]
this is a large amount of money we're talking about that has just kind of gone into
[00:35:48]
the ether.
[00:35:49]
And I think that's sad.
[00:35:50]
Looking at forwards now.
[00:35:51]
So we're observing a spread between 2026 and 2027 vintages.
[00:35:56]
Yeah.
[00:35:56]
What does that tell you?
[00:35:58]
And yeah, what can we learn from that?
[00:35:59]
Broadly speaking, 2026 is becoming the spot supply essentially in a couple of months, right?
[00:36:06]
That's one aspect of it.
[00:36:08]
The other aspect of it is I think when numbers are in,
[00:36:11]
kind of know where the supply and demand is going to broad strokes end up by the
[00:36:15]
end of the year.
[00:36:17]
and we can make an educated guess on the supply balance at the end of next year and
[00:36:22]
that gets you to the conclusion that next year is going to be better next year is
[00:36:27]
definitely going to be better and the year after that's going to be better than
[00:36:30]
that big picture everything's getting better that's the message that i would like
[00:36:36]
to leave you guys on everything is getting better so while we are talking about the
[00:36:42]
short term these next three months
[00:36:45]
broadly observing spot prices trend down.
[00:36:48]
That's the most likely scenario we're going to observe.
[00:36:52]
Outside of that, next year is looking very nice.
[00:36:55]
The year after that's looking even better.
[00:36:57]
So the direction of the market is fantastic.
[00:37:01]
Don't let the short-term movements really let you take your eye off of that.
[00:37:07]
I think we are coming to the end of the episode.
[00:37:09]
Just quickly to recap our expectations for Spot Down 4.1.
[00:37:13]
So I guess it's a nice coincidence that when you're doing the Q4,
[00:37:18]
podcast you are literally talking about spot in the very literal sense it is the
[00:37:21]
remainder of the spot so yeah feel free to yeah yeah so to summarize everything on
[00:37:29]
spot we do expect the slump to continue the degree to which it will continue I
[00:37:36]
can't really promise you anything so are we gonna stay at like this 50 cent mark or
[00:37:41]
are we gonna hit 30 cents I hope we don't but the possibility is there when it
[00:37:46]
comes to
[00:37:47]
why it's doing that it's a combination of it's the end of the year you also have
[00:37:54]
the large overhang from 2024 which we are just you know in a sort of hangover phase
[00:38:01]
and as a consequence of that the market balance right now there's just a lot of
[00:38:06]
selling happening
[00:38:07]
There are reasons why it can bounce into a positive trend, at least for a little bit.
[00:38:15]
And that does come down to there being some sort of supply shocks or narrative
[00:38:21]
shocks,
[00:38:22]
essentially,
[00:38:23]
where we're looking at,
[00:38:24]
for example,
[00:38:25]
Norway's hydro production and we're realizing,
[00:38:27]
hey,
[00:38:28]
we might be producing significantly less than we thought we were.
[00:38:33]
But broadly speaking,
[00:38:35]
slumpy territory in the last quarter here so forwards generally looking quite
[00:38:40]
positive I think the market is a bit getting pressured by the spot prices since to
[00:38:46]
some extent you know these two things are interchangeable a lot of the time but the
[00:38:53]
2026 prices are still looking pretty healthy we're gonna roll into 2026 with a
[00:38:59]
better market situation than we started this year with which is gonna be very
[00:39:02]
positive
[00:39:04]
And broadly speaking,
[00:39:05]
that is also why you are seeing the premiums for the next years at the levels that
[00:39:10]
they are.
[00:39:12]
And well,
[00:39:14]
if everything goes well,
[00:39:16]
we might see the prices drastically even above that by the end of the next year.
[00:39:20]
Exciting.
[00:39:21]
I've got a good feeling.
[00:39:22]
And hopefully that materializes.
[00:39:25]
Yeah.
[00:39:25]
Thanks for watching the Q4 Outlook for Sotero Markets.
[00:39:29]
And yeah, catch you in the next one.
[00:39:31]
Yeah, it was a pleasure having you around, listener.
[00:39:35]
Hope to see you in the next one.
🌍 Soldera Market Discussions: GO Ecosystem Overview
Join Stenver Jerkku (Founder & CEO) and Al William Tammsaar from Soldera as we explore the fundamentals of Guarantees of Origin (GOs) in the European renewable energy market. In this premiere episode, we break down:
→ What are Guarantees of Origin and how do they work? 🌐
→ The regulatory landscape across different European countries 📜
→ Complex market dynamics and challenges
→ The role of AIB in standardizing the market
→ The future of hourly GOs and energy storage
Key insights we explore:
→ How GOs separate physical electricity from its green attributes
→ Why biomass facilities face unique verification challenges
→ The impact of Norwegian hydropower on market supply
→ Current price trends and market movements
→ The effects of Italian government auctions on prices
Don't forget to like, comment, and subscribe to stay updated on all things GO!
#Renewableenergy #GuaranteesOfOrigin #Sustainability #CleanEnergy
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit podcast.soldera.org
Join Stenver Jerkku for an in-depth look at how renewable energy producers can optimize their GO sales strategy in challenging market conditions.
This episode covers:
→ Current market analysis and price trends 📊
→ The dramatic price drop from €8-10/MWh to €0.40-0.50/MWh
→ Why forward contracts are now outperforming spot sales→ How Norwegian reservoir levels impact prices
→ The ongoing effects of Italian auctions Producer strategiesWe discuss:→ Why holding GOs may not be the best strategy
→ How volume aggregation improves pricing→ The benefits of automated trading systems→ Balancing spot and forward sales
→ Why producers shouldn't ignore 5% potential revenueDon't forget to like, comment, and subscribe to stay updated on all things GO!🎧
Available on any of your favourite podcast or video platforms: linktr.ee/solderahq
Transcript of the episode's discussion between Stenver Jerkku and Oliver Bonallack
[00:00:03]
Hey everyone, and welcome to another episode of Soldera Market Discussions.
[00:00:07]
I'm here with Stenvo.
[00:00:08]
Say hi, Stenvo.
[00:00:10]
Hey, how are you doing, Gulliver?
[00:00:11]
And yeah,
[00:00:12]
today we thought we would just go over how producers make the most profit from
[00:00:16]
guaranteed origin sales,
[00:00:18]
but more specifically how they do so in the current market conditions.
[00:00:22]
So yeah, let's kick things right off.
[00:00:23]
Stenvo, how do you see the current market for producers in 2024?
[00:00:27]
And do you think it's going to get better in future?
[00:00:30]
I mean, it's been tough, right?
[00:00:32]
Like to take a step back last year,
[00:00:35]
the geo prices were somewhere around 8 euros per megawatt hour,
[00:00:39]
even up to 10 at some point.
[00:00:41]
And then as we got through the summer, suddenly the prices started dropping sharply.
[00:00:47]
By winter, they were 5 euros, 4 euros per megawatt hour.
[00:00:51]
And by spring, they were 1 or 2 euros per megawatt hour.
[00:00:57]
And a lot of things happened there and a lot of people were very confused.
[00:01:02]
How did this happen?
[00:01:03]
We saw a lot of people living in denial when we were telling them what the market was like.
[00:01:08]
They didn't believe us and they were holding on to their guarantees of origin,
[00:01:13]
not wanting to sell them.
[00:01:15]
And we were telling them that, hey,
[00:01:18]
You can see the market like there's a fundamental reason why that happened, right?
[00:01:23]
The Norway reservoirs are very full.
[00:01:26]
There was a lot of rain.
[00:01:28]
There's a lot of humidity and precipitation out there.
[00:01:31]
So the market is flooded with renewable energy and that naturally pulls down the crisis.
[00:01:38]
And the whole thing actually, funnily enough, started with the Italian auction.
[00:01:44]
So the Italian government has been doing these auctions and they set the price
[00:01:51]
floor for their auction.
[00:01:53]
They hope that that gets them better results.
[00:01:56]
Well, what happened in reality was that the price floor just made the entire auction fade.
[00:02:02]
multiple times month after month because the price was dropping further.
[00:02:07]
And each time it failed,
[00:02:08]
it had massive negative impact on the prices,
[00:02:10]
which caused further downward pressures.
[00:02:13]
And I don't remember the exact numbers,
[00:02:15]
but I've heard traders run the calculation how much money
[00:02:21]
Italian taxpayers had to pay because of these practices, actually.
[00:02:25]
It was a lot of money because eventually they sold all these geos off,
[00:02:30]
but at the massive discount versus if they had just trusted the market to do its
[00:02:35]
thing.
[00:02:35]
In the summer, 2024 was around one euro per megawatt hour, give or take.
[00:02:41]
And by now it's around 40 to 50 cents, right?
[00:02:44]
So you've seen this massive downward trend.
[00:02:48]
2024 also had an overabundance of like precipitation and reservoirs in Norway are full.
[00:02:54]
Plus there's been a lot of renewable energy construction out there.
[00:02:58]
Plus Italy again failed its September auction this year.
[00:03:03]
So like it's definitely been in like a very negative direction.
[00:03:08]
However,
[00:03:09]
interestingly enough,
[00:03:11]
for the first time,
[00:03:12]
if you look at all the way back to the prices of guarantees of origin,
[00:03:17]
historically,
[00:03:18]
the forwards and spot have been trading in pretty much the same area.
[00:03:23]
And if you even do a backtracking calculation,
[00:03:27]
like what would have happened if I would have always used forwards instead of using
[00:03:31]
spot,
[00:03:32]
you can see that historically,
[00:03:33]
you would have lost money on forwards.
[00:03:35]
And just...
[00:03:37]
Every month selling in spot,
[00:03:39]
kind of like dollar cost average sales,
[00:03:41]
if you will,
[00:03:42]
like just letting somebody else carry the price risk and trust the market,
[00:03:46]
you will have made more money.
[00:03:47]
It's like the index fund investing all over again, right?
[00:03:50]
Just go with the market.
[00:03:52]
When last summer,
[00:03:53]
when the prices started dropping,
[00:03:55]
something happened and suddenly the forwards became a lot more valuable than spot.
[00:04:01]
In fact, like two or three times more valuable.
[00:04:04]
So ever since then, it's actually been very beneficial to lock in your forward prices as well.
[00:04:10]
That's a bit about history.
[00:04:12]
Now, when we look forward, does it get better?
[00:04:17]
It absolutely will.
[00:04:18]
There's a lot of signs pointing to that.
[00:04:20]
We've done a lot of analysis ourselves.
[00:04:24]
We bought information from other third parties who have run the future predictions.
[00:04:30]
SDX,
[00:04:30]
which is one of the biggest trading firms out there,
[00:04:33]
the biggest guarantee of origin trading firm out there,
[00:04:36]
they in Iceland,
[00:04:37]
Reykjavik,
[00:04:39]
gave a very bold estimation that in a few years,
[00:04:42]
we may have even 10 euros per megawatt hour again,
[00:04:45]
or even above in the best case scenarios.
[00:04:48]
And a lot of it essentially comes down to all this transparency reporting that the
[00:04:54]
European Union is putting on companies,
[00:04:56]
the fact that renewable energy is just becoming more and more popular,
[00:05:00]
more people want to use it.
[00:05:03]
Just quickly for those out there who might not know all of the intricacies of
[00:05:07]
selling goes,
[00:05:08]
what's the difference between selling spot and selling futures just in simple
[00:05:12]
terms?
[00:05:13]
In simple terms,
[00:05:14]
selling spot means that every month,
[00:05:17]
let's say you have a solar installation,
[00:05:20]
let's say 10 megawatts,
[00:05:22]
and every month you generate some amount of guarantees of origin.
[00:05:26]
Let's say you generate 100 megawatt hours or something on some month,
[00:05:30]
then you could either just sell them all away every month as you generate,
[00:05:36]
as you go,
[00:05:36]
that selling spot,
[00:05:38]
or you could lock in the future price
[00:05:41]
So you lock in the forward price in next year.
[00:05:46]
As you generate the next year production, you already have sold it away.
[00:05:50]
It's the same as in farming.
[00:05:52]
You can do futures for like grain and all the other commodities.
[00:05:57]
You just lock in the price and when you finally deliver them,
[00:06:00]
then you get the money that you promised and you deliver the volumes that you
[00:06:05]
promised for that as well.
[00:06:07]
So it's pretty simple.
[00:06:10]
And if geos that are produced expire within 12 months,
[00:06:13]
if you're selling future,
[00:06:14]
you're not selling the current geos that you have in your possession.
[00:06:17]
You're selling the ones that are going to produce at a future period.
[00:06:20]
Exactly, exactly.
[00:06:21]
You sell the future ones, not the current ones that you already generated.
[00:06:25]
The ones that have been generated, those should all go to spot sale, basically.
[00:06:30]
Sure.
[00:06:30]
So you could be selling spot and futures at the same time as a producer.
[00:06:34]
In fact, that's what we recommend most of our producers to do.
[00:06:37]
So in Soldera, for example, we're all about trusting the market.
[00:06:43]
And instead of trying to trade and hit the extremes with trading, you may get very lucky.
[00:06:50]
Maybe you hold on and the prices explode and you get the best deal.
[00:06:54]
But the opposite can happen as well.
[00:06:56]
We've seen producers this year lose like more than 60% of their revenue from
[00:07:01]
guarantees of origin simply because they try to be smart and do trading while not
[00:07:06]
actually having a specialized trading team that tries to figure all of this stuff
[00:07:12]
out.
[00:07:13]
So our recommendation for producers is stability.
[00:07:17]
At the end of today's renewable energy production,
[00:07:21]
you want to have as much stability and predictable cash flows as possible.
[00:07:25]
So we recommend doing partial forward edging,
[00:07:29]
let's say like 30% or 60%,
[00:07:31]
really depending on how much stability or how much you want to live for potential
[00:07:35]
upside.
[00:07:36]
And then the rest selling to spot as you produce them.
[00:07:41]
And it's really about like in Soldera, we do it all for you.
[00:07:45]
So every month,
[00:07:47]
all of our producers,
[00:07:48]
we currently have like 1,300 renewable energy production points across EU.
[00:07:55]
They all generate guarantees of origin.
[00:07:57]
We aggregate them together.
[00:07:59]
By aggregating together, we get volumes and volumes get you the best deals on the market.
[00:08:05]
That's really how it works.
[00:08:06]
The market is very simple on that front since it's all OTC.
[00:08:11]
It's like all done.
[00:08:13]
All the deals require a lot of manual work and so on.
[00:08:17]
Then the best way to get the best deals is to just have more volumes.
[00:08:21]
So by aggregating all the people together, all the producers,
[00:08:24]
getting those volumes,
[00:08:26]
and then just following a schedule,
[00:08:28]
selling every single month,
[00:08:29]
you can really get the best deals on the market.
[00:08:33]
And we do the same for forwards.
[00:08:35]
Instead of just locking in all your forwards at a single point,
[00:08:39]
let's say you want to hedge like 40% of your portfolio.
[00:08:42]
That's the amount you want to put to forward sale.
[00:08:46]
Every quarter, let's say January comes now,
[00:08:50]
Then you hedge 10% of your 2026 quarterly, each quarter delivery.
[00:08:56]
So over the year.
[00:08:58]
Now comes April, the next quarter, you hedge another 10%.
[00:09:02]
Again, quarterly hedging over 2026.
[00:09:04]
So over the 26, you also deliver it throughout time.
[00:09:10]
And our system automatically,
[00:09:12]
you know,
[00:09:12]
does the prediction,
[00:09:13]
how much you produce,
[00:09:14]
depending on smart algorithms.
[00:09:17]
And then we help you allocate this portfolio and everything is done automatically
[00:09:23]
using our advanced intelligent tooling.
[00:09:26]
Hmm.
[00:09:27]
And when it comes to futures,
[00:09:29]
I'm interested,
[00:09:30]
are the buyers confident that they're sort of making the right decision?
[00:09:34]
I know it's kind of a difficult question.
[00:09:36]
I mean, how strong an indicator are the sort of future steals that you lock in?
[00:09:41]
Like historically backdating those, have they been accurate at predicting the price movement?
[00:09:45]
They're very volatile.
[00:09:47]
The geo market is very volatile and it's very hard to accurately predict where the
[00:09:53]
market goes because it's affected a lot by rainfall and weather and these things
[00:09:59]
which are somewhat still unpredictable for us at this point,
[00:10:04]
especially over the long term of the entire year.
[00:10:07]
And this is also why we don't recommend hedging way 100%.
[00:10:13]
So let's say you hedge away 100% and then it turns out we're going to have a very dry season.
[00:10:19]
And over that dry season, the prices will skyrocket by the end of the summer or something.
[00:10:25]
And then you're just completely missing out on that one.
[00:10:28]
We've seen offers made to producers in some cases where the buyer says,
[00:10:34]
we'll lock in the next 10 years forward.
[00:10:37]
I mean, yeah, you can do it.
[00:10:38]
You have very predictable cash flows,
[00:10:40]
but you could also lose massive amounts of money over those 10 years because nobody
[00:10:45]
knows where the market is 10 years in 10 years.
[00:10:49]
But we strongly believe that the market is going to be a lot more bigger and in a
[00:10:56]
better place than it is right now.
[00:10:58]
All the signs are pointing towards it.
[00:11:00]
All the regulations that are coming out do require using renewable energy,
[00:11:05]
government subsidies,
[00:11:06]
all the ESG,
[00:11:08]
the corporate transparency.
[00:11:09]
In Estonia,
[00:11:10]
for example,
[00:11:11]
if you buy an electric car,
[00:11:12]
you get government subsidy,
[00:11:14]
but only if you use renewable energy going forward.
[00:11:17]
So these things really will drive the demand in the future and locking in for 10
[00:11:22]
years is while it causes maximum stability,
[00:11:26]
maximum stability also means no potential obstacle.
[00:11:30]
So you spent a lot of time sort of analyzing the regulatory environment,
[00:11:34]
building the tech in accordance to that,
[00:11:37]
really,
[00:11:37]
really getting stuck into markets and thinking about where they're going to be
[00:11:42]
going in future.
[00:11:43]
But what's the sentiment amongst producers?
[00:11:45]
Do they think it's going to go up?
[00:11:46]
Do they really have an understanding of price movement?
[00:11:49]
Do you feel like when you're approaching them and you're talking to them,
[00:11:52]
they just think,
[00:11:52]
oh,
[00:11:53]
you know,
[00:11:53]
geos aren't worth it right now.
[00:11:55]
They're too cheap.
[00:11:56]
Yeah.
[00:11:56]
What do they think?
[00:11:57]
Well,
[00:11:57]
first is that the thinking of how much they're valued is completely from one
[00:12:03]
spectrum edge all the way to other.
[00:12:06]
So like we've seen some producers believe that by 2030,
[00:12:10]
we won't have the guarantee of origin market because we'll be 100% renewable.
[00:12:14]
I'm kind of skeptical of that claim, but that's what some producers truly believe.
[00:12:20]
And then there's the other spectrum who sees that this is only the beginning.
[00:12:25]
But what we see in the middle and what a large part of producers actually,
[00:12:30]
where they're at is that,
[00:12:32]
and they're very honest about it,
[00:12:33]
and it's completely understandable why,
[00:12:35]
is that they frankly just say that they don't know.
[00:12:37]
They don't understand it.
[00:12:38]
The market is not actually very transparent if you don't specialize on it.
[00:12:43]
You can generate transparency for yourself in this market pretty easily.
[00:12:48]
There's data service providers.
[00:12:51]
There's now public auction platforms, which are great, like Montel Marketplace and Apex Spot.
[00:12:56]
And these auction platforms have created a lot of transparency.
[00:13:01]
And there's more and more talk about geos.
[00:13:04]
But the reality is that...
[00:13:07]
Most people in this market currently feel like struggling to find information.
[00:13:14]
And it's also for most producer guarantees operation are like number 10 priority
[00:13:20]
because it's like 5% of their extra revenue maximum.
[00:13:25]
And they have like million other priorities to maximize their new constructions and
[00:13:29]
electricity power and so on.
[00:13:31]
So geos are like not at the top of the priority list.
[00:13:36]
And at the same time, they need to make decisions.
[00:13:39]
Do we sell now or do we not sell now?
[00:13:41]
And that's very hard if you don't have this information.
[00:13:45]
And it's not for most producers worth it to really try to get that information.
[00:13:50]
It's just too expensive for them compared to how much they're going to get back from it.
[00:13:55]
And that's why we believe the automatic tools are also the best for them.
[00:13:59]
Just rely on good market strategies that aggregates everybody together,
[00:14:03]
that uses smart algorithms to do it for them.
[00:14:06]
And that's why a lot of people have really trusted us as well.
[00:14:08]
And it's been one of the main reasons why we've been growing like 50% month to
[00:14:13]
month in such a short time.
[00:14:16]
Yeah, it's exciting how well you guys are doing.
[00:14:19]
I'm really interested about aggregation and how specifically aggregation gets better deals.
[00:14:25]
I mean,
[00:14:25]
I understand that buyers want to get more GOs in one go,
[00:14:30]
but what's that difference look like?
[00:14:32]
Is it difference between somebody who's producing GOs not being able to sell
[00:14:36]
whatsoever or just getting a better price?
[00:14:38]
It's the,
[00:14:39]
you know,
[00:14:39]
from the buyer's perspective,
[00:14:41]
a lot of the buyers over here on this market,
[00:14:44]
they're calling and searching for sellers like a big chunk of their day.
[00:14:50]
And if they find the seller,
[00:14:51]
then they need to make sure the seller has done KYCs,
[00:14:55]
which is a big process because in many countries,
[00:14:59]
guarantees of origins are securities like in Germany.
[00:15:01]
then they need to make sure that there's a contract signed.
[00:15:05]
If it's a forward deal,
[00:15:06]
they need to make sure that they're like a credit responsible party,
[00:15:10]
that they can actually deliver what they promised.
[00:15:12]
So there's like a lot of admin work involved in every single deal.
[00:15:18]
Now,
[00:15:19]
if you're a small producer relatively,
[00:15:22]
let's say you generate like one gigawatt a year,
[00:15:31]
it's very hard to make money on those trades.
[00:15:35]
So because like all of the effort you put into it,
[00:15:38]
the labor is going to basically eat away all your margins because usually they
[00:15:43]
don't even,
[00:15:43]
you know,
[00:15:44]
the buyers,
[00:15:44]
they need to talk with their back office,
[00:15:46]
with their compliance team and so on.
[00:15:48]
So what naturally starts happening is that one, they don't even bother with the small producer.
[00:15:54]
They're just going to say that's too small volume.
[00:15:56]
I don't care.
[00:15:57]
Or they're going to just offer them lower price to make up for all that.
[00:16:00]
Yeah.
[00:16:01]
But if you aggregate all the production together,
[00:16:05]
go behind a single counterparty,
[00:16:07]
then everything changes,
[00:16:09]
right?
[00:16:09]
Suddenly behind us,
[00:16:11]
there's thousands of production points,
[00:16:14]
but for the buyer,
[00:16:15]
we're a single entity.
[00:16:16]
So it's kind of like this virtual renewable energy power plant where they can just source.
[00:16:22]
And that helps them a lot.
[00:16:25]
And that just gets you the better deals.
[00:16:27]
And they can get the big chunk at once and make sure it gets to the right places.
[00:16:33]
It's pretty simple.
[00:16:34]
And do you let them know exactly what that aggregation actually comprises?
[00:16:40]
As in, I guess...
[00:16:41]
They want to be purchasing a specific type sometimes,
[00:16:44]
or do you have to aggregate only wind or only solar or just put it all together?
[00:16:48]
We really break it down,
[00:16:50]
like the technology,
[00:16:52]
wind,
[00:16:52]
solar,
[00:16:52]
hydro,
[00:16:53]
the COD,
[00:16:54]
like when did the plant become operational,
[00:16:58]
the generation month by month,
[00:17:01]
when did it become generated.
[00:17:03]
Sometimes some producers set minimum price thresholds, which we need to hit.
[00:17:09]
In practice,
[00:17:09]
what's happened is if it's too out of weight,
[00:17:13]
then they just won't sell and it just goes to the next month.
[00:17:17]
and so on so like we we really break it down to whatever the buyer needs and they
[00:17:23]
can either try to buy in part of it or all of it but our goal is simple we just
[00:17:28]
sell to the highest bidder and we use like algorithmic approach to how we do those
[00:17:33]
sales instead of letting human emotions into it because that's when things can get
[00:17:38]
bad as top markets have really well shown in the past
[00:17:41]
Let's look at the role of automation now.
[00:17:43]
I'm interested how much,
[00:17:46]
well,
[00:17:46]
obviously there's a time saving,
[00:17:47]
but based on the average sort of,
[00:17:50]
I always want to say like salaries,
[00:17:51]
because you've got somebody sitting down and entering that,
[00:17:53]
how much are they going to be actually saving,
[00:17:56]
right?
[00:17:57]
Yeah, well, there's two parts of it.
[00:17:59]
One is how much they're going to be saving and another is how much they're going to
[00:18:02]
be earning more.
[00:18:04]
Right.
[00:18:04]
So that's the two parts, essentially.
[00:18:07]
And it's significant,
[00:18:08]
like especially because one thing that's very hard to measure is like,
[00:18:12]
what was your strategy without us versus what it has been with us?
[00:18:18]
And compare, we've done some analysis on that in the past.
[00:18:23]
And because like we've had producers,
[00:18:26]
like I mentioned in the beginning,
[00:18:27]
who have said like,
[00:18:28]
I don't want to join it because I want to hold on and wait until it gets back to
[00:18:32]
like,
[00:18:32]
you know,
[00:18:32]
last year prices.
[00:18:34]
And then a few months ago,
[00:18:36]
most of them,
[00:18:37]
like almost all of them that we talk have eventually joined us.
[00:18:41]
And when we run the numbers,
[00:18:42]
like what hold have they earned then,
[00:18:44]
they had joined us immediately versus what they actually earned.
[00:18:48]
It's like up to three times difference.
[00:18:50]
We could have made them three times more revenue than they would have themselves.
[00:18:55]
That's a very huge increase in their bottom line that they were missing out.
[00:19:01]
So for us, maximizing the...
[00:19:05]
revenue flow from guarantees of origin is our number one priority.
[00:19:08]
We put a lot of effort into analyzing that, into building out our network.
[00:19:12]
In our last tender,
[00:19:15]
we had more participants than the French government's guarantee of origin tender.
[00:19:20]
So you can really see that we have quite a nice network out there of buyers.
[00:19:26]
So yeah, that's the thing.
[00:19:29]
Now,
[00:19:29]
when it comes to savings,
[00:19:31]
if we discount just maximizing the revenue,
[00:19:33]
when we only focus on the savings,
[00:19:36]
it depends a lot from country to country.
[00:19:38]
And it also depends on the size of your business.
[00:19:41]
So when you're a tiny producer,
[00:19:45]
in some countries,
[00:19:46]
you need to put a lot of effort into monthly issues,
[00:19:50]
for example.
[00:19:51]
So you really need to like every month read your information from metering point,
[00:19:59]
enter those data in your TSO,
[00:20:02]
confirm it through mobile phone and two-factor authentication or something.
[00:20:07]
And that can take quite a lot of time.
[00:20:12]
In the worst case, when you delete the company, we know they have like specialized...
[00:20:16]
People who only just do issuance reporting every month.
[00:20:20]
That's literally their whole job.
[00:20:22]
They just do it.
[00:20:23]
It's very time consuming, very annoying for them.
[00:20:27]
And it's also very demotivating for the workers because it's not very exciting just
[00:20:33]
copying numbers from one place to another.
[00:20:35]
And we automate all of that away.
[00:20:38]
That just replaces, like that lets these people do something more productive, right?
[00:20:44]
But in some countries, the issuance is basically automatic.
[00:20:47]
So you don't see like every month,
[00:20:48]
they just see more guarantees or for agents come to their account.
[00:20:52]
But then there's the sales side.
[00:20:54]
Like when they start doing sales,
[00:20:56]
they always need to go through KYCs for the buyers,
[00:20:59]
like almost always,
[00:21:01]
unless the buyer is like a friend or something.
[00:21:03]
When they go through the KYCs, that's additional compliance or overhead.
[00:21:07]
If they want to get good deal, then they really need to go out there and start sourcing.
[00:21:11]
buyers so on the saving side depending on the size of your business it could be
[00:21:18]
quite you know maybe few days a year or it could be like literally full time
[00:21:25]
people's positions essentially interesting
[00:21:30]
Talk to me more about how Soldera, do you approach buyers or do buyers approach you?
[00:21:36]
I mean, it's kind of like your business model is that you had all of that yourself.
[00:21:40]
Would you ever consider going to some sort of more public facing model?
[00:21:43]
Is that even possible?
[00:21:44]
For example,
[00:21:44]
operating some sort of marketplace or I mean,
[00:21:47]
you said you had more participants than a sovereign auction.
[00:21:50]
Would it be possible to run your own auctions?
[00:21:52]
Do you already do that?
[00:21:53]
Yeah.
[00:21:53]
How does that work?
[00:21:54]
Yeah,
[00:21:55]
so most of our producers that we have come to us,
[00:21:58]
including internationally,
[00:21:59]
like we've had producers come to us from like across different European countries.
[00:22:04]
We even had now come from India and US,
[00:22:06]
like globally producers come to us and they're like,
[00:22:08]
hey,
[00:22:09]
please bring this solution for us as well.
[00:22:11]
So we've been very active in expansion and getting to more and more countries.
[00:22:16]
And it's one of our biggest focuses, rapidly integrating with every local registry.
[00:22:22]
Even if they don't have an API, we still integrate.
[00:22:25]
We really, really specialize on that and do it very fast.
[00:22:29]
But we do have business developers as well who do talk with the big guys,
[00:22:34]
utilities and so on,
[00:22:36]
because they usually require more attention,
[00:22:39]
more control.
[00:22:39]
They have some special requirements and we're very flexible in making sure that
[00:22:44]
All their needs are fulfilled as well.
[00:22:46]
And this comes to your question about the marketplace.
[00:22:51]
We currently don't see ourselves being a marketplace player.
[00:22:55]
We really want to focus fully on helping the producers.
[00:22:58]
That said, when we do talk about big utility scale producers, they obviously want more control.
[00:23:05]
like trading tests from like a biggest utility in like Norway or Finland and so on.
[00:23:12]
They're not just going to hand their portfolio to us and say, you know, do whatever you want.
[00:23:16]
So we sort of offer them this hybrid approach where they can opt in either
[00:23:21]
partially or completely into one of our trading vehicles.
[00:23:25]
We have multiple different ones on our platform and they can even,
[00:23:28]
you know,
[00:23:29]
allocate parts of their portfolios into
[00:23:31]
multiple ones, then they can see the results, they can assess it, they can compare it.
[00:23:35]
And if they like it,
[00:23:37]
then they can just increase the amount of portfolio they flow into this trading
[00:23:42]
vehicle.
[00:23:43]
And it's always very transparent,
[00:23:45]
very much focused on making sure the producers get exactly what they need,
[00:23:49]
that their compliance needs are fulfilled.
[00:23:51]
Like one producer told me that...
[00:23:54]
My biggest problem is that I need to,
[00:23:57]
according to my shareholder agreements,
[00:23:59]
get the best offers on the markets.
[00:24:01]
But I also have really high compliance requirements, DSG and so on.
[00:24:06]
So every time I go to sales, I need to put a lot of effort into this KYC and stuff.
[00:24:11]
And it's a lot of work for us.
[00:24:12]
And we were like, well, now you can just use one of our trading vehicles.
[00:24:17]
We handle all the KYCs in the background.
[00:24:19]
We're only a single counterparty for you.
[00:24:21]
And we give you full transparency that this was really the best deal on the market.
[00:24:27]
And yeah, so talk about that transparency.
[00:24:30]
You have to compare with other data sources because he says he has to go and tell
[00:24:34]
his shareholders that he got the best deal.
[00:24:36]
You give him a way to prove that, right?
[00:24:37]
Or dev a way to prove that.
[00:24:38]
We really want to bring more transparency in this market.
[00:24:42]
We want to make sure a guarantee for each market succeeds.
[00:24:45]
And it will succeed if there's a lot of trust around it,
[00:24:48]
if people see exactly what's going on,
[00:24:49]
and they know that the renewable energy producers are getting the best deals on the
[00:24:53]
market.
[00:24:53]
So for us, it's all about transparency.
[00:24:56]
The producers see exactly how many people we had in tenders.
[00:24:59]
They see the price ranges.
[00:25:01]
They don't see who exactly were the offers and buyers because sometimes the buyers
[00:25:06]
actually don't allow that for their own clients' reasons.
[00:25:09]
But that's fine.
[00:25:11]
That's not what people usually need.
[00:25:13]
They see exactly all the information they need for their compliance purposes and
[00:25:18]
bring the transparency.
[00:25:19]
They see the market trends.
[00:25:21]
They see what's going on.
[00:25:22]
And the way we work is very well regulated by the contracts we sign with them.
[00:25:28]
Do you ever get people who just really do not understand your offering?
[00:25:32]
You explain that you bundle,
[00:25:33]
you explain that you aggregate,
[00:25:34]
you explain that that helps them get better pricing.
[00:25:37]
Do the whole bitch, everything, they just don't understand it.
[00:25:40]
And at that point, what do you do?
[00:25:42]
Do you just walk away or do you keep trying?
[00:25:43]
Yeah, I'm curious.
[00:25:45]
I mean, look, we're not for everybody.
[00:25:47]
There's people who want to do their own auctions or tenders and want to do it themselves.
[00:25:52]
Some people actually get excited about trying to sell their guarantees of origin.
[00:25:56]
And it's sort of like their hobby.
[00:25:58]
So even though they understand it all, they still don't join us.
[00:26:02]
Some people I've seen literally try to treat us as traders.
[00:26:07]
Every time they come to us and are like, what price are you going to give it to us?
[00:26:10]
And I'm going to be like...
[00:26:11]
I don't know.
[00:26:12]
The market will show us eventually.
[00:26:14]
And then they're like, but you're buying and selling.
[00:26:17]
No, we're not buying.
[00:26:18]
We're brokering and aggregating.
[00:26:20]
So it's completely different.
[00:26:22]
And eventually, some of them understand what we do and join.
[00:26:27]
Some of them don't.
[00:26:28]
And that's fine.
[00:26:29]
We can't service everybody.
[00:26:31]
That's fine.
[00:26:32]
We do the best for the people that just are value aligned with us and see the
[00:26:37]
benefit we bring to us.
[00:26:38]
essentially people who want to make sure they have as little back office work as
[00:26:42]
possible and want to get the maximum results from the sales let's let's uh let's
[00:26:46]
think about wrapping here because we're getting close to time but i'm curious about
[00:26:51]
the current state of the market let's let's end on that you think you're the sort
[00:26:55]
the stall there stance is that markets are going to improve but either way it
[00:26:59]
doesn't really matter so much to producers who are getting in addition to their
[00:27:04]
existing revenue right so if it's
[00:27:05]
If you're not making any money on goals,
[00:27:07]
you might as well start because it's just in addition to what you're currently
[00:27:11]
earning.
[00:27:12]
But either way,
[00:27:12]
it's looking good in future and it's kind of a little bit in a slow period right
[00:27:16]
now.
[00:27:17]
We're very bullish in the future and the markets sort of work on cycles, right?
[00:27:22]
So right now it's a downward cycle, but it's already actually showed improvements this month.
[00:27:27]
So usually the December is a bit busier month because everybody's want to wrap up
[00:27:31]
their books and make sure they have everything covered.
[00:27:34]
So all the issue departments wake up and so on.
[00:27:36]
The producers who are not burning money on geos,
[00:27:39]
I mean,
[00:27:39]
they're losing out on up to 5% revenue.
[00:27:42]
That's massive.
[00:27:43]
And you won't get them on backtrack.
[00:27:46]
You may as well start getting them right away because 5% extra revenue on renewable
[00:27:51]
energy is huge.
[00:27:54]
Even if right now it's smaller than 5%,
[00:27:59]
in terms of profits,
[00:28:00]
it's huge because it's a low margin business,
[00:28:02]
right?
[00:28:02]
And so that really helps them.
[00:28:06]
And once they start factoring in on that,
[00:28:08]
suddenly their balance sheets and financial plans become a lot better.
[00:28:12]
And since a lot of renewable producers...
[00:28:15]
A big part of their job is fundraising to build new installations, right?
[00:28:20]
Making sure you have a good strategy in the entire geo management is essential to
[00:28:28]
put the best booth forward when doing this fundraising.
[00:28:32]
And using Soldera as a service to essentially manage this full stack,
[00:28:38]
we've heard it really helps it,
[00:28:40]
provides a really compelling narrative and story for investors,
[00:28:43]
plus the results speak for themselves as well.
[00:28:46]
I've got a product idea for you guys.
[00:28:47]
You should add a little like Soldera wrapped,
[00:28:50]
definitely not inspired from Spotify at the end of the year.
[00:28:52]
So producers can see exactly how much extra they earned because of the geo sales
[00:28:56]
through Soldera.
[00:28:57]
And that can be a standalone slide in whatever deck or business plan that they have
[00:29:01]
to show to their investors when they're fundraising.
[00:29:04]
I love it.
[00:29:05]
I love it.
[00:29:05]
Why don't you put it together?
[00:29:06]
Let's do it.
[00:29:07]
Let's do it.
[00:29:08]
All right.
[00:29:09]
Well, yeah, cheers.
[00:29:11]
That was a really good combo.
[00:29:12]
We'll try and do this weekly, but whenever we get around to it for the next one.
[00:29:15]
So yeah, thank you very much.
[00:29:17]
Thank you.
[00:29:17]
It was a pleasure and looking forward for the next one.
[00:29:20]
Cheers.
[00:29:20]
All right.
[00:29:21]
Cheers.
[00:29:21]
Bye.
🌍 Soldera Market Discussions: Understanding RE100's Credible Claims Guidelines
Join Al, Ollie & Stenver for a detailed exploration of RE100's framework for credible renewable energy claims.
📹This episode covers:
→ What makes a renewable energy claim credible under RE100 standards 📊
→ The six key criteria for valid claims
→ Geographic market boundaries and their implications
→ How vintage limitations affect renewable energy certification
→ The importance of attribute aggregation
⚡Key topics we discuss:
→ Why countries like Poland remain outside the AIB system
→ The Costa Rica paradox of 99% renewable grid
→ How market boundaries affect liquidity
→ The special requirements for hydro and biomass certification
→ The 15-year age limit rule and its exceptions
💡Notable insights include:
→ Why grid connection alone isn't enough for cross-border trades
→ How the UK's post-Brexit isolation affects the market
→ The challenges of matching consumption periods
→ Why tracking matters even in nearly 100% renewable markets
→ The importance of preventing attribute unbundling
Fascinated by renewables, renewable assets and renewable market frameworks? Subscribe to stay informed on pressing developments!
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit podcast.soldera.org
As Q1 kicks into gear, we share our perspectives on the dynamics most likely to shape the European Guarantees of Origin (GO) market.
This Episode Covers:
* How record-high Nordic hydro reservoirs are creating potential market oversupply conditions 💧
* Why the new CSRD reporting requirements will impact companies with over 500 employees 📋
* What makes the March 30th disclosure deadline crucial for Q1 market movements ⏰
* How German elections could influence Europe's largest GO importing market 🇪🇺
* What forward trading patterns reveal about long-term price confidence 📈
Understanding Market Dynamics:
* Despite current oversupply, why supply levels remain lower than early 2024 levels 📉
* How mandatory corporate sustainability audits are reshaping EU company practices 🏢
* Why local sourcing requirements are becoming essential, particularly for German subsidies 🗺️
* How RED3 directive makes it easier for small-scale renewable producers to participate 🌱
* What new industry support programs mean for energy-intensive sectors across Europe ⚡
Stay tuned for our quarterly market updates to keep your finger on the pulse of the GO market!
#GuaranteesOfOrigin #RenewableEnergy #EnergyMarkets #Sustainability
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit podcast.soldera.org
Soldera Markets is delighted to host Taavi Veskimägi, former CEO of Estonia's TSO Elering, to take an in-depth look at the Baltic energy transition.This Episode Covers:
→ Estonia's journey from oil shale dependency to renewable energy leadership
→ The recent 2025 Baltic grid desynchronization from Russia
→ How Guarantees of Origin (GOs) drive market-based renewable adoption
→ The critical role of energy independence in national security
→ Green hydrogen's future in the Baltic energy mix
Key Insights:
→ Estonia's early adoption of digital solutions for energy trading
→ The impact of EU carbon prices on traditional energy sources
→ Balancing market competitiveness with sustainability goals
→ Why interconnectors are crucial for price stability
→ The challenges and opportunities in frequency market development
Special Focus on European Energy Security:
→ How Estonia prepared for grid resilience a decade ahead of Western Europe
→ The importance of maintaining a unified European energy market
→ Balancing regulation with innovation in clean tech
#EnergyTransition #CleanEnergy #GridResilience #RenewableEnergy #Estonia #Baltics
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit podcast.soldera.org
Soldera Markets is delighted to host Tony Tiyou, CEO of Renewables in Africa, to explore the growing African renewable energy landscape.
This Episode Covers:
→ The evolving African renewable energy certificates (RECs) market
→ Growth patterns showing doubling volumes year-on-year
→ How only 17 of 54 African countries currently participate in I-REC systems
→ Pricing differences between African markets ($1-5/MWh) versus other regions
→ The challenges of grid integration for large-scale renewable projects
Key Insights:
→ African I-REC volumes reaching 3.5 million MWh in 2024
→ The untapped potential in distributed energy resources
→ How African renewables have lower default rates than comparable U.S. investments
→ The critical need for international capital in project development
→ Why solar makes economic sense beyond environmental benefits
Special Focus on African Energy Development:
→ The economic impact of unreliable power on businesses
→ How solar adoption is growing rapidly without government subsidies
→ The push for local manufacturing of renewable components
→ Regional integration through AfCFTA and pan-African energy initiatives
→ The continent's vast solar potential (currently just 2% of global capacity)
#RenewableEnergy #AfricanEnergy #CleanEnergy #SolarPower #IRecs #EnergyAccess #AfricanDevelopment
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit podcast.soldera.org
Join us with Mary Polovtseva, GO expert and renewable policy analyst with Veyt, as we explore the evolving European Guarantees of Origin market.
Topics covered:
→ Policy vs market analysis roles in the GO space
→ Impact of geopolitics on EU energy transition
→ CSRD's influence on GO demand
→ EU's Omnibus package reducing CSRD scope by 80%
→ Norway's evolving position on GOs
→ Granularity debates (monthly vs hourly matching)
→ Clean Industrial Deal & public procurement
→ GOs as revenue for renewable producers
→ Implementation challenges across EU states
→ Green Claims Directive and eco-labels
Key insights:
→ EU decarbonization targets remain despite competing priorities
→ Companies adopting dual reporting for scope 2 emissions
→ Potential reduction from 50,000 to 10,000 CSRD companies
→ Only renewable hydrogen regulations currently push hourly granularity
→ Public procurement (40% of EU GDP) could drive GO demand
→ GOs can represent up to 7% of operational income for producers
→ National implementation varies widely across member states
→ Clean Industrial Deal merges decarbonization with competitiveness
#RenewableEnergy #Sustainability #EnergyPolicy
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit podcast.soldera.org
In this episode, Fulbright Scholar Kevin Lu interviews Stenver Jerkku, founder and CEO of Soldera, as part of his research into Estonia's climate tech ecosystem. After working in content design and strategy for climatetech at Salesforce and exploring climate innovation across 21 countries, Kevin is now researching at Tallinn University of Technology where he's examining how founders build successful climate startups in Estonia.
This interview explores:
→ How Estonian entrepreneurs think globally from day one
→ Soldera's founding journey and pivot from carbon credits to renewable energy
→ Navigating fundraising as a climate tech company in Estonia
→ When founders should (or shouldn't) pursue venture capital
→ How Soldera leverages AI to automate compliance work
→ How EU regulations create business opportunities
→ Finding balance between supportive and restrictive policies
→ What Estonia could improve to better support climate startups
Key insights include:
→ Climate tech founders need laser focus rather than pursuing multiple opportunities
→ Estonia's small market forces founders to think internationally from day one
→ Taking VC means accepting responsibility to build a billion-dollar business
→ Estonia's fast company formation and digital services are models for Europe
→ Maintaining stable business policies helps Estonia attract international founders
→ Community-building events could strengthen Estonia's climate tech ecosystem
#ClimateTech #Estonia #VentureCapital
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit podcast.soldera.org
As we enter Q2, we examine the key factors influencing the European Guarantees of Origin (GO) market while evaluating our Q1 predictions.
Looking Back at Q1 and Assessing Our Predictions
→ Most predictions materialized, especially regarding March 31st disclosure deadline activity
→ Record Norwegian cancellations show market progress with 22 TWh more domestic consumption 🇳🇴
→ Pricing remained sideways despite high volumes and record cancellations
→ Geopolitical factors and defense priorities temporarily overshadowing sustainability initiatives
Critical Supply Dynamics
→ 47 TWh renewable underproduction silently reducing market oversupply 📉
→ Nordic hydro reservoir levels have less market impact than commonly believed
→ Rapid value decline of 2024 GOs problematic for remaining holders
→ Germany's June deadline creates final window for 2024 GO consumption 🇩🇪
Demand Outlook and Market Sentiment
→ Forward prices historically low at €1+ despite continued interest
→ CSRD scope reduction from 50,000 to 10,000 companies impacting price modeling 📋
→ Potential hydrogen regulation relaxation could significantly boost GO demand
→ Voluntary GO adoption in Iceland signals sustainable demand growth
Strategic Considerations
→ Why some people are considering leaning toward 30% forward volume hedging 📊
→ Market's contango state reflects confidence in long-term improvement
→ Country-specific vintage rules create arbitrage opportunities in Estonia and Italy
→ Energy-intensive industry incentives creating new demand sources across Europe ⚙️
Stay informed with our quarterly market updates to navigate the evolving GO market landscape!
#GuaranteesOfOrigin #RenewableEnergy #EnergyMarkets #Sustainability
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit podcast.soldera.org
Transcript of the episode's discussion between Oliver Bonallack, Al William Tammsaar, and Stenver Jerkku
[00:00:03]
Hey guys, and welcome back to another episode of Sodera Markets.
[00:00:07]
We are the podcast to talk about all of the developments in the Renewable Energy
[00:00:11]
Certificate and Guarantee of Origin Space.
[00:00:14]
Today we're doing our state of the geomarkets.
[00:00:16]
So it's our outlook for 2025 Q2.
[00:00:18]
If you missed our 2025 Q1, you can go back and check and see how our predictions stacked up.
[00:00:24]
But today I'm joined here with Al and Stenver.
[00:00:26]
So it's nice to have you guys.
[00:00:28]
Yeah,
[00:00:28]
I guess we start by looking back at Q1 and see how we kind of did with our
[00:00:34]
predictions last time.
[00:00:35]
How do we do?
[00:00:36]
Yeah, I think generally we hit the nail on the head.
[00:00:39]
I think we got most things right, except one, which we'll talk about in a bit.
[00:00:43]
But in the first quarter,
[00:00:45]
actually,
[00:00:46]
we saw even more market activity than we expected with the March 31st disclosure deadline,
[00:00:52]
which affected most countries that use guarantees to origin.
[00:00:55]
As a special highlight,
[00:00:57]
however,
[00:00:57]
I would like to point out the fact that we saw record cancellations of guarantees
[00:01:02]
of origin in Norway.
[00:01:04]
And this is incredibly relevant because historically Norway is very bad at using
[00:01:09]
their own guarantees of origin.
[00:01:10]
So we saw an increase right now of around 22 terawatt hours of more consumption in
[00:01:16]
their domestic market than last year,
[00:01:18]
which is a huge increase.
[00:01:20]
The final numbers are still pending.
[00:01:22]
We'll get to see how everything played out after they have calculated the residual
[00:01:27]
energy mix and everything.
[00:01:28]
But usage of guarantees of origin in Norway has gone up significantly.
[00:01:32]
And I think that's major progress for the market.
[00:01:35]
Since historically,
[00:01:36]
the reason why Norway is such a major exporter is because their domestic market thinks,
[00:01:43]
oh,
[00:01:43]
we're green anyway,
[00:01:45]
doesn't put money into this and sells off essentially the greenness of their
[00:01:49]
electricity to other countries.
[00:01:51]
And now both of them think that everything's fine.
[00:01:53]
While in reality, the energy producers in Norway...
[00:01:57]
They're selling their green electricity to someone else,
[00:01:59]
not you,
[00:02:00]
like the factory that's not buying it.
[00:02:02]
It's great to see that they're starting to buy because I actually was just yesterday,
[00:02:07]
came back from direct market meeting in Amsterdam,
[00:02:10]
and people are starting to get very critical of Norway.
[00:02:13]
Actually,
[00:02:14]
there were sessions and seminars where people put it straight on the slides and
[00:02:17]
were criticizing Norway for that.
[00:02:20]
And somebody even was asked on stage that,
[00:02:24]
hey,
[00:02:24]
if Norway would leave the AIB,
[00:02:27]
would it raise the geo prices?
[00:02:28]
And he was like, yes.
[00:02:30]
So like, yes, people are getting critical of Norway and I think it's rightfully so.
[00:02:36]
But a very interesting counterpoint, actually.
[00:02:39]
I met the director of IREC and he said that we had a quite interesting conversation.
[00:02:46]
He said that we can't blame Norwegian government for that because Norwegian
[00:02:51]
government is not responsible for reporting like we should be blaming consumers.
[00:02:55]
I actually want to address that because this is such an interesting point.
[00:02:59]
This brings me back to the carbon markets.
[00:03:01]
In carbon markets, it was the same thing.
[00:03:03]
Everybody was shifting the blame.
[00:03:05]
It's not Vera's responsibility.
[00:03:07]
It's the project's responsibility or the VVP's responsibility or whatever other
[00:03:12]
term that nobody understands.
[00:03:13]
This is the law.
[00:03:14]
You know, you joined AIB, it's the law, you know, you need to follow the rules.
[00:03:18]
You need to enforce the rules.
[00:03:20]
If you're not enforcing them, like who is like, I'm sorry.
[00:03:23]
Like I'm in the firm belief that it's Norway's government fault.
[00:03:28]
Not anybody's government's fault for not enforcing the rules they have agreed.
[00:03:33]
And I will fight that opinion.
[00:03:36]
Like anybody that comes to tell me it's not government's fault and consumers fault.
[00:03:40]
No, yeah, consumers break the rules, but who's enforcing it is the question.
[00:03:44]
And like,
[00:03:45]
this is not the voluntary carbon market where nobody's enforcing and everybody's
[00:03:48]
just chitchatting.
[00:03:49]
Yes.
[00:03:50]
Another thing that I will point out is Norway is not part of the European Union.
[00:03:55]
So that makes everything very complicated because the renewable energy directive
[00:03:59]
that we have in Europe,
[00:04:01]
Norway hasn't even fully adopted it.
[00:04:05]
Not RET2, definitely not RET3.
[00:04:08]
So everything's a bit weird and strange compared to other countries that have
[00:04:13]
guarantees of origin.
[00:04:15]
They work on, in some sense, outdated requirements at this point.
[00:04:19]
Yeah,
[00:04:20]
I'm very excited to see where all of these conversations go of Norway potentially
[00:04:24]
joining the EU or at least transposing like renewable energy directive to its full extent.
[00:04:30]
Because right now it's in this like very strange borderland between being adopted
[00:04:36]
fully and not being adopted at all,
[00:04:39]
where everybody's just kind of closing their eyes and going like,
[00:04:42]
okay,
[00:04:43]
it's fine.
[00:04:43]
It's okay.
[00:04:44]
It's okay.
[00:04:44]
Just keep exporting.
[00:04:45]
It's fine.
[00:04:47]
It doesn't make sense that you sell away your renewable power and then at the same
[00:04:53]
time you claim that we have renewable power.
[00:04:56]
This is not good for the market.
[00:05:00]
I'm very scared of the credibility of the market.
[00:05:03]
I worked in carbon markets and we need to get rid of these discrepancies.
[00:05:08]
So despite all of that, I mean, what's behind the driving cancellations in Norway then?
[00:05:13]
Do we know?
[00:05:13]
A big part of this is like CSRD because there are a lot of Norwegian companies or
[00:05:20]
companies that have a Norwegian presence that follow the CSRD.
[00:05:25]
And then they do all of the nice things that they have to disclose the energy mix
[00:05:28]
and they have to follow certain protocols.
[00:05:31]
And it does seem that that has moved the needle.
[00:05:33]
There are also major industrial players in Norway that have announced that
[00:05:37]
yeah okay we're taking it seriously we're working on it all of this has moved
[00:05:42]
demand forward significantly and that's very positive it seems like the market over
[00:05:48]
there is moving in the right direction i guess the only question is how long is it
[00:05:52]
going to take for everything to kind of settle out and start making perfect sense
[00:05:56]
Yeah,
[00:05:57]
and I actually heard in the conference that,
[00:05:59]
if I'm not mistaken,
[00:05:59]
but the Iceland aluminum refineries now started buying geos.
[00:06:03]
So those are all very, very good signals and very encouraging of that.
[00:06:08]
And applaud all the stakeholders involved who have done the hard work in these
[00:06:15]
local markets to push this forward and make sure we have a credible system across
[00:06:20]
the EU.
[00:06:20]
All of this being said,
[00:06:21]
we are still in a sort of oversupplied market state,
[00:06:25]
I think,
[00:06:26]
when it comes to guarantees of origin.
[00:06:28]
There's quite a big overhang.
[00:06:29]
We've seen some reports that have essentially said that the overhang didn't really
[00:06:34]
increase last year significantly.
[00:06:37]
We're still dealing with about the same amount of guarantees of origin circulating
[00:06:41]
in addition to whatever is being produced.
[00:06:43]
It hasn't gotten worse, but it also...
[00:06:46]
So far, hasn't gotten significantly better.
[00:06:50]
And I think the prices also reflected that across the last quarter.
[00:06:56]
We did see 2024 prices go down and down and down, stabilizing at some point.
[00:07:03]
And we did see 2025 prices stabilize a bit faster and, well...
[00:07:09]
We basically just had a sideways kind of a couple of months.
[00:07:13]
I would say pretty good market action, but at price points that aren't very inspiring.
[00:07:19]
Actually, I'd like to inject some of the learnings from direct market here again.
[00:07:25]
You mentioned the word pretty good market action.
[00:07:28]
What do you mean by that?
[00:07:29]
Volumes were good.
[00:07:30]
Like we did see like pretty good trading volumes.
[00:07:33]
So here's a nice question, right?
[00:07:35]
So we had good volumes,
[00:07:37]
we had record cancellations,
[00:07:39]
but we had sideways market,
[00:07:41]
which in trading term is called crab market,
[00:07:43]
right?
[00:07:44]
Actually,
[00:07:44]
a lot of traders in the conference,
[00:07:46]
like they expressed the concern about the fact that we have a
[00:07:51]
we are having a sideways market,
[00:07:53]
nothing is happening because,
[00:07:54]
you know,
[00:07:55]
traders,
[00:07:55]
you know,
[00:07:57]
they take positions and they trade positions.
[00:08:00]
And if the market is not moving, there's nothing to take over there.
[00:08:04]
And,
[00:08:05]
you know,
[00:08:06]
it's clear some firms are struggling actually on that front and some organizational
[00:08:11]
changes are happening.
[00:08:13]
Rumors are going on in some places.
[00:08:15]
But can you explain to that or what's your hypothesis on why we have record volumes,
[00:08:21]
record cancellations,
[00:08:22]
but not price moments?
[00:08:24]
So I think a lot of this comes down to the uncertainty.
[00:08:27]
And that's also something that we,
[00:08:29]
I think,
[00:08:30]
can smoothly transition into uncertainty in the market of like guarantees of
[00:08:35]
origins role going forward,
[00:08:37]
especially due to all of the geopolitical turmoil.
[00:08:41]
So we have our own position.
[00:08:43]
Obviously, energy independence also means having your own production capacity.
[00:08:48]
It means having a strong base of renewable energy.
[00:08:51]
It means having good storage, and it means having strong baseload.
[00:08:54]
Stuff like nuclear or, well, potentially gas, depending on response speed, right?
[00:09:00]
But ultimately, we need to be energy independent.
[00:09:04]
This is just a priority for Europe as a geopolitical entity.
[00:09:10]
But we have seen the omnibus package.
[00:09:13]
So for context, European Union, I don't think has still completely accepted it.
[00:09:19]
The proposal was made to essentially simplify the CSRD reporting scope,
[00:09:25]
this thing that has been driving significant demand,
[00:09:28]
to reduce the scope from 50,000 companies to 10,000 companies.
[00:09:33]
And to significantly simplify the kind of data points required in it,
[00:09:37]
I don't think it affected renewable energy.
[00:09:40]
It affected all of these like qualitative questions.
[00:09:43]
But a lot of this has damper on sustainability as a theme that corporations
[00:09:50]
prioritize or believe in.
[00:09:52]
I'm interested,
[00:09:52]
sorry to sneak something in here,
[00:09:54]
but last episode,
[00:09:55]
I mean,
[00:09:55]
last quarterly report for the Q1 Outlook,
[00:09:58]
you mentioned that eventually if you try and model everything,
[00:10:00]
it gets to the point where you're trying to model the entire world economy.
[00:10:03]
And I thought that was a really profound point.
[00:10:05]
But I would say that recently the world economy has been pretty volatile.
[00:10:09]
And I think you can completely disregard it and isolate GOs to their own little vacuum, right?
[00:10:14]
So how has the recent volatility on the world financial stage impacted GOs at all?
[00:10:20]
Well,
[00:10:20]
I think this is one of the things that we ultimately see is that the sustainability
[00:10:24]
has taken a backseat to questions of defense.
[00:10:28]
I think defense has become a more major theme in global discussion.
[00:10:33]
And I think that is reflected in, to some extent, the excitement around guarantees of origin.
[00:10:39]
Now, the flip side of this is that we did see record cancellations.
[00:10:44]
I think we will,
[00:10:46]
after all of the numbers have come in,
[00:10:47]
we'll see that the adoption of guarantees of origin is at an all-time high.
[00:10:51]
While at the same time, this kind of vibe of the market, you could say, is not optimistic.
[00:10:57]
And because of these animal spirits essentially driving what people think things
[00:11:01]
are worth,
[00:11:02]
we're ultimately going to have depressed prices if people just have this vibe of
[00:11:06]
Well,
[00:11:06]
maybe guarantees of origin,
[00:11:08]
maybe they aren't the thing,
[00:11:09]
even though the numbers would suggest heavily that they are.
[00:11:12]
I asked that question actually from many people in conference as well,
[00:11:17]
and this was a big discussion topic over there.
[00:11:20]
People had very differentiating opinions on it, actually.
[00:11:23]
It was quite interesting to see.
[00:11:24]
Many said, we don't know, no idea how it's going to affect, of course.
[00:11:28]
A lot of uncertainty.
[00:11:30]
Some believe the bearish narrative,
[00:11:32]
believe that the tariffs will start,
[00:11:35]
you know,
[00:11:36]
further reducing the sustainability importance and like all the light green stuff
[00:11:42]
will be starting to be rollbacked.
[00:11:44]
And some believe that they'll have no impact.
[00:11:46]
because geos are not in the US market.
[00:11:49]
It doesn't matter that the European laws and objectives still apply and the
[00:11:53]
companies doing business in Europe still need to,
[00:11:56]
you know,
[00:11:57]
be compliant with EU laws.
[00:11:59]
In fact,
[00:11:59]
like the Germany,
[00:12:00]
I think just announced with the new government coalition that they're going to
[00:12:05]
firmly stay on path to the 2040 net zero commitments.
[00:12:11]
And in fact, they increased some requirements as well.
[00:12:14]
Which was an interesting side note,
[00:12:15]
they actually are considering accepting international carbon credits for the
[00:12:21]
reduction targets as well,
[00:12:22]
but that's another story.
[00:12:23]
That will be very interesting.
[00:12:25]
Yes.
[00:12:26]
All right.
[00:12:27]
But yeah,
[00:12:27]
another thing that we gave an overview of last time when we had this call was the
[00:12:34]
German elections.
[00:12:35]
And as Denver already mentioned that the German election,
[00:12:38]
they went exactly as everyone predicted,
[00:12:41]
ended up with a CDU,
[00:12:42]
CSU and SPD coalition.
[00:12:45]
The negotiations possibly even went better than expected in the sense of there were
[00:12:50]
negotiations which ended up getting more green topics into the picture.
[00:12:55]
And overall,
[00:12:56]
I'd say this was even better,
[00:12:59]
possibly from a sustainability perspective than we were expecting as this kind of
[00:13:05]
baseline scenario.
[00:13:06]
And I think we should mention that,
[00:13:07]
obviously,
[00:13:08]
you know,
[00:13:08]
for those who haven't been following politics too closely,
[00:13:11]
last time we were worried about,
[00:13:12]
you know,
[00:13:12]
a certain party getting into German political power and that didn't happen,
[00:13:16]
which is overall,
[00:13:18]
it's a good thing for the geo market.
[00:13:19]
So I guess now let's look at short term market drivers.
[00:13:22]
So what do we think is going to happen in the sort of near to immediate term that's
[00:13:25]
going to be impacting geos that traders should be keeping an eye on?
[00:13:29]
So one of the major things to highlight is just the fact that so far this year,
[00:13:33]
we have produced 47 terawatt hours less than last year in terms of renewable energy.
[00:13:40]
At least 47 terawatt hours less.
[00:13:43]
It's been less wind this time around.
[00:13:45]
And it's been actually even a bit less hydro this time around.
[00:13:50]
And all of this has created this picture where we're actually quite behind on
[00:13:55]
renewable energy generation than what you would otherwise expect.
[00:13:59]
i think this is something people are possibly sleeping on because again the market
[00:14:05]
overhang like the total amount of floating supply that has been carried over year
[00:14:10]
to year
[00:14:11]
is somewhere in the ballpark of 180 terawatt hours.
[00:14:15]
That's it.
[00:14:16]
So the lowest the overhang has ever been is around 90 terawatt hours.
[00:14:21]
The highest it has been is like 180 terawatt hours.
[00:14:25]
The difference is around 90 terawatt hours.
[00:14:27]
That's the difference of like this overhang.
[00:14:29]
I think the underproduction has actually eaten into this overhang significantly already.
[00:14:34]
If this continues, who knows?
[00:14:37]
Can't predict the future.
[00:14:38]
But even if we don't like compensate somehow for this underproduction going forward
[00:14:43]
into this year,
[00:14:44]
I think this will have profound effects on supply and demand already.
[00:14:48]
And I think that is a very bullish signal.
[00:14:51]
Now,
[00:14:51]
the second part we need to consider is hydro,
[00:14:55]
since now that we're entering the time where we're getting snowmelt and we're
[00:15:00]
seeing Norway's hydro really start kicking in and doing more and what's happening
[00:15:06]
with the reservoir levels.
[00:15:07]
Again,
[00:15:08]
they are at what you could say unusually high levels,
[00:15:13]
but the total energy stored,
[00:15:15]
I'm saying a number off the top of my head and perhaps we can fact check you this
[00:15:19]
if I'm wrong.
[00:15:20]
But I believe the total storage is less than 12 terawatt hours total.
[00:15:25]
So when people talk about the effect of reservoir levels,
[00:15:29]
I think they are somewhat overemphasizing how much this could possibly affect
[00:15:37]
market dynamics compared to what people have been sleeping on,
[00:15:40]
which is like major underproduction actually across the whole EU region right now.
[00:15:45]
So I'd say actually we ended up this quarter in very positive supply and demand dynamics.
[00:15:54]
And I think I'm just sad this has not really materialized in the prices yet.
[00:15:59]
I think we will see some changes coming up.
[00:16:02]
But again, can't predict the future with complete accuracy.
[00:16:05]
I do have, looking at the numbers, a sort of bullish feeling about it.
[00:16:10]
That's cool to hear.
[00:16:11]
Does this apply to both 24 and 25 or only 25?
[00:16:15]
I would say it more applies to 25 because 24 is really heavily dropping off a cliff.
[00:16:21]
So what you have to keep in mind is that in a couple of countries,
[00:16:25]
you can't use 24 geos for 25 consumption.
[00:16:29]
Yes,
[00:16:29]
that reduces the amount of areas where you can realistically even use the old
[00:16:34]
guarantees of origin.
[00:16:35]
They have less market staying power.
[00:16:37]
So if you have them for speculative reasons, like at some point they will just go to zero.
[00:16:42]
But that's like part of the picture, right?
[00:16:44]
And ultimately, well, we are still in overproduction.
[00:16:47]
So I think there will just generally be a lot more people trying to get still
[00:16:52]
offload their 24 geos when trying to buy them.
[00:16:55]
Another thing that I would like to highlight is actually while we have been talking
[00:16:59]
about the March disclosure deadline,
[00:17:01]
Germany does not have a March disclosure deadline.
[00:17:05]
Their deadline is in, I believe, June.
[00:17:08]
It's like a bit of time to consume 24 geos.
[00:17:12]
But for the second half of the year,
[00:17:13]
obviously,
[00:17:14]
they will rapidly be losing value anyway,
[00:17:17]
because everything will just start expiring.
[00:17:19]
So that's kind of the last run out the door.
[00:17:21]
I don't think the market liquidity will be significantly high,
[00:17:25]
except for these regions,
[00:17:26]
for example,
[00:17:27]
in Estonia,
[00:17:28]
where you can buy guarantees of origin,
[00:17:30]
which are just about to expire and then have another six months where you can use them.
[00:17:34]
Like,
[00:17:35]
you know,
[00:17:35]
in those kind of arbitrage situations,
[00:17:38]
I think that kind of demand will stick around.
[00:17:40]
But it has limited use cases in the market.
[00:17:42]
I wasn't aware of this until you mentioned it recently.
[00:17:44]
Do you want to quickly go over that little like 12 to 18 months difference with
[00:17:49]
this sort of EU law?
[00:17:50]
Because that's the base, isn't it?
[00:17:52]
According to the Renewable Energy Directive,
[00:17:55]
guarantees of origin can be traded for up to 12 months.
[00:17:58]
12 months is the limit for trading period.
[00:18:01]
That's like you can't have guarantees of origin that are tradable longer than that.
[00:18:06]
But you can,
[00:18:08]
however,
[00:18:09]
specify in your laws,
[00:18:10]
if you want,
[00:18:11]
up to a 18-month period from issuance where they can be used.
[00:18:15]
So that means for the last six months,
[00:18:18]
you can't transfer them off of your account,
[00:18:20]
but you can cancel them.
[00:18:21]
You can use them still.
[00:18:23]
Like that, there's like this sort of grace period.
[00:18:25]
But what that grace period allows you is if you are,
[00:18:29]
for example,
[00:18:29]
a major utility,
[00:18:31]
you can buy these 24 geos and keep using them on an ongoing basis for whatever you
[00:18:36]
need if the law doesn't tell you to do otherwise.
[00:18:38]
And I think that's like a major point of arbitrage.
[00:18:41]
I believe Italy changed their laws recently to also a law force.
[00:18:44]
That's been a kind of point of drama there.
[00:18:48]
What's your opinion on that?
[00:18:49]
Is that a good thing or is that a bad thing?
[00:18:51]
Personally,
[00:18:52]
I feel guarantees of origin from one production year at minimum,
[00:18:57]
what our law should say.
[00:18:58]
Same production year, same consumption year.
[00:19:01]
So like if you are consuming in 24, you're producing in 24.
[00:19:05]
If you're consuming in 25, you're producing in 25.
[00:19:07]
I think that makes sense.
[00:19:09]
The market...
[00:19:10]
already has differentiated prices and liquidity for different vintages,
[00:19:15]
this wouldn't be a major step for the market.
[00:19:18]
Any markets inside of the EU already do this,
[00:19:22]
but I think this should be enforced overall because it creates a very clean supply
[00:19:28]
and demand break.
[00:19:29]
So if you have these kind of years of major overproduction,
[00:19:33]
it doesn't end up kind of haunting you like some sort of ghost for the next four
[00:19:37]
years while you try to get rid of like this huge overproduction that didn't really
[00:19:42]
have like appropriate demand on the other side at the time.
[00:19:45]
Yeah, I agree.
[00:19:46]
It's sad to see Italy adopted this change.
[00:19:50]
to sort of give you more time to hold your geos after trading and you know being in
[00:19:56]
Estonia and I was already critical of other countries I can definitely be critical
[00:20:00]
of Estonia here as well I think Estonia should change this you know they should
[00:20:05]
also cut it after 12 months and
[00:20:07]
you know even get to the german system as you mentioned one vintage for one year or
[00:20:13]
even you know eventually more granular like maybe rex do it but i agree like it's
[00:20:18]
uh we should be moving towards more specific not like less yes and uh i am
[00:20:25]
completely okay with the six month holding period whatever actually it should be
[00:20:29]
just whatever the disclosure deadline is right
[00:20:32]
But you should be able to hold it for how long you need to actually report your
[00:20:36]
consumption year.
[00:20:37]
That's fine.
[00:20:38]
But I don't think you should be able to like, yeah, carry over 24 production into like late 25.
[00:20:46]
Does that make sense?
[00:20:47]
Yeah.
[00:20:47]
Yeah.
[00:20:48]
You're right.
[00:20:48]
Actually this, I think that's a way better way to put it actually.
[00:20:52]
Yeah.
[00:20:52]
It wouldn't really require a lot.
[00:20:53]
The market can do it.
[00:20:55]
The market's completely capable of handling this.
[00:20:57]
There's no legal barrier to do this.
[00:20:59]
Like the Renewable Energy Directive does not limit you in doing this.
[00:21:03]
There are countries that already do this.
[00:21:05]
I just think we should accept this as a common practice because that already brings
[00:21:10]
us just a bit closer to this granularity.
[00:21:13]
And it also connects the market a bit more
[00:21:16]
Like,
[00:21:17]
I don't know how we would handle liquidity if we get into this like hourly level,
[00:21:21]
but liquidity is a completely reasonable,
[00:21:24]
easy to handle question when we talk about like yearly production.
[00:21:28]
Yeah.
[00:21:28]
So if any policymakers here listen to this,
[00:21:31]
please,
[00:21:32]
please force us to have at minimum yearly vintages for yearly production.
[00:21:37]
Everybody will be happy.
[00:21:38]
Nobody will be, well, maybe some will be sad.
[00:21:41]
I'm sure some would be sad.
[00:21:43]
any pain like that would be very temporary and you would be already playing a very
[00:21:47]
dangerous game if you were hurt by this so just to wrap up the short-term supply
[00:21:52]
conditions before we look at demand we're seeing continuing renewable
[00:21:56]
underproduction and we're also looking at sort of hydro reserves in the nordics and
[00:22:01]
in iberia that are well above seasonal averages so in demand what are we seeing
[00:22:06]
yeah so as we've mentioned a couple of times there was this march 31st disclosure
[00:22:11]
deadline this has now passed what we are already seeing in the market is that
[00:22:15]
there's not a lot of volume trading hands at all right now like it's pretty light
[00:22:19]
in that sense likely going to be in this sort of trading hangover phase for like at
[00:22:25]
least a couple more weeks as people get like their stuff together and start
[00:22:29]
figuring out the next next compliance targets
[00:22:31]
As an important highlight, Germany's disclosure deadline is at another time.
[00:22:35]
So that does affect the dynamics a bit.
[00:22:38]
But overall, you can expect at least this month to be relatively slow when it comes to trading.
[00:22:44]
The second element in this picture is,
[00:22:47]
well,
[00:22:47]
2024 GEOs are losing value and we're losing value fast.
[00:22:52]
And as...
[00:22:54]
24 vintage geos become more readily available as solar production kicks in,
[00:22:59]
as we see wind parks do berthing,
[00:23:02]
as we see snow melt and hydro production.
[00:23:06]
25 geos will become more readily available as 24 geos start rapidly expiring.
[00:23:12]
And because of this,
[00:23:13]
you can expect that 24 GOs,
[00:23:16]
you are going to be in trouble if you're still holding them at this point.
[00:23:19]
This is an annually recurring thing.
[00:23:22]
You really shouldn't be holding on to 24 GOs longer than you have to if you have
[00:23:27]
any financial interests in them for selling.
[00:23:30]
If you have only financial interests in terms of buying or holding or having this
[00:23:35]
nice six month grace period,
[00:23:37]
very cool.
[00:23:37]
But if you are in this situation where you're still expecting to sell your 24 geos,
[00:23:42]
it's kind of getting late,
[00:23:43]
you know,
[00:23:43]
like they're expiring actively.
[00:23:45]
Are you addressing real,
[00:23:46]
are there people out there who are actually in that situation or is this kind of
[00:23:49]
just like hypothetical?
[00:23:50]
Oh my God.
[00:23:51]
Every time.
[00:23:52]
Like, I swear.
[00:23:53]
Well, at Soltera, we help a lot of very large customers handle their guarantees of origin.
[00:23:58]
And one of the things that we chronically have seen with many customers is that you
[00:24:02]
finally open up the registry account and you realize that there's like an absurd
[00:24:07]
amount of expired geos from years where like guarantees of origin were worth like
[00:24:12]
six or seven euros.
[00:24:13]
And then you're doing the bath in your head and you're looking at this and going like,
[00:24:16]
wow,
[00:24:16]
this is a half a million dollar graveyard.
[00:24:18]
What am I looking at?
[00:24:19]
Like, it's...
[00:24:20]
It feels so bad.
[00:24:22]
You know,
[00:24:22]
this is ultimately how we help in Soldera is that we make sure everything's handled
[00:24:26]
and sold.
[00:24:27]
Like when you see that this isn't happening in a company and you just open up the
[00:24:31]
accounts and see what's happened before,
[00:24:33]
it kind of like,
[00:24:34]
I don't know,
[00:24:34]
it makes me sad.
[00:24:35]
As a renewable energy producer, you should be getting all the money you should be getting.
[00:24:39]
Yeah, I mean, it's the key to transition after all.
[00:24:42]
Let's talk about forwards then.
[00:24:44]
I think that's a very interesting topic we haven't gotten there.
[00:24:47]
Or is there anything we're missing before that?
[00:24:49]
So big uncertainty when it comes to forwards, obviously.
[00:24:52]
And I think we see this reflected in the prices.
[00:24:54]
Prices, I would say, on the forward curve are historically low right now.
[00:24:59]
they're a bit over a euro the foro premium is still there obviously the market is
[00:25:05]
valuing 26 vintage geos quite a lot higher than 25 like current year geos but since
[00:25:13]
overall prices are relatively low compared to what we've seen in the last couple of
[00:25:18]
years we have seen a lot of market interest in actually locking in these prices on
[00:25:23]
both sides so the liquidity is quite high it's just that prices that are
[00:25:27]
I wouldn't say necessarily inspiring.
[00:25:29]
You know,
[00:25:30]
there is a completely likely scenario where we end up getting into next year and we
[00:25:34]
are at the kind of prices that we're looking at right now.
[00:25:37]
They could also be significantly higher.
[00:25:39]
They could also be a bit lower.
[00:25:41]
I think it's a bit like asymmetric right now in the sense of how much lower can it
[00:25:45]
go compared to how much higher can it go?
[00:25:47]
I don't know how well this is factored into the forward prices right now.
[00:25:51]
It's really a question of every person's ultimate goals and objectives as they're
[00:25:57]
managing their guarantees of origin.
[00:25:59]
It really depends, right?
[00:26:01]
Do you want the stability?
[00:26:02]
Do you want the security of knowing what your geos are going to be worth?
[00:26:05]
Do you want to risk it a bit more and have more ongoing market exposure?
[00:26:09]
that's really a personal question at the end of the day i i think the risks are a
[00:26:13]
bit asymmetric right now in the sense of there's a lot of room up but there doesn't
[00:26:18]
feel like there's a lot of room down currently my feeling about this what i am
[00:26:22]
seeing is that over the last quarter and likely we're going to keep seeing this
[00:26:27]
forward deals will keep making up a very large amount of market transactions this
[00:26:31]
kind of market activity will likely keep going what sort of premium are we looking
[00:26:35]
at right now for forwards
[00:26:37]
Currently off the top of my head, we're looking at now this is very current.
[00:26:41]
And obviously I have to preface every time we talk about prices, it will change tomorrow.
[00:26:45]
Like this is a very relative thing.
[00:26:47]
The market is quite volatile.
[00:26:49]
Spot prices are a bit less than 0.7 euros per megawatt hour when it comes to spot.
[00:26:56]
And it's like a bit above a euro when it comes to forwards.
[00:27:00]
So we are looking at over a 30% premium, 30 something percent premium.
[00:27:04]
It is like a premium.
[00:27:05]
Definitely.
[00:27:06]
But when you look at it in terms of like absolute cents,
[00:27:09]
we're looking at maybe like a 30,
[00:27:11]
40 cents premium per megawatt.
[00:27:13]
So what's our recommendation now?
[00:27:15]
Currently, our recommendation is still locking in some volume.
[00:27:19]
Our current recommendation, our recommendation system is that we either recommend 60% or 30%.
[00:27:25]
Like we don't really get too much more specific on this.
[00:27:29]
And this is essentially based on our understanding of how is the
[00:27:36]
Right now, feeling more towards this 30% than the 60%.
[00:27:40]
I don't think the prices are necessarily very inspiring.
[00:27:44]
But on the other hand,
[00:27:45]
the stability that you can get from it to protect you from the downside is worth exploring.
[00:27:51]
Obviously, can't be generalized as overall financial advice.
[00:27:55]
But our position is there's a lot of room up.
[00:27:59]
There's some room down.
[00:28:00]
But it's very asymmetric in that sense.
[00:28:02]
Yeah, I guess it entirely depends on risk profile, right?
[00:28:05]
I mean,
[00:28:05]
if you're a producer who's,
[00:28:07]
you know,
[00:28:07]
kind of not struggling,
[00:28:08]
but you might not be getting by as easily as others,
[00:28:10]
your risk profile is going to be lower.
[00:28:11]
So...
[00:28:12]
Yeah,
[00:28:13]
and you have to keep in mind,
[00:28:14]
the most important thing for renewable energy producers is cash flow.
[00:28:18]
Like they need to have predictability in their cash flow.
[00:28:21]
They need to understand how the money is going to work out.
[00:28:23]
And having for prices locked in just allows them to do this a bit easier.
[00:28:28]
So I definitely understand the interest in locking in for prices.
[00:28:31]
But liquidity is very much there.
[00:28:33]
Like you could probably lock in whatever volumes you want right now.
[00:28:37]
But on the other hand, again, that inspiring.
[00:28:39]
It's all I'm going to say.
[00:28:40]
Let's jump into the long-term market drivers.
[00:28:43]
Obviously,
[00:28:43]
these are the things that are going to make the market change the most
[00:28:46]
significantly over a long period of time,
[00:28:48]
but they are equally the most speculative.
[00:28:50]
So yeah, let's dive in.
[00:28:52]
I think the first is CSRD scope production.
[00:28:54]
Yeah, most definitely.
[00:28:56]
I think this has been the biggest potential upset in the guarantees of origin market overall.
[00:29:01]
It's just the fact that before it used to be very nice that,
[00:29:06]
hey,
[00:29:06]
you can just depend on the fact that 50,000 companies over the next couple of years,
[00:29:11]
they will have to actively think about how they are disclosing their energy consumption.
[00:29:16]
Where does it come from?
[00:29:17]
What does it do?
[00:29:18]
If the omnibus goes through, which there is, I think, a strong indication that it will,
[00:29:22]
This will push back the clock and likely reduce the amount of companies that have
[00:29:27]
to report this overall from 50 to 10,000.
[00:29:30]
Overall,
[00:29:31]
a sort of bearish element and likely what is depressing the forward prices for
[00:29:37]
guarantees of origin,
[00:29:39]
since it's being factored in that the estimated demand is lower than it was previously.
[00:29:45]
Most likely, it's feeling like it will go through.
[00:29:48]
I guess we will see next time we have a quarterly outlook at the very latest,
[00:29:52]
but this will reduce the amount previously estimated amount of demand from some
[00:29:58]
level down to some new level,
[00:30:01]
which is just lower.
[00:30:02]
So the supply and demand dynamics change because of this.
[00:30:06]
So the scope of companies reduces from 50,000 to 10,000,
[00:30:10]
but what are the sort of scale of those companies within that scope,
[00:30:13]
right?
[00:30:13]
Because you don't just want to immediately assume it's a 5x reduction, right?
[00:30:16]
Because companies are larger.
[00:30:18]
Yes, the requirements will stay around for the largest 10,000 companies.
[00:30:23]
And these are ultimately the ones consuming a big amount of the electricity on the grid.
[00:30:30]
In that sense, this is a sort of long tail situation.
[00:30:33]
I do not believe we are cutting it down by five times.
[00:30:37]
We're likely cutting it down maybe by half of like the expected CSRD consumption or
[00:30:44]
consumption directly driven by CSRD over the next couple of years.
[00:30:48]
And just in terms of timelines, so the package has already been finalized.
[00:30:52]
So anyone who wants to go and sort of estimate how much impact that will have,
[00:30:57]
they can go and check that out.
[00:30:58]
But it still has to go through the legislative process, which could take a few months.
[00:31:01]
Although I'm reading that there are calls to make it fast-tracked so we don't
[00:31:04]
actually know exactly when it will be announced.
[00:31:07]
Yeah,
[00:31:07]
there's also a vote,
[00:31:08]
I believe,
[00:31:09]
happening quite soon to stop the clock,
[00:31:12]
as they say,
[00:31:13]
for new companies getting enrolled into having to do the CSRD reporting.
[00:31:18]
I don't know what the status is with this,
[00:31:20]
but likely that's a really important part of the picture in the short term.
[00:31:24]
But again,
[00:31:25]
when we're talking about long-term drivers,
[00:31:27]
currently,
[00:31:28]
even the threat of CSRD scope getting reduced is having a effect on how for prices
[00:31:36]
are getting modeled.
[00:31:37]
I can't tell you if this is an appropriate estimate or not.
[00:31:42]
It feels like the impact has been quite major.
[00:31:46]
And I guess we will see over the next couple of months if for prices rebound after
[00:31:52]
some more clarity has been created about what exactly is going on.
[00:31:56]
I mean,
[00:31:56]
I guess to take a sort of extra speculative bullish approach,
[00:31:59]
the argument could be made that once they've kind of made this categorization
[00:32:03]
between the large companies and the smaller companies.
[00:32:06]
They then have kind of more potential to implement strategies that might be kind of
[00:32:11]
bullish on the geo market towards the larger companies who can afford to kind of
[00:32:15]
implement those changes without sort of negatively affecting the bulk,
[00:32:18]
who I guess were the reason this kind of got scaled back in the first place.
[00:32:21]
Right.
[00:32:22]
So, I mean, we'll see how it develops.
[00:32:24]
I don't think it's an immediately super bearish thing, kind of just off the bat.
[00:32:27]
We'll have to see how it goes.
[00:32:28]
second major element that is a very interesting thing to keep track of from the
[00:32:34]
sideline is hydrogen so i don't know how much we have talked on this podcast about
[00:32:40]
hydrogen and how it relates to guarantees of origin there's such a thing as green
[00:32:45]
hydrogen production which is essentially hey this hydrogen has been synthesized has
[00:32:50]
been created with electricity from renewable energy sources
[00:32:55]
Now,
[00:32:55]
the European Union has a sort of rulebook for how these kind of claims can be made,
[00:33:01]
but it's currently incredibly strict.
[00:33:03]
Like,
[00:33:03]
you have to have temporal and location matching,
[00:33:06]
so the production device has to be relatively close to the place where you're
[00:33:12]
actually
[00:33:12]
creating the hydrogen it has to be an unsupported electricity has temporal
[00:33:18]
requirements meaning the exact hour that you're consuming the electricity it needs
[00:33:23]
to have been producing the electricity and all of this has created a very high bar
[00:33:28]
to actually get over considering the state of
[00:33:32]
the electricity market when it comes to guarantees of origin,
[00:33:35]
it has created this very strict list of things that are actually quite hard to
[00:33:38]
comply with.
[00:33:39]
Now,
[00:33:39]
there is a push to make this significantly easier to relax these kinds of requirements,
[00:33:45]
which would make it significantly easier to produce green hydrogen.
[00:33:51]
It would lower the compliance barrier to do so,
[00:33:54]
and it would have a major potentially increase in demand for guarantees of origin.
[00:34:00]
Because ultimately, you can have green hydrogen when it's produced from green electricity.
[00:34:06]
I mean, let's hope the hydrogen lobby can have a significant impact here.
[00:34:10]
Because it feels to me like not having this already just kind of undermines the
[00:34:15]
purpose of GEOS within the Renewable Energy Directive,
[00:34:17]
right?
[00:34:18]
It's like you're saying that we have an instrument that allows for trackable energy consumption.
[00:34:22]
And yet in one of the key use cases,
[00:34:25]
which is green hydrogen,
[00:34:25]
you're not allowing it to be implemented.
[00:34:27]
Right.
[00:34:27]
So I don't understand why this is not.
[00:34:29]
Exactly.
[00:34:29]
They are allowing it to be implemented,
[00:34:31]
but the bar is so high that it might as well like not be there.
[00:34:35]
Right.
[00:34:35]
Yeah.
[00:34:36]
It almost seems like they hired some wrong consultants to put those papers together.
[00:34:42]
Because obviously these weren't like geo market players and the people who actually
[00:34:46]
deal with this stuff.
[00:34:47]
The way it's structured and how I read it and all these requirements,
[00:34:52]
it really feels like it's done by carbon market people.
[00:34:55]
And these two things are not the same.
[00:34:57]
They're not the same country.
[00:34:59]
Whoever wrote this and pushed this through, it seems like they were just not energy people.
[00:35:05]
They were carbon people.
[00:35:06]
I'm sorry if they were, but they weren't using the systems we have in place.
[00:35:10]
They were inventing new systems.
[00:35:12]
And that's very bad.
[00:35:15]
we we shouldn't be creating extremely complex systems that just attract consultants
[00:35:20]
and completely destroy the use cases because i spoke with many hydrogen players in
[00:35:25]
the rec market and they said it's just very bad shape like yeah saying you know
[00:35:31]
like uh europe's biggest export is regulation i think this is one of those
[00:35:35]
instances again we we are very
[00:35:37]
very good at putting together arcane sets of rules requiring professional
[00:35:42]
consultants to just go like,
[00:35:44]
ah,
[00:35:44]
well,
[00:35:44]
it says this over here.
[00:35:46]
You can't do that.
[00:35:47]
No, no.
[00:35:47]
It's not even well done rules.
[00:35:49]
Like it doesn't fit into the frameworks we built out in the guarantee of origin framework, which
[00:35:56]
Frankly, it's actually, I would say, pretty good framework.
[00:35:58]
Of course, there's improvements we can make and there always is.
[00:36:01]
But I mean,
[00:36:03]
compared to carbon markets,
[00:36:05]
this is like,
[00:36:06]
you know,
[00:36:07]
iPhone versus like Disney's phone with the cord.
[00:36:10]
You know, there's other comparisons.
[00:36:12]
I fully agree.
[00:36:13]
And,
[00:36:13]
you know,
[00:36:13]
even if you wanted to have this,
[00:36:15]
like,
[00:36:15]
temporality element that,
[00:36:16]
hey,
[00:36:17]
okay,
[00:36:17]
in the same timeframe,
[00:36:18]
well,
[00:36:19]
you know,
[00:36:19]
the guarantee of origin,
[00:36:20]
like,
[00:36:20]
the lowest,
[00:36:21]
like,
[00:36:21]
resolution we have right now is a month.
[00:36:23]
So at least, like, you know, go, like, okay, for now, we'll just go month.
[00:36:27]
When we get hourly geos, we'll think about it.
[00:36:30]
But for now, it's a month.
[00:36:31]
But then instead,
[00:36:32]
you have this,
[00:36:32]
like,
[00:36:33]
no,
[00:36:33]
no,
[00:36:33]
it needs to be trackable down to the exact hour,
[00:36:35]
even though we don't have a mechanism for
[00:36:37]
to do this i don't know it's your problem figure it out like that's kind of it's
[00:36:41]
not reasonable for the state of the infrastructure to support it it's just kind of
[00:36:45]
wish casting some sort of like i would like a system to exist that would handle
[00:36:50]
this and ultimately like we just don't have it i guess like the drive to improve
[00:36:55]
that sort of infrastructure and granularity isn't going to be there unless we have
[00:36:58]
all the market participants who are sort of involved and want to make that push
[00:37:01]
happen so yeah i still think we need to we need to onboard every every sector we
[00:37:05]
can
[00:37:05]
Norway will keep being a topic like in terms of long term like will they join the
[00:37:09]
EU in that case everything will get resolved by just them accepting the actual
[00:37:14]
regulation for guarantees of origin and how they are reported.
[00:37:17]
Right now we're kind of in this like middle in between state that it's very awkward
[00:37:21]
and my hope is that over time it'll get better.
[00:37:24]
We'll see.
[00:37:25]
But they are a big market player in the guarantees of origin market.
[00:37:29]
And at the end of the day, you can't afford to ignore them.
[00:37:31]
You have to figure out what's happening in Norway because it does affect,
[00:37:35]
especially on the supply side,
[00:37:37]
it does affect what's happening.
[00:37:38]
I can't guess I asked you to simplify this in like a super easy way.
[00:37:42]
But could you explain to me,
[00:37:44]
who's kind of relatively new to the guarantee of origin ecosystem,
[00:37:47]
how you have countries like Poland and Romania who are in the EU,
[00:37:50]
but not in the AIB.
[00:37:51]
But then you have countries like Norway,
[00:37:53]
who are kind of like,
[00:37:53]
you know,
[00:37:54]
like these third states who are somehow in the AIB.
[00:37:57]
Like, I can't wrap my head around it.
[00:37:58]
Yeah.
[00:37:59]
So AIB,
[00:38:00]
the association of issuing bodies is a sort of,
[00:38:02]
it's a sort of meta registry,
[00:38:04]
which means that they connect registries between each other.
[00:38:08]
So guarantees of origin from one country can move to another one.
[00:38:11]
You could think about this similarly to how we have in banking, we have Swift.
[00:38:15]
So essentially there's this system where banks communicate with each other.
[00:38:18]
And then, you know, you can do from one bank to another bank to somebody's account.
[00:38:23]
This is the kind of role that the AIB fills.
[00:38:26]
They make sure,
[00:38:27]
like in this example,
[00:38:28]
right,
[00:38:29]
that the banks can communicate and that there's like this single source of truth
[00:38:32]
that both banks can agree.
[00:38:34]
Yes, money has been sent out.
[00:38:36]
Yes, money has been received.
[00:38:38]
All of this is, we're on the same opinion on this whole process.
[00:38:41]
Everything's fine.
[00:38:42]
Now, AIB comes with requirements.
[00:38:45]
It requires that you have implemented the sort of renewable energy directive standards.
[00:38:49]
And Norway has exactly up to that point.
[00:38:52]
Now,
[00:38:52]
why isn't Poland inside VIP is a much better question,
[00:38:56]
and that is actually purely technical.
[00:38:59]
They could join anytime they wanted to.
[00:39:01]
They just don't have the technical capability to get everything connected.
[00:39:05]
They can't integrate with Swift, like that's ultimately the problem here.
[00:39:09]
So they are very challenged in actually getting everything connected exactly to the
[00:39:15]
point where it meets their technical barriers or requirements that they could get in.
[00:39:21]
While Norway is complying up to the point and they have a technical integration,
[00:39:25]
so they get to be inside the island.
[00:39:27]
I didn't know.
[00:39:28]
That's a very interesting to know.
[00:39:30]
If Norway will switch to Graxel, will they just like suddenly have everything they need?
[00:39:34]
You mean Poland?
[00:39:35]
Yes.
[00:39:36]
Yeah.
[00:39:36]
Sorry.
[00:39:36]
Poland.
[00:39:37]
Yeah, yeah, yeah.
[00:39:38]
They would.
[00:39:38]
But,
[00:39:38]
uh,
[00:39:39]
well,
[00:39:39]
as we,
[00:39:40]
I think have discussed before,
[00:39:41]
Poland's like guarantees of origin system is one of the most like arcane,
[00:39:45]
strange places in the renewable energy market right now.
[00:39:48]
I mean, there's one company that manages the registry.
[00:39:51]
There's another company you need to report the numbers to.
[00:39:54]
You can't do it electronically.
[00:39:56]
It needs to be a physical document.
[00:39:57]
There's a lot of like very strange things happening there.
[00:40:00]
I'm sure they're moving in the right direction because they have declared that they
[00:40:04]
want to join the AIB.
[00:40:06]
And I think in the background, there are developments for joining the AIB.
[00:40:11]
But Poland, just like every country, will move at the speed of government.
[00:40:15]
And that means we really don't have a deadline for this.
[00:40:18]
Like it will happen when it happens.
[00:40:20]
By the way,
[00:40:20]
if anybody listening knows any more information about this or is like an expert on
[00:40:23]
the topic,
[00:40:23]
please get in touch with us because we definitely want to dive into that.
[00:40:26]
It's super interesting.
[00:40:28]
Yeah, talk to us about Polish Geo.
[00:40:30]
I actually talked with many producers in Poland and they said they are just
[00:40:34]
currently stacking the Geos on their account and struggling to sell them away.
[00:40:38]
So Poland has a serious liquidity issues currently at...
[00:40:43]
They're trading at a discount to like AIB connected guarantees of origin as well.
[00:40:47]
So it's actually like costing the renewable energy producers of Poland that they're
[00:40:53]
just not able to like get AIB connected.
[00:40:56]
So I think from a government perspective,
[00:40:58]
this is kind of like failing the,
[00:41:00]
you know,
[00:41:00]
goals of what is the registry supposed to do for you.
[00:41:03]
Yeah,
[00:41:03]
but interestingly enough,
[00:41:04]
there is some sort of possibility to use Polish geos in some other AIB countries.
[00:41:11]
I don't know how exactly it works,
[00:41:13]
but the fact is that the prices are very closely correlated only with discount.
[00:41:17]
Yeah, it's called the next domain cancellation.
[00:41:20]
That's actually how everything used to work before the AIB existed.
[00:41:23]
I think the financial equivalent would be something like I write it down in my book
[00:41:28]
that you received money and like the other country goes like,
[00:41:31]
oh,
[00:41:31]
okay,
[00:41:32]
I guess you received money.
[00:41:33]
Sure.
[00:41:33]
Like, you know, but there isn't like the swift in between.
[00:41:37]
It's just somebody sending an envelope of like,
[00:41:39]
I don't know,
[00:41:40]
ask me later for the money,
[00:41:41]
but just make sure that they,
[00:41:43]
you know,
[00:41:43]
have it marked down.
[00:41:44]
Like promissory notes, is that what it was called?
[00:41:46]
Like an archaic banking?
[00:41:46]
Yeah, it kind of feels like a promissory note.
[00:41:49]
Yes,
[00:41:49]
it's full on like,
[00:41:51]
you know,
[00:41:51]
exactly this like correspondence banking kind of like arcane shit,
[00:41:55]
like in the middle.
[00:41:56]
Like this is the kind of thing that used to be very normal in the renewable energy
[00:42:02]
market and is actually normal in,
[00:42:04]
for example,
[00:42:05]
biogas market still x domain cancellations where just in one country they write it
[00:42:09]
down in their own ledger of oh I cancelled it for you but you're not in this
[00:42:13]
country this other country's registry now needs to come look at my registry and go
[00:42:17]
like oh okay I see that I will write it also down in my registry and it's a sort of
[00:42:22]
like it's the medieval version of AIB that's essentially what this is
[00:42:27]
That's how the biomethane and biogas still works, right?
[00:42:30]
Yes.
[00:42:30]
In many places,
[00:42:31]
between many registries,
[00:42:33]
because we don't have the same kind of like AIB nice infrastructure between everything.
[00:42:37]
In many places, that's exactly how this works.
[00:42:39]
Like two registries essentially have to agree with each other.
[00:42:43]
It's like banking before SWIFT, exact same logic.
[00:42:46]
Like we need to have like this bilateral agreement that, okay, what's the procedure here?
[00:42:50]
EU plus AIB.
[00:42:51]
It's very good invention.
[00:42:53]
It's pretty nice.
[00:42:53]
All right.
[00:42:54]
We've got a few more.
[00:42:55]
Well,
[00:42:56]
the second half of long-term market drivers,
[00:42:57]
we've divided into structural demand growth,
[00:43:00]
which I'm really curious how you've done this division,
[00:43:02]
but it'd be great if you could shed some light on that.
[00:43:04]
Yeah.
[00:43:05]
I guess there's like regulatory developments, which is just how are the laws going to move.
[00:43:09]
And the second part of it is what are we seeing companies do?
[00:43:14]
Like where are companies moving?
[00:43:16]
How does everything work out?
[00:43:18]
And part of this is that there's more interest in voluntary using geos,
[00:43:23]
even though you're not forced to.
[00:43:25]
Like there actually has been voluntary growth in using guarantees of origin.
[00:43:29]
There has been like voluntary traction on it.
[00:43:31]
As Denver mentioned before in Iceland, they are using more geos than they did before.
[00:43:36]
There is continuing adoption and we have seen this in the past quarter and there's
[00:43:41]
no reason for us to expect that this will not continue into the future.
[00:43:45]
There's also this element of like just countries doing stuff on their own.
[00:43:48]
One of these things is that the energy intensive industries,
[00:43:52]
they can get discounts for consuming renewable energy and we are seeing new kind of
[00:43:57]
demand sources pop up on that end as well.
[00:44:00]
There are multiple countries where you can see if you consume carbon-free electricity,
[00:44:06]
we will give you a discount essentially on your levies.
[00:44:09]
Like you have to pay us less if you're using green electricity.
[00:44:13]
And that's just kind of an indirect subsidy for buying guarantees of origin ultimately.
[00:44:19]
So that is just a new kind of demand source.
[00:44:22]
We do see this with many kind of labels as well, but these are like government initiatives.
[00:44:28]
Finally, and most importantly, the market still continues being in contango.
[00:44:33]
The belief continues being that the market will be better next year than it is this year.
[00:44:39]
And it does feel like that is the truth.
[00:44:41]
The market state right now,
[00:44:43]
again,
[00:44:44]
also not very inspiring,
[00:44:46]
but we have a lot of things going for us.
[00:44:48]
The supply and demand is actually looking pretty good.
[00:44:51]
Demand keeps growing relatively stable.
[00:44:54]
We're even producing less than last year so far.
[00:44:56]
Overall, everything looks pretty good, but make sure and just wait for the market to catch up.
[00:45:03]
Nice.
[00:45:04]
Well, we've come to the end of our quarterly Outlook wrap up.
[00:45:08]
So that's great.
[00:45:09]
We should do another one of these in Q3, obviously.
[00:45:11]
So I want to keep an eye out for that.
[00:45:13]
But yeah, it was really great to do this.
[00:45:14]
Thanks, Al and Stembo.
[00:45:15]
Any final words?
[00:45:16]
Thanks, Al, for the great overview and lots of work that you and the team have put into it.
[00:45:21]
And I truly, truly appreciate the effort.
[00:45:24]
A lot of insights and hopefully this was interesting for viewers as well.
[00:45:29]
And I'm glad to see people becoming like in the geo markets.
[00:45:32]
You can definitely see the vibe and shift changing where people are starting to
[00:45:36]
demand more unification,
[00:45:38]
clarity,
[00:45:38]
and things starting to basically be more fair and equal everywhere.
[00:45:43]
So those are very, very good things.
[00:45:45]
Nice.
[00:45:47]
Thanks for having me.
[00:45:48]
I hope everybody learned something.
[00:45:51]
I sure feel like I did.
[00:45:53]
It was very nice talking through all of this.
[00:45:56]
Looking forward to doing this in the next quarter as well.
[00:45:59]
Yeah,
[00:45:59]
but echoing Stanford's words,
[00:46:02]
there's clearly a trend of things getting better in terms of expectations,
[00:46:06]
in terms of regulations,
[00:46:07]
in terms of like what we actually expect this market to do for us.
[00:46:11]
And I don't think there's like really a reason to expect that the market will start
[00:46:17]
expecting less suddenly from it.
[00:46:19]
So overall, quite positive.
[00:46:21]
I'll just as a final word mention that.
[00:46:23]
Yeah,
[00:46:23]
about Saldera,
[00:46:24]
like if anybody's looking for pure guarantee of origin automation,
[00:46:29]
cancellation,
[00:46:31]
issuance,
[00:46:31]
sales,
[00:46:32]
everything in a single bundle package,
[00:46:34]
whether it's a producer,
[00:46:36]
trader,
[00:46:36]
it doesn't matter.
[00:46:38]
We offer the platform for guarantees of origin management and it's also free to use.
[00:46:44]
So that's also always very positive.
[00:46:46]
So all the software parts are free.
[00:46:48]
We only take fees from market activities.
[00:46:50]
Nice.
[00:46:51]
Link in the description and catch you in the next one.
[00:46:53]
All right.
[00:46:54]
Thank you so much.
As Q3 unfolds, we analyze the evolving dynamics shaping the European Guarantees of Origin (GO) market while reviewing our Q2 predictions.This episode is based on our full in-app quarterly report available to Soldera members. You can also listen to this episode your favourite podcast platform here.
Looking Back at Q2 and Assessing Our Predictions
→ Market experienced prolonged decline before dramatic recovery in final weeks 📉
→ Prices bottomed at 40 cents before recovering to 80 cents, validating under-supply predictions
→ German June disclosure deadline created delayed market activity separate from March patterns 🇩🇪
We Need To Talk About Norway…
→ Q2 Episode correction: Total Norwegian GO consumption actually decreased year-over-year despite record cancellations.
→ Problematic government behaviour impacting the GO market intensifies 🇳🇴
Critical Supply Dynamics
→ Europe producing 8-9% less renewable energy than last year, creating 50 TWh deficit
→ Nordic hydro reserves normalizing after record-high levels, hot summer predictions threatening further decline ☀️
→ 2024 vintage GOs now in end-of-life phase as traders rotate inventory 🔄
Demand Outlook and Regulatory Shifts
→ CSRD scope reduction from 50,000 to 10,000 companies but targeting largest emitters 📋
→ Hydrogen RFNBO requirement relaxation lobbying could unlock hundreds of TWh demand
→ Corporate sustainability commitments remaining strong despite regulatory changes
→ Forward curve premiums moderating as regulatory uncertainty impacts long-term pricing 📈
Strategic Market Considerations
→ Forward markets showing 50% premiums for 2026 vintage as utilities hedge exposure 📊
→ Record-low oversupply reduction expected to significantly impact market dynamics
→ New government auctions emerging while market fragmentation challenges persist 🆕
→ Cross-border virtual GO accounts on the horizon at Soldera. Watch this space …
As always, stay connected with our quarterly market outlooks to track the GO landscape. Catch our next outlook in Q4!
#GuaranteesOfOrigin #RenewableEnergy #EnergyMarkets #Renewables
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit podcast.soldera.org
🌍 Guarantees of Origin — Building a Market Maker
In this episode of Soldera Markets, Stenver, Al and Ollie from Soldera chat with Koen Andriessen and Chris Myers from Faraday Trading, about what it takes to build a Market Making (MM) operation in the current Guarantee of Origin (GO) market.
This episode delves into:
→ How Faraday transitioned from financial derivatives to GO market making 📊
→ Their passive approach: waiting for counterparties rather than chasing trades
→ Why they focus on AIB grid-connected certificates for sharper pricing
→ How constant trading volume creates effective risk management
→ How Faraday views the market: learn about the MM approach to risk and strategy.
Faraday’s Origin Story:
→ Three co-founders with extensive careers in financial market making
→ Started January 2024 as their first entrepreneurial venture together
→ Saw GO market as less developed compared to efficient financial markets
→ Drew parallels to financial products that became liquid over time
→ Brought MM expertise to a space dominated by back-to-back trading
Soldera Auctions:
→ Learn how Faraday and Soldera work well together
→ Explore how market makers access quality GO supply efficiently
→ Understand how streamlined sourcing strengthens MM liquidity provision
Enjoyed this episode? Sign up for more GO market expertise in your inbox ⬇️
Renewable Producer in GO Markets? Try Soldera ⬇️
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit podcast.soldera.org
Transcript of the episode's discussion between Stenver Jerkku, Al William Tammsaar, Oliver Bonallack, Christopher Meyers, and Koen Andriessen
[00:00:03]
Hey everybody, and welcome back to another episode of the Soldera Markets podcast.
[00:00:08]
Today we're joined by Faraday Trading.
[00:00:10]
So we've got Koen Andriessen and Chris Myers from Faraday.
[00:00:13]
I want to hand over to you guys to do a little introduction about yourselves and
[00:00:17]
tell us about Faraday.
[00:00:18]
Just for the audience, we can say that Faraday are an environmental commodities trader.
[00:00:23]
And obviously,
[00:00:24]
this is a podcast that focuses on the guarantee of origin and renewable energy
[00:00:28]
certificate space.
[00:00:29]
There's going to be a lot to talk about, specifically price action.
[00:00:31]
I think that's what this episode is going to be focusing on.
[00:00:33]
But yeah, over to you guys just to do a little bit of an intro about yourselves.
[00:00:37]
So my name is Kuhn Andries.
[00:00:39]
I'm together with Hide and Christopher, one of the co-founders of Faraday Trading.
[00:00:44]
Our backgrounds are actually in financial markets.
[00:00:47]
And we're kind of the new kid on the blog in terms of the geo market.
[00:00:50]
We started January last year.
[00:00:53]
And now we're quite active in the geospace and getting to be a household name.
[00:01:01]
Anything to add to that, Chris?
[00:01:03]
Yeah,
[00:01:04]
well,
[00:01:04]
basically,
[00:01:04]
I think it's fairly important to highlight that we have an extensive background in
[00:01:10]
market making.
[00:01:11]
So all three of us,
[00:01:13]
our careers have started in the financial industry,
[00:01:15]
mainly focusing on market making financial instruments and derivatives.
[00:01:21]
So an extensive knowledge when it comes down to risk management.
[00:01:26]
to liquidity provision and well because equity markets and financial markets are
[00:01:33]
technologically a little bit more advanced we obviously bring a huge technology
[00:01:38]
knowledge that comes with it so you guys are one of the most active guys i've seen
[00:01:44]
on the market and always very much enjoyed working with you and things move fast
[00:01:48]
get done fast and it's like very to the point so
[00:01:52]
What initially brought you to this market?
[00:01:54]
Why did you decide to open shop with GEOs?
[00:01:58]
I think it's a fascinating story.
[00:02:00]
So,
[00:02:00]
well,
[00:02:00]
effectively,
[00:02:01]
what we saw is the market that we're coming from,
[00:02:04]
the financial market,
[00:02:05]
is,
[00:02:06]
let's say,
[00:02:06]
a bit more developed in that sense compared to the GEO market.
[00:02:10]
You're working already quite efficiently.
[00:02:12]
And what we saw specifically in the geo market,
[00:02:15]
besides that it's,
[00:02:16]
you know,
[00:02:16]
everything renewable is just very interesting because there are a lot of changes
[00:02:20]
happening.
[00:02:20]
It means that there are definitely interesting parts that you can focus on.
[00:02:25]
But what we saw...
[00:02:27]
as our role within the geo market is just a party that you go to for a good price.
[00:02:33]
And, you know, that's it pretty much, right?
[00:02:36]
So everything at the backend is efficient.
[00:02:38]
We try to automate, simulate to you guys as much as possible.
[00:02:42]
So I don't want to do any...
[00:02:45]
stupid work in terms of filling in everything so that's really what we try to do
[00:02:50]
and I think a key difference between us and well a key let's say a strategic point
[00:02:57]
for us is that we're actually rather
[00:02:59]
passive in obtaining flow.
[00:03:02]
So we're more of the approach that we wait for the flow to come to us.
[00:03:06]
So if you want to have a good price or a price in something I can show to you,
[00:03:11]
if you don't have anything to sell,
[00:03:13]
I'm not going to try to call you and convince you to
[00:03:17]
to sell something.
[00:03:18]
That,
[00:03:18]
of course,
[00:03:18]
also means that a big part of the market you don't interact with because some
[00:03:22]
parties just operate the other in a different way.
[00:03:26]
But what we do see is that a lot of producers,
[00:03:28]
large corporates,
[00:03:29]
they appreciate and value our approach.
[00:03:32]
If you,
[00:03:33]
again,
[00:03:33]
if you paralyze it where we were before,
[00:03:35]
is that it's always like how a market works.
[00:03:37]
You have, you know, your top 70% of volume has been traded by your top 10% of kind of people.
[00:03:43]
Nevertheless,
[00:03:44]
it means that the vast scope of people that are using these geos or are using these
[00:03:49]
geos is growing at a rapid pace.
[00:03:52]
And
[00:03:53]
the size of that market is just going to continue growing for the while,
[00:03:57]
at least for the foreseeable future.
[00:03:59]
Well,
[00:03:59]
coming back to your question,
[00:04:00]
what we see,
[00:04:01]
we want to kind of give these people the possibility to find a liquid market.
[00:04:08]
And
[00:04:09]
That's not always the case when the technology isn't there or the marketplace isn't
[00:04:14]
there or it's a bit more obscure,
[00:04:17]
let's say.
[00:04:18]
And I think that's a really good point to make that we want to be this liquidity
[00:04:24]
provider in that space that's out there that you can just reach.
[00:04:27]
No,
[00:04:28]
you get a market,
[00:04:28]
fair market,
[00:04:30]
a firm market and efficient and a quick market without having to make any more
[00:04:36]
noise about it than necessary.
[00:04:38]
How much volumes do you guys move in a year?
[00:04:41]
Because you sort of,
[00:04:43]
I think we actually started roughly around the same time,
[00:04:46]
even if I'm not mistaken,
[00:04:48]
right?
[00:04:49]
You guys had like massive amounts of,
[00:04:51]
like you've always been very efficient from what we've seen on our side,
[00:04:55]
essentially.
[00:04:55]
It's always nice to hear.
[00:04:58]
That's what we aim for.
[00:04:59]
So I can share that last year,
[00:05:02]
which was our first year,
[00:05:03]
we traded a bit north of 10 terawatt hours.
[00:05:07]
And of course, you do have to keep in mind that we started off in January.
[00:05:10]
We're new to the market.
[00:05:12]
It's a bilateral market.
[00:05:14]
So a big chunk of that year is effectively building relationships,
[00:05:18]
you know,
[00:05:19]
doing the KYC,
[00:05:20]
getting onboarding things done.
[00:05:21]
So I can say that,
[00:05:23]
I mean,
[00:05:23]
this year we've definitely surpassed what we traded last year already.
[00:05:27]
And I would expect it to be a multiple of last year's trades.
[00:05:32]
Probably important to highlight is also that we don't do any double counting.
[00:05:36]
So it's not because we trade with A and B that we say we did $10.
[00:05:42]
This is always directly traded with us.
[00:05:44]
We are the counterparty.
[00:05:46]
So people, when they trade, it's one trade.
[00:05:48]
It's not two trades.
[00:05:52]
Yeah, it makes sense.
[00:05:53]
Yeah,
[00:05:54]
I see a lot of numbers with the factor too,
[00:05:57]
if you obviously always count all trades on all sides.
[00:06:00]
But so that's clean, direct traded with us.
[00:06:04]
Nothing, nothing at it.
[00:06:06]
All right.
[00:06:06]
So do you guys have also taken a look at the REC market as well?
[00:06:12]
Or it's mainly been focused on Geo so far?
[00:06:14]
Yeah, mainly focused on the Geo.
[00:06:16]
Really focused on Geo so far.
[00:06:18]
And it's also the case that I would say that we're specifically very sharp.
[00:06:23]
in the more generic GEO, so to say.
[00:06:25]
So of course,
[00:06:27]
if you want to buy,
[00:06:28]
for example,
[00:06:29]
AIB Grid Connected,
[00:06:30]
then we can give you a sharp price.
[00:06:33]
I'm pretty confident.
[00:06:34]
Whereas due to the way that we are set up, if you come for a very specific niche volume,
[00:06:39]
you know, it might be the case that we're not the best price in there.
[00:06:43]
And that's also fine.
[00:06:43]
That's not necessarily our aim to be the best everywhere because,
[00:06:47]
you know,
[00:06:48]
coming from our approach,
[00:06:50]
we really focus being the best in the more generic things in terms of selling and
[00:06:55]
buying specific,
[00:06:56]
of course,
[00:06:56]
is...
[00:06:57]
Not really a problem.
[00:06:58]
It's logical also because it's also the way that product has been set up.
[00:07:03]
You unfortunately have niche pockets where people with very strong convictions want
[00:07:09]
to specifically do certain things.
[00:07:11]
And obviously that comes with a price.
[00:07:13]
And I think most people are aware of that.
[00:07:15]
So that's fine.
[00:07:16]
But our focus today is on the more liquid side of the specter,
[00:07:20]
which then also allows us to take away that
[00:07:23]
you know, the widespread that you might see in other niche pockets.
[00:07:29]
I want to leap on the, you used the word conviction.
[00:07:32]
So you come to the market, you started a trading firm in January 2024.
[00:07:34]
So last year, so you haven't been around for too long.
[00:07:38]
But really when it comes to the digital market and these high liquidity areas like
[00:07:42]
the AIB hub connected,
[00:07:43]
more generic certificates,
[00:07:45]
what drew you to the market besides the sort of,
[00:07:47]
you know,
[00:07:47]
fragmentation and wanting to bring transparency and volumes?
[00:07:50]
Because
[00:07:51]
A lot of people could look at the market in its current state and opinions vary on
[00:07:56]
where it's going.
[00:07:57]
So I'm curious from the standpoint of choosing to start a firm,
[00:08:02]
NGOs specifically,
[00:08:03]
that's something that interests me quite a lot because I imagine you have an
[00:08:07]
opinion either way on the market,
[00:08:09]
right?
[00:08:09]
Well, I mean...
[00:08:11]
Having an opinion on the market,
[00:08:12]
yeah,
[00:08:12]
sure,
[00:08:13]
we have a certain opinion and there are things that you can track,
[00:08:16]
especially in terms of production on the market currently.
[00:08:19]
What drew us to the market as well is just we are coming from a trading background
[00:08:24]
and by nature,
[00:08:25]
traders are people that are quite entrepreneurial,
[00:08:29]
you know,
[00:08:30]
be it that you trade for a firm or be it that you trade for yourself.
[00:08:34]
So we really wanted to give a go.
[00:08:35]
I mean, it's also the first company that I founded or that we founded.
[00:08:39]
I think all three of us is the first one.
[00:08:41]
So it's also just a really nice challenge to see.
[00:08:44]
And especially in a market that,
[00:08:46]
as I said,
[00:08:47]
you know,
[00:08:47]
I think the renewables market is really booming,
[00:08:49]
specifically the last 10 years or so.
[00:08:52]
And it's just a market that I'd like to be in, to see what is happening there, to see...
[00:08:57]
how we can actually add value to the market by being a market maker slash liquidity
[00:09:03]
provider,
[00:09:04]
right?
[00:09:04]
Which is not something I would say that's standard.
[00:09:07]
Like a lot of people trade back to back.
[00:09:09]
So I think, yeah, those things all add up to...
[00:09:14]
the fact that there is a space for us in this market right where we can start and
[00:09:20]
and trade from and that's also what we've seen and also the people that we trade
[00:09:24]
with what we typically hear is that we are good at what we do we kind of make true
[00:09:32]
on our promises in terms of
[00:09:34]
You come for a price, I give you a price, and the rest is kind of hassle-free, right?
[00:09:38]
We deliver on time, we pay in time.
[00:09:40]
The contracting is done fairly quickly.
[00:09:42]
Typically, we send you the contract the same day, if not, you know, in the next few days.
[00:09:48]
So the KYC process is all, you know, somewhat automated as far as you can do that.
[00:09:53]
so it's really there that we saw space for a party like us in this market that made
[00:09:59]
us enter it what's interesting though what's something that i'd like to talk to you
[00:10:02]
about is that one thing that kind of surprise is not the right word because it is a
[00:10:08]
european market of course
[00:10:09]
But you have all these unique registries for every single country,
[00:10:17]
whereas that's not the case for all of the environmental products.
[00:10:20]
But I believe you guys have somewhat of a,
[00:10:23]
I'm not sure if solution is the right word,
[00:10:25]
but a way to make it easier,
[00:10:27]
I believe,
[00:10:27]
correct?
[00:10:27]
Yeah, exactly.
[00:10:28]
Like tell about our side,
[00:10:30]
we got into this market because we noticed 30% of producers are not selling their
[00:10:34]
geos,
[00:10:35]
their residual mix.
[00:10:36]
Right.
[00:10:37]
And when we started looking into it, we understood it's just, there's too small.
[00:10:42]
And like you just mentioned,
[00:10:43]
like the local fragmentation,
[00:10:46]
the bureaucracy of the registries is quite insane.
[00:10:50]
So we thought we'll just build a solution to automate all of that.
[00:10:53]
Right.
[00:10:54]
Why not?
[00:10:55]
And actually,
[00:10:55]
the story goes that the first geo deal we ever did was that I went to my friend's
[00:11:00]
place who has a solar panel on its roof.
[00:11:03]
I had a wine bottle with me and I was like, why aren't you selling these things?
[00:11:07]
And he was like, I didn't even know about it.
[00:11:09]
So then we sat down with Dal with him and drank the wine and filled out all the
[00:11:13]
forms for him and let him sign on the spot.
[00:11:16]
And that was our first, actually, how we got into that market.
[00:11:21]
I mean,
[00:11:21]
we've been in carbon markets for 10 years before,
[00:11:24]
but we were very interested how this one works.
[00:11:27]
And what we found,
[00:11:28]
it's a lot of things we liked and made the entire pivot from carbon market to
[00:11:33]
renewable energy from that point.
[00:11:35]
All these government registries we discovered, they're pretty much the same.
[00:11:39]
They're just a lot of overhead, a lot of compliance.
[00:11:41]
They don't have APIs.
[00:11:43]
They're very annoying to work with.
[00:11:45]
And we were like, but we're in the age of AI.
[00:11:49]
We can automate the compliance with AI.
[00:11:51]
We can integrate with registries, even if they don't provide APIs, thanks to our technologies.
[00:11:56]
And we've been building like this virtual layer on top of the local registries.
[00:12:03]
So everybody will be able to
[00:12:06]
use these different government registries everywhere without them having to need
[00:12:11]
their own accounts.
[00:12:13]
So we've had select partners who've been using this access manually essentially,
[00:12:19]
but very soon we want to offer it out there.
[00:12:22]
Somewhere around the end of summer,
[00:12:25]
we're going to approach you guys and say,
[00:12:26]
hey,
[00:12:27]
here's all our registries.
[00:12:28]
Here's where we're integrated.
[00:12:29]
Do you want to use these different countries?
[00:12:32]
And our goal is to eventually build sort of like,
[00:12:35]
I don't know if you heard the term neo-bank,
[00:12:37]
right?
[00:12:37]
So like all these Revolut,
[00:12:39]
Wise and so on,
[00:12:41]
they offer you their bank account and you can send money and you do whatever you
[00:12:46]
want in their app.
[00:12:47]
But underneath, there's a very traditional bank they're basically built on top of.
[00:12:52]
So we're kind of doing the same for government registries.
[00:12:54]
And our goal is to make sure that you can trade, cancel, use it in any country you want.
[00:13:02]
And you don't need to go through all this local compliance pain.
[00:13:06]
You just can...
[00:13:08]
Use our platform,
[00:13:09]
send geos to our virtual accounts and cancel them,
[00:13:13]
trade them,
[00:13:14]
whatever you want.
[00:13:15]
Avoid the import export fees,
[00:13:16]
keep the geos in the local country and just pay them when you finally know exactly
[00:13:21]
how much you're going to have to send to your buyer.
[00:13:26]
I'm keen to learn more about it when the product is finished.
[00:13:31]
And just to come back on the way that you guys started,
[00:13:34]
so how much new volume have you brought to the market in terms of geos?
[00:13:38]
It's hard to say exactly because we haven't kept that specific KPI in mind.
[00:13:45]
And we do have existing customers and big utilities who have approached us and
[00:13:51]
joined us as well.
[00:13:53]
But from gut feeling,
[00:13:55]
it's about one third is completely new volumes that have never traded Geos before.
[00:14:01]
We currently manage like 1.5 derawatt hours.
[00:14:04]
So a third of that around 500 gigawatt hours is definitely new volumes.
[00:14:10]
And that's growing very fast.
[00:14:13]
The interesting thing about that,
[00:14:14]
though,
[00:14:15]
is what we discovered is that a lot of countries are breaking AIB rules.
[00:14:21]
AIB directive, the Red 2 directive, I think, specifically says... Red 3, actually.
[00:14:28]
Red 3, okay.
[00:14:29]
specifically says that the producers smaller than 50 kilowatts should be able to
[00:14:37]
have easier registration flow for their devices.
[00:14:41]
Many countries make it completely impossible for them to register.
[00:14:45]
Sweden, in fact, recently just started doing change to even ban them.
[00:14:49]
Like they don't want to deal with them because they say it's too much work.
[00:14:53]
So basically what's sort of
[00:14:56]
stunting our impact a bit is that governments are not following EU directives or
[00:15:03]
the registries rather.
[00:15:05]
So in many countries, we can only focus on 100 kilowatts or above or 1 megawatt or above.
[00:15:12]
In Slovenia, you actually have to pay 15 grand if you want to export your geos.
[00:15:19]
It's crazy, right?
[00:15:20]
So in Lithuania, they have laws, a prosumer law, which...
[00:15:26]
I won't get into too much details,
[00:15:27]
but basically it excludes almost everybody that's under like 500 kilowatts.
[00:15:33]
In Finland,
[00:15:35]
you have to pay basically 500 euros base fee a year,
[00:15:39]
which obviously excludes anybody that's like under one megawatt already.
[00:15:43]
In addition, you have to get like an audit is an extra couple of hundred euros.
[00:15:51]
That was included in that.
[00:15:53]
Because I think it's like 250 plus audit or something.
[00:15:56]
Yeah, exactly.
[00:15:57]
So per device, you know, you rack up fees.
[00:16:00]
At the same time, we see a really similar thing in...
[00:16:03]
Latvia,
[00:16:04]
hopefully we've managed to cause some changes there,
[00:16:06]
but there for a while,
[00:16:09]
it's been one auditor can only do audits.
[00:16:12]
And then everybody has to get audited every five years from this one auditor who
[00:16:16]
basically gets to set whatever,
[00:16:19]
you know,
[00:16:20]
price they want for it.
[00:16:22]
So it's been kind of confusing all around.
[00:16:25]
You look at this patchwork and you look at the renewable energy directive and you
[00:16:28]
think everything's going to be relatively standardized.
[00:16:31]
But once you start getting into the details, things start making less and less sense.
[00:16:35]
I mean,
[00:16:36]
you know,
[00:16:37]
there are countries where there's essentially like a guy with an Excel sheet
[00:16:41]
managing guarantees of origin for the country,
[00:16:43]
right?
[00:16:43]
Yes.
[00:16:44]
Yeah.
[00:16:44]
And the communication around it, the marketing around it is also done very poorly, I would say.
[00:16:49]
I mean,
[00:16:50]
we all know in most countries,
[00:16:52]
people are incentivized to put solar panels on their roofs,
[00:16:58]
to have home batteries,
[00:17:00]
et cetera,
[00:17:00]
et cetera.
[00:17:01]
But communication around this unbundling of the energy and then the certificate
[00:17:07]
itself seems to have very,
[00:17:10]
very,
[00:17:10]
very low penetration within,
[00:17:12]
you know,
[00:17:14]
households I would say and smaller companies and obviously with levels that we see
[00:17:19]
now it's maybe not the most important thing but it would be so much easier if it
[00:17:24]
would be very clear cut and transparent and obviously a bit more unified because
[00:17:29]
this is still Europe and it seems that in many ways we are still not one.
[00:17:35]
It's worth bringing the conversation back to,
[00:17:36]
you know,
[00:17:37]
how the market is structured all together,
[00:17:38]
right?
[00:17:39]
And you have AIB,
[00:17:40]
which is a non-profit based in Belgium or Netherlands,
[00:17:43]
I'm not quite sure which.
[00:17:44]
But essentially,
[00:17:45]
right,
[00:17:45]
the EU doesn't prescribe any idea of how these things should work other than a
[00:17:50]
high-level sort of technical mandate.
[00:17:51]
And then the AIB's role is to find a way to integrate that from a technical perspective.
[00:17:55]
And that's how the EECS framework came around.
[00:17:58]
But, you know, like...
[00:18:00]
There isn't really a responsibility,
[00:18:03]
it feels like,
[00:18:03]
for anybody to take the lead on marketing or take the lead on making this thing
[00:18:08]
feel commercially well understood.
[00:18:10]
And I think that's one of the main problems.
[00:18:13]
And you can link that back to the accessibility of the market as well because the
[00:18:18]
AIB don't have really any enforcement mechanism besides barring people from being
[00:18:22]
in the AIB themselves.
[00:18:23]
So you have the EECS rules saying that
[00:18:27]
well, members need to make it cost effective for market participants.
[00:18:31]
But then they also say,
[00:18:32]
well,
[00:18:33]
they should be allowed to charge whatever they want to be commercially viable.
[00:18:36]
So it's like, you know, there is a constant balancing act.
[00:18:40]
And I guess,
[00:18:41]
yeah,
[00:18:41]
that's just the case with anything that's top down government driven because
[00:18:45]
they're never going to have user experience at the forefront of the equation.
[00:18:49]
Speaking of marketing, like if you go outside of the geo bubble,
[00:18:54]
Anybody you speak about and you explain what are geos,
[00:18:58]
they immediately think they're carbon credits.
[00:19:00]
And that's actually quite a big issue because carbon credits reputation,
[00:19:05]
as we know,
[00:19:06]
regardless of what carbon people say,
[00:19:08]
is horrible.
[00:19:09]
The public doesn't actually,
[00:19:11]
I don't know anybody,
[00:19:12]
honestly,
[00:19:13]
from outside of carbon world that supports it.
[00:19:16]
And it's like people are very, very skeptical of its impact.
[00:19:20]
And there's a lot of bad stuff about it.
[00:19:22]
So the first thing you always need to explain that, oh, no, these are not carbon greatest.
[00:19:25]
These are actually regulated.
[00:19:27]
But I distinctly remember one presentation I did on stage here in Estonia.
[00:19:34]
And I was basically talking about Soldera.
[00:19:39]
And in front of me was the Estonian Environmental Ministry Committee, essentially.
[00:19:44]
The guys that should know what are geos, they made the laws about geos.
[00:19:49]
So they were at least included there.
[00:19:51]
And then at the end of the presentation, I got three questions.
[00:19:56]
And all three were like, how do you ensure that these are trustworthy?
[00:20:01]
And I'm like, well, do you trust your local DSO or not?
[00:20:05]
I basically explained to her three times that these are not carbon credits.
[00:20:09]
These are for tracking electricity.
[00:20:12]
And it's completely different.
[00:20:15]
There's nothing in common there.
[00:20:17]
And it's your own grid provider that gives out these certificates and consumes them.
[00:20:23]
It's very logical, actually.
[00:20:24]
Very simple.
[00:20:25]
One megawatt hour goes in.
[00:20:26]
That's one certificate.
[00:20:28]
One megawatt hour goes out.
[00:20:29]
That's using one certificate.
[00:20:31]
We're not the party that ensures the quality.
[00:20:34]
That's the TSO, right?
[00:20:36]
I think that's actually one thing that's very interesting.
[00:20:38]
An interesting difference between financial markets, where you would just trade stocks versus...
[00:20:43]
the geo market where you can actually look at the geo because it's a tracking
[00:20:49]
mechanism nothing else pretty much than that and you can actually zoom in on the
[00:20:54]
specific power plant that produced it and I think what you see being lobbied for as
[00:21:00]
well is to go to a more granular approach probably also will help
[00:21:05]
I think in terms of the geo adoption and the story and the marketing part that you
[00:21:10]
can say about the geos.
[00:21:11]
Of course, the more granular you get, the more it makes intuitive sense.
[00:21:16]
You know, we don't have to have the discussion how granular is good enough, right?
[00:21:21]
I don't think we're going to go to 15-minute geos.
[00:21:24]
That's pretty much as granular as the power market gets currently.
[00:21:27]
But,
[00:21:27]
you know,
[00:21:28]
steps towards a more granular approach will definitely help the marketing of the
[00:21:32]
product,
[00:21:33]
I'd say.
[00:21:33]
I think we just all agree that the up to two hour window is probably not the
[00:21:39]
correct granularity we have right now.
[00:21:41]
Well, in Estonia, we essentially have the system of where you have this 12 month trading period.
[00:21:46]
And after that 12 month trading period,
[00:21:48]
you also have a six month hold period where you can still use it.
[00:21:51]
And that makes it so you can...
[00:21:52]
Like how a very long timeline where you actually,
[00:21:56]
you know,
[00:21:57]
can use it for canceling against the consumption of electricity.
[00:22:01]
And that has never made intuitive sense to us of like why it doesn't work that way.
[00:22:06]
While you do see governments moving at least towards this logic of you produced it
[00:22:12]
in this year,
[00:22:13]
you consume it in this year.
[00:22:15]
I think that makes a lot of intuitive sense at the bare minimum.
[00:22:19]
and even less than a year.
[00:22:21]
But wrecks are half and half, right?
[00:22:23]
So the international wrecks.
[00:22:24]
So you can say that the international wrecks are somewhat ahead of the curve on
[00:22:30]
that one,
[00:22:31]
even,
[00:22:32]
if that makes sense.
[00:22:33]
I guess one of the big...
[00:22:35]
Now that we're on the granularity topic,
[00:22:37]
I mean,
[00:22:37]
the market participants in general are very much against the granular geos because,
[00:22:44]
well,
[00:22:44]
mostly because they don't want to change their business,
[00:22:46]
right?
[00:22:46]
And it's very simple right now.
[00:22:48]
And more, I mean, just...
[00:22:50]
Again,
[00:22:50]
adds another layer of complexity to a market where a lot of people who are using
[00:22:55]
these products are where it's not their main job.
[00:22:59]
So it's an admin layer on top of the total package.
[00:23:05]
And if you're obviously going to have to incentivize to do even more around all
[00:23:10]
this,
[00:23:11]
although it would be good for...
[00:23:13]
the environment.
[00:23:14]
It's the ask, I think, to be very frank.
[00:23:16]
We need to automate it and make it simpler.
[00:23:19]
And this is the other side of it, right?
[00:23:21]
Why is this still so difficult?
[00:23:24]
And how can it not just be,
[00:23:26]
again,
[00:23:26]
as we said,
[00:23:27]
one registry,
[00:23:27]
everything goes into one,
[00:23:29]
you know,
[00:23:29]
simplify things.
[00:23:31]
For years in the financial industry,
[00:23:32]
you've had financial products that were misused by the players on the streets,
[00:23:38]
mainly because of the granularity,
[00:23:40]
because there was this
[00:23:42]
you know, difficulty around it.
[00:23:44]
And the second you take those difficulties away,
[00:23:46]
well,
[00:23:47]
you suddenly see loads more volume,
[00:23:50]
a lot more players,
[00:23:51]
and it becomes a lot more liquid and a lot tighter.
[00:23:54]
So that is the big argument often brought up against granularity.
[00:23:58]
Like, how do you ensure liquidity?
[00:24:00]
And you guys being marketplace makers would be fascinating to hear your thoughts on it.
[00:24:05]
Well, yes, data.
[00:24:06]
Speaking from other markets,
[00:24:07]
you basically have some automated trading tools essentially to manage,
[00:24:11]
let's say,
[00:24:12]
a 15-minute window or one-hour window.
[00:24:14]
So the power market exists.
[00:24:16]
The geos are issued based on the power that is produced.
[00:24:20]
So effectively, all the data is there, right?
[00:24:22]
So if you go towards a more granular approach,
[00:24:25]
then it would just mean that the registries have to add more data.
[00:24:28]
And from us as market participants,
[00:24:30]
It means that we have to digest the data.
[00:24:33]
Digesting data,
[00:24:34]
I would say,
[00:24:35]
being automated,
[00:24:36]
doing things efficient,
[00:24:37]
is kind of up our alley in that sense.
[00:24:40]
But do you guys see that there will be liquidity issues with more granular markets
[00:24:45]
or it actually will just force evolving of the existing plot layers,
[00:24:49]
essentially?
[00:24:50]
Well,
[00:24:50]
I think the more granular approach,
[00:24:53]
what would happen is that it would actually help more renewable energy at the point
[00:24:59]
that there is not enough of it.
[00:25:00]
So you would get very large price differences, like in a power market.
[00:25:05]
Of course, the GO will never be worth less than zero.
[00:25:08]
But effectively,
[00:25:09]
when the sun shines in the Netherlands,
[00:25:11]
the power price dies very quickly below zero because there's plenty of it.
[00:25:16]
How nice is it that those GOs will be virtually worthless,
[00:25:21]
meaning that you actually stimulate the use of GOs and renewable energy,
[00:25:25]
additional renewable energy at times when it's actually not there.
[00:25:29]
And it can be,
[00:25:31]
obviously it won't be solar here,
[00:25:32]
but maybe putting a battery in between then suddenly becomes a little bit more
[00:25:35]
viable.
[00:25:36]
Having said that though,
[00:25:37]
currently,
[00:25:38]
I mean,
[00:25:38]
as is,
[00:25:39]
the GOs are just a small part of the power price that companies pay.
[00:25:43]
Like if I pay 70 euros per megawatt hour and my GO is worth 75 cents,
[00:25:48]
let's say a euro,
[00:25:50]
what does it really add in terms of making a decision whether or not to invest in a
[00:25:54]
new wind plant?
[00:25:55]
Yeah, probably doesn't have a very big impact.
[00:25:57]
The Landesweekern from Iceland did put up a surprising statistic,
[00:26:02]
though,
[00:26:02]
that 7% of their revenues came from geos.
[00:26:06]
That was very surprising for me.
[00:26:07]
They probably made some good trades there, right?
[00:26:10]
I would assume so.
[00:26:10]
I wasn't familiar with that number, but it sounds pretty good.
[00:26:15]
Or they don't make enough of power.
[00:26:17]
But I haven't made enough of that number, so I can't really comment too much about it.
[00:26:20]
Yeah,
[00:26:21]
the granular geos are definitely...
[00:26:24]
I'm interested,
[00:26:25]
do you have any gut feeling yourself when we'll start getting these things actually
[00:26:31]
happening?
[00:26:32]
That's the European Union, right?
[00:26:34]
Those things are decided from the European Commission.
[00:26:37]
So, no.
[00:26:39]
It's a short answer.
[00:26:41]
I'm not sure how long it will take for any changes to take place.
[00:26:45]
No.
[00:26:45]
And on the other side, obviously it sounds so logical.
[00:26:48]
You have all the data.
[00:26:49]
It is there.
[00:26:49]
It shouldn't be that difficult, blah, blah, blah, blah, blah, blah.
[00:26:52]
But in the end,
[00:26:53]
as Kuhn mentioned,
[00:26:54]
rightly so,
[00:26:55]
is that it will have implementations on pricings around these moments when there is
[00:27:00]
plenty and moments when there's not enough,
[00:27:02]
making it a lot more variable,
[00:27:04]
potentially attracting a lot more people who might speculate.
[00:27:07]
That's one.
[00:27:08]
Second part of it is that...
[00:27:10]
I think it's part of the balancing exercise that this whole market is doing between
[00:27:16]
the old style non-renewable versus today the energy mix with a lot of renewable and
[00:27:23]
planting batteries everywhere and it's
[00:27:27]
It's also, it takes time.
[00:27:28]
It's not something you can just,
[00:27:30]
again,
[00:27:31]
it's not a financial public that you just launch and say,
[00:27:33]
okay,
[00:27:33]
here we go,
[00:27:34]
here it is,
[00:27:34]
and let's make it.
[00:27:35]
No, it's physical construction.
[00:27:38]
I think Europe in that point of view is always slow, don't get me wrong.
[00:27:44]
But in this case,
[00:27:45]
it's maybe not always so wrong to do it step by step instead of just saying,
[00:27:50]
as of tomorrow,
[00:27:51]
we could do it.
[00:27:52]
What will the implementation be?
[00:27:55]
Maybe there will be a lot more focus on the geo, I think, at that point.
[00:27:58]
It could be really swinging about.
[00:27:59]
Yeah, well, you always have to.
[00:28:01]
If you invent the phone, you can't start from iPhone.
[00:28:04]
You have to start from Nokia, right?
[00:28:06]
And even earlier.
[00:28:07]
So things have to come step by step.
[00:28:10]
And I think geos are, in general, like in a...
[00:28:15]
You know,
[00:28:15]
there's still a young instrument,
[00:28:17]
like they only got regulated like a bit more than five years ago.
[00:28:21]
So, so with the AIB.
[00:28:23]
Same goes for, you know, electric cars, you know, it's infrastructure.
[00:28:27]
Things have to,
[00:28:28]
you know,
[00:28:28]
you can,
[00:28:28]
you can claim that everybody needs to drive electric fine,
[00:28:31]
but we're going to produce all the electricity.
[00:28:33]
Where are these cars going to charge?
[00:28:35]
What's the technology behind it?
[00:28:37]
How long will they last?
[00:28:37]
I mean, there's loads of questions that come into play.
[00:28:39]
I think the ultimate goal,
[00:28:40]
I think we agree there is that grant granted more granular prices and.
[00:28:45]
You know,
[00:28:45]
shorter windows will be beneficial and helpful for people who really want to be
[00:28:50]
very specific and balance it all out.
[00:28:53]
I mean, there's a commitment that a lot of companies do, right?
[00:28:56]
A lot of commitments around, we want to be green, but we don't want to be legally green.
[00:29:01]
We just want to be real green.
[00:29:03]
We want to have either the windows on site.
[00:29:05]
We want to have the storage of our green PVs on site with batteries.
[00:29:10]
We're replenishing our total fleet,
[00:29:13]
and that needs to be able to load up on all our different venues.
[00:29:17]
So the wheels are in motion, but might not be for tomorrow.
[00:29:22]
Plus, it brings more volatility to the market as well, which is good for getting more actors.
[00:29:29]
It's not bad, it's real, right?
[00:29:31]
Volatility is real.
[00:29:32]
And it's just like players like Faraday,
[00:29:35]
who are market makers,
[00:29:37]
who try to balance out these kind of irregularities.
[00:29:44]
Honestly, I think people that think volatility is bad don't understand how markets work.
[00:29:48]
Yeah.
[00:29:50]
And it brings it back to us, right?
[00:29:52]
I mean, the question that Ollie asked in the beginning is what triggers you in such a market?
[00:29:57]
Well,
[00:29:57]
what does trigger us is that you've got days where prices go up 35%,
[00:30:03]
40%,
[00:30:03]
back down 25%,
[00:30:04]
30%,
[00:30:04]
and then end up pretty much flat somewhere.
[00:30:08]
And very often what we feel, it comes from lack of people who are willing to make markets
[00:30:16]
And that kind of pushes things and it pushes it quite extensively, right?
[00:30:20]
So if you're managing a portfolio of GOs as an energy producer and you suddenly up
[00:30:25]
35% on the day and then you go for lunch and you come back and you realize you're
[00:30:29]
down five.
[00:30:30]
I mean,
[00:30:31]
don't get me wrong,
[00:30:31]
it doesn't move that quickly in their minds either,
[00:30:34]
but it's cool to have a player who's there to give you markets and actually
[00:30:39]
tradable markets,
[00:30:40]
prices that are fun and that you can,
[00:30:42]
you know,
[00:30:44]
lean on in case you say actually I want to capitalize on that move and one or two
[00:30:50]
days later maybe move back in so it kind of as an investment tool and also as a
[00:30:54]
hedging tool towards larger institutions we seem to be quite favorable when it
[00:31:00]
comes down to that
[00:31:02]
Offset some of that risk you're holding.
[00:31:04]
Take back on some of that risk if you're willing.
[00:31:07]
Instead of the discussions that we sometimes have with people is, oh, we have a view.
[00:31:12]
It's going to go somewhere there.
[00:31:14]
And if it goes there, then I'll do that.
[00:31:16]
I'm like, okay, but that means you're not moving for six to eight months probably.
[00:31:20]
Oh, yeah.
[00:31:21]
Okay.
[00:31:22]
How about all the other moves that are happening at the time?
[00:31:26]
Oh, well, we have a strategy it's called then.
[00:31:30]
Well,
[00:31:30]
we're very keen to interact with those strategies and offset some of that risk and
[00:31:37]
take on some of that risk when you feel like it.
[00:31:40]
And instead of having to,
[00:31:41]
you know,
[00:31:42]
feel like you're pushing your product to another guy who's then going to hold on
[00:31:46]
for it forever.
[00:31:47]
That's just not us.
[00:31:48]
Speaking of which, what's your view on the market?
[00:31:51]
That's a good point, right?
[00:31:52]
We have this very,
[00:31:54]
very sweet spot that means that we don't really have to worry too much where it's
[00:32:00]
going.
[00:32:01]
If it dries up, that's a different story.
[00:32:03]
For us, it's the interaction, it's the trading, the constant trading we do all day long.
[00:32:09]
That's what makes our risk model, let's put it that way, efficient.
[00:32:14]
And the more we trade, the more it becomes efficient.
[00:32:17]
It would be,
[00:32:18]
I would say,
[00:32:19]
quite dangerous to say if you take one huge view and act upon that or only that,
[00:32:25]
because I think it's the way to get burned.
[00:32:28]
We feel like the more we can attract people to trade with us,
[00:32:32]
the more that we have a sensation or a feeling of where the market is going at that time.
[00:32:37]
And that will influence the way we would potentially trade.
[00:32:41]
So to generically say, for example, in six months' time, we'll be at two euros again.
[00:32:47]
Some of those discussions we've had with some people at some of the meetings that we've had.
[00:32:53]
It's fine.
[00:32:53]
There needs to be a market.
[00:32:55]
Everybody needs to take on a view.
[00:32:57]
But I think for Faraday,
[00:33:00]
it's a bit precautious to say,
[00:33:03]
well,
[00:33:03]
we're only going to trade one side or one way or one direction.
[00:33:06]
Well, you're a market maker, right?
[00:33:07]
Your main thing is volumes, basically.
[00:33:10]
Somebody told me that geos on average are traded around seven times before they get
[00:33:16]
to cancellation.
[00:33:18]
Do you have any data points on that front?
[00:33:21]
Sounds like new data to me.
[00:33:22]
You can see from the AIB data that bring out every source and how often the geo is transferred.
[00:33:28]
I don't know the exact number by heart, but it can very well be the case.
[00:33:33]
So what you do see is that there are more people active in the market and there's
[00:33:37]
more trading happening.
[00:33:39]
Making the market, you would assume, more efficient as well.
[00:33:43]
Yeah, absolutely.
[00:33:44]
And what is your view on the market?
[00:33:46]
So one of the things that we historically have been seeing is last year,
[00:33:50]
there was quite a significant increase in supply.
[00:33:53]
Well, we've been seeing this last couple of years, but it's been building up.
[00:33:57]
So there's a relatively high amount of just supply looking for a home, essentially.
[00:34:04]
What we do see this year,
[00:34:06]
the counter trend to this is just the fact that so far renewable energy production
[00:34:11]
actually in Europe is down.
[00:34:12]
So we're seeing that affect the incoming supply.
[00:34:15]
The other thing that we're seeing is that demand is still growing.
[00:34:19]
So overall, we're quite optimistic on the supply and demand dynamics right now.
[00:34:23]
Do you have any numbers?
[00:34:24]
Well,
[00:34:26]
I've seen a couple of estimates,
[00:34:28]
trying to estimate the whole year of how this is going to play out.
[00:34:31]
The numbers that we are currently seeing is somewhere between 60 and 80 terawatt
[00:34:39]
hours of less production than last year.
[00:34:42]
And in addition to that, an estimated growth of at least 50 terawatt hours of demand.
[00:34:47]
So those two things together,
[00:34:49]
if you consider that in the bigger picture of there's around 700 something terawatt
[00:34:55]
hours of float essentially in the market,
[00:34:57]
it's a pretty significant chunk of that.
[00:35:00]
I'll be very curious,
[00:35:01]
you know,
[00:35:01]
to compare actually the production numbers that you have,
[00:35:04]
because looking at Anto ourselves,
[00:35:06]
we don't really estimate such a big drop in volume this year.
[00:35:10]
But where I do agree with you is that there is quite a large amount of geo overhang
[00:35:15]
at the moment that essentially will supply the market for some time to come,
[00:35:21]
I'd say.
[00:35:21]
Because if you're talking about 400 to 500 terawatt hours that are currently...
[00:35:28]
left or looking for a home,
[00:35:29]
as you said,
[00:35:30]
Al,
[00:35:30]
you know,
[00:35:30]
there's pretty much half a year's production,
[00:35:33]
roughly.
[00:35:34]
And, you know, a bit more than that, more than half a year's demand, right?
[00:35:38]
So it's interesting to see how that develops and at what point in time,
[00:35:43]
you know,
[00:35:43]
of course,
[00:35:43]
if a trend continues that there's more demand than maybe in,
[00:35:47]
you know,
[00:35:48]
X years from now,
[00:35:49]
you will see a bit more of a balanced market that effectively demand chips away a
[00:35:54]
little bit of that supply.
[00:35:56]
Then again,
[00:35:56]
looking at the targets of the European Union in terms of the amount of renewable
[00:36:01]
energy,
[00:36:02]
the projects that are still ongoing and just the sheer amount of extra supply that
[00:36:08]
will become available every year,
[00:36:09]
especially solar,
[00:36:10]
I believe that's a really big increase.
[00:36:12]
So it's interesting to see how it develops in the next couple of years.
[00:36:15]
And solar especially,
[00:36:16]
I find like really interesting as a case,
[00:36:19]
since even though we do see more production coming online,
[00:36:22]
the solar market feels like it's in this awkward place where the sun is shining and
[00:36:27]
everything looks great,
[00:36:28]
then prices have a tendency of being close to zero,
[00:36:31]
if not negative.
[00:36:33]
So the feeling is that we do also see some curtailment and some cannibalization come with this.
[00:36:38]
So essentially,
[00:36:41]
it really depends on the area,
[00:36:42]
but there are areas in Europe where you can add more solar panels.
[00:36:46]
It does not necessarily translate into more energy production necessarily anymore.
[00:36:51]
That's fair.
[00:36:52]
Did I hear correctly, Al?
[00:36:53]
You said there's 700 terawatt hours over...
[00:36:57]
I think it's between 5% and 7% roughly.
[00:37:00]
It fluctuates.
[00:37:02]
And there's a methodological difference as well.
[00:37:05]
So one way you can look at it is people can also be holding supply.
[00:37:10]
Essentially,
[00:37:11]
even though we produce every month,
[00:37:13]
we don't necessarily cancel for the consumption every month.
[00:37:16]
So what you do end up seeing in the market is also there are these periods where
[00:37:19]
cancellations go up.
[00:37:21]
And then we see the floating supply go down significantly.
[00:37:24]
Well,
[00:37:25]
at the same time,
[00:37:25]
you can't assume that every single megawatt hour on the market that isn't canceled
[00:37:29]
is necessarily,
[00:37:30]
you know,
[00:37:31]
actually trying to find a new home.
[00:37:32]
But these are like rough numbers.
[00:37:34]
You mentioned that the production is reduced this year by hundreds.
[00:37:40]
Yeah, somewhere between 60 to 80.
[00:37:43]
At the historical float, I remember you had that as well.
[00:37:46]
So we could actually compare how it's been moving, if I'm not mistaken.
[00:37:50]
Yeah, I have a more, I guess a more conceptual question.
[00:37:53]
And forgive me for making a crude analogy to financial markets,
[00:37:57]
given you guys are both,
[00:37:58]
you know,
[00:37:59]
you come from financial backgrounds,
[00:38:00]
but...
[00:38:01]
It feels to me like there's two kind of places where data to make insights into a
[00:38:07]
market come from.
[00:38:08]
And that's kind of the underlying asset.
[00:38:10]
So in the case of equities, you're looking at the performance of the company.
[00:38:14]
And in the case of like a commodity,
[00:38:15]
like an environmental commodity,
[00:38:16]
you're looking at production data and the discrepancy between issuance and
[00:38:20]
productions and stuff like that.
[00:38:23]
But then you've also got data on sort of market participation and participants.
[00:38:27]
And,
[00:38:28]
you know,
[00:38:28]
there's a particularly spicy day in the office a couple of days ago when prices
[00:38:32]
were surging.
[00:38:32]
And there was kind of,
[00:38:33]
it almost feels like,
[00:38:34]
in a sense,
[00:38:35]
when you're in that conversation,
[00:38:36]
a little bit like a conspiracy,
[00:38:37]
like who's doing what?
[00:38:39]
I was wondering as a trader,
[00:38:41]
you know,
[00:38:41]
or a market maker in your case,
[00:38:43]
how much of the job is having your ear to the ground and trying to work out what
[00:38:46]
other people are doing?
[00:38:48]
You know,
[00:38:48]
trying to find data on that as opposed to finding data on the underlying market
[00:38:51]
itself.
[00:38:52]
And does that question relate to timeframes in terms of short-term decisions and
[00:38:57]
long-term decisions?
[00:38:58]
That's a good question.
[00:39:00]
I mean,
[00:39:01]
I think being a trader and trading in general,
[00:39:05]
regardless of the product or the market,
[00:39:07]
is about developing a certain case based on several factors.
[00:39:14]
And there are always unknowns.
[00:39:16]
There are known unknowns, so to say, and there are unknown unknowns.
[00:39:20]
So there will be things that you won't ever be able to explain because you cannot
[00:39:26]
see the whole market,
[00:39:27]
right?
[00:39:27]
Because it's so complex.
[00:39:29]
And I remember when I was a trader,
[00:39:31]
people would ask me,
[00:39:32]
like,
[00:39:32]
what's the hardest thing about your job?
[00:39:34]
And the hardest thing I said is always that at the end of the day,
[00:39:37]
you never do your job right,
[00:39:38]
right?
[00:39:39]
Because you're never, it's only a very rare occasion that you can sell the high or buy the low.
[00:39:44]
So there's always something that you can do better.
[00:39:48]
And effectively, that's pretty much every market that you'd be active on.
[00:39:53]
If there's a market that that's the case,
[00:39:55]
I'd be very eager to know and eager to join that market.
[00:40:00]
It's effectively, yeah, you're working with a lot of unknown.
[00:40:03]
So it's only, you know, it can take some time to actually have your analysis validated.
[00:40:09]
And sometimes you're correct and you can still lose money, right?
[00:40:13]
And sometimes you're wrong and you make money.
[00:40:15]
So that is the life of a trader, so to say.
[00:40:18]
When it comes down to information,
[00:40:20]
it's always important to understand,
[00:40:24]
first of all,
[00:40:25]
who are the actors within the environment that you're playing?
[00:40:29]
And what will their reaction be to this kind of information?
[00:40:31]
And I think your comparison with the whole pizza thing is amazing.
[00:40:35]
Because let's say eight, nine years ago, a lot of people would not have cared that much.
[00:40:44]
even if that information came out.
[00:40:46]
But if you look at financial markets,
[00:40:49]
thanks to the Robinhoods of this world,
[00:40:51]
we're looking at retail involvement up north of 30% of volume.
[00:40:57]
So if they happen to be,
[00:41:00]
and if you want to,
[00:41:00]
and this is a bit of a not nice thing to do,
[00:41:03]
but if you want to classify smart money,
[00:41:05]
quick money and dumb money,
[00:41:08]
If that dumb money,
[00:41:09]
I'm not saying that all retail are obviously dumb,
[00:41:12]
but unfortunately in these markets,
[00:41:15]
you do have a big boat that can move ship quite quickly and do totally irrational
[00:41:23]
things.
[00:41:24]
And I think one of the nice things we've seen in financial markets in the last
[00:41:27]
three years is the real impact,
[00:41:30]
is that when people are selling,
[00:41:31]
they're selling off in chunks.
[00:41:33]
They don't hold.
[00:41:35]
You have this real quick reversions because they come back in.
[00:41:39]
So they behave in a different way,
[00:41:41]
meaning that having your ear to the ground,
[00:41:44]
using information,
[00:41:46]
It's for you to understand what is that information going to do with the market
[00:41:51]
that I am acting in.
[00:41:52]
And if you've understood that, then yeah, then information becomes valuable.
[00:41:59]
I think that back to the question in that,
[00:42:02]
you know,
[00:42:03]
you have market infrastructure data and data.
[00:42:06]
linking that to retail participation in financial markets,
[00:42:09]
for example,
[00:42:10]
you see people starting to clock on to the fact that there's,
[00:42:13]
you know,
[00:42:13]
incredibly high short interest in a particular stock,
[00:42:16]
for example,
[00:42:17]
or that there's a large amount of trading volume that's happening off exchange and
[00:42:21]
happening in a dark pool.
[00:42:22]
And people start asking questions about the actual infrastructure of the market and
[00:42:26]
using that to inform their
[00:42:28]
their trading decisions.
[00:42:29]
Do you see any parallels in the geo market in terms of looking at how actors are
[00:42:34]
behaving and looking at how the complexity of the market is starting to sort of
[00:42:38]
form a topography and then being like,
[00:42:40]
okay,
[00:42:40]
because I'm seeing this pattern here,
[00:42:42]
that might inform how I act as opposed to purely looking at stuff like production
[00:42:46]
data.
[00:42:46]
If you really want to compare with what we see in the geo space for now is that
[00:42:51]
there are probably just not enough people who trade enough volume
[00:42:57]
There's a lot of people who use this once a year, once every six months.
[00:43:03]
The amount of people that's really active,
[00:43:05]
I think that is one of the things that is kind of important to keep in the back of
[00:43:10]
your head.
[00:43:11]
That it would be great if more people traded more often and if the smaller chunks
[00:43:18]
get spread out more,
[00:43:20]
trade monthly,
[00:43:21]
even weekly.
[00:43:22]
I know it sounds like a nightmare, but...
[00:43:25]
That's why you have us.
[00:43:27]
That is something that could really help because there is a bottleneck there still.
[00:43:31]
And that's also why we think it's great that Faraday has joined this kind of this
[00:43:37]
market because it gives an out,
[00:43:39]
gives liquidity.
[00:43:40]
Basically, it gives air to a market that could get really quickly congested.
[00:43:46]
Yeah, I agree.
[00:43:46]
I mean, it's always been very nice.
[00:43:48]
I think like Soldera and Faraday work very well together, right?
[00:43:51]
Because you guys always provide liquidity and we help these players aggregate together.
[00:43:57]
So they even have the volumes to do monthly trades, essentially.
[00:44:00]
Because if you're like a one megawatt hour producer,
[00:44:03]
you simply don't have the volumes to participate even properly.
[00:44:07]
But the podcast has been going on pretty long.
[00:44:09]
So I think we need to start wrapping up.
[00:44:11]
So I'll just ask one last question.
[00:44:14]
What happened last week?
[00:44:15]
We all know that the week of 16th to 20th of June,
[00:44:19]
we had a lot of trading,
[00:44:20]
a lot of activity,
[00:44:21]
prices almost 2x.
[00:44:24]
So any thoughts or indications there?
[00:44:27]
it's not an easy one to say yeah there no i i think there's just a lot of buyers
[00:44:32]
that's uh that's the that's the short answer yeah you know this should squeeze on
[00:44:38]
so that's your answer
[00:44:40]
I'll leave that to you.
[00:44:42]
Yeah, we saw a lot of buyers as well.
[00:44:45]
And this week you saw, especially yesterday or two days ago, price comes off quite a bit again.
[00:44:51]
And currently we're somewhat in between those levels.
[00:44:54]
So interesting to see how it develops.
[00:44:57]
I mean, that kind of goes into what Chris just mentioned, right?
[00:45:02]
In terms of how the way it comes and what it does at specific points in time.
[00:45:07]
So that's what you saw happening last week.
[00:45:10]
Yeah, it makes a lot of sense.
[00:45:12]
I guess it's a company,
[00:45:14]
you maybe have more information than us,
[00:45:16]
but I guess it's a combination of a short squeeze and German reporting period
[00:45:22]
coming up essentially.
[00:45:23]
So that's our thesis on it, but.
[00:45:26]
I'm not sure how you define a short squeeze per se,
[00:45:28]
but from a financial market perspective,
[00:45:30]
it's definitely not the case.
[00:45:32]
So, you know, as I said, we see there's plenty of geos to go around.
[00:45:36]
So,
[00:45:37]
you know,
[00:45:37]
in order for there to be a short squeeze,
[00:45:39]
you would have to have a lot less supply,
[00:45:42]
I'd say.
[00:45:42]
I'd more keep it on,
[00:45:45]
you know,
[00:45:46]
quite a decent amount of buying in a relatively short period of time.
[00:45:49]
Makes sense.
[00:45:50]
All right, guys.
[00:45:50]
Yeah, thank you so much.
[00:45:52]
Thanks for your time.
As 2025 comes to a close, we analyze the critical factors shaping the European Guarantees of Origin (GO) market while reviewing our assessment from Q3. You can select your favourite podcast platform to watch or listen to this episode here.
How to Access the Outlook
This quarter’s report includes all-new hydrology and reservoir predictive graphs for Norway, which will be a permanent fixture moving forward. 📊
As always, this discussion is based on our comprehensive in-app quarterly report available to Soldera members via the sidebar.
Looking Back at Q3 and Assessing Our Predictions
→ Market experienced unusually high volatility with 2025 vintage prices spiking in July before declining
→ Production estimates adjusted as Italian data corrections showed slower underproduction than initially forecast
→ Southern Norway reservoir levels critically low despite record-high northern reserves 💧
→ Summer trading activity exceeded expectations with significant hedging pressure
Norway Takes Center Stage 🇳🇴
→ Norway’s parliament votes to transpose REDD II into national law
→ Southern reservoir zones (NO2) at historically low levels affecting 2026 outlook
→ Northern zones (NO4) overflowing but transmission-limited from reaching demand centers ⚡
→ Market remains cautious on implementation timeline and actual demand impact
Critical Supply Dynamics
→ 2024 vintage oversupply continues pressuring 2025 spot prices below €0.50/MWh
→ End-of-year spot weakness follows typical seasonal pattern as traders rotate to 2026 vintage
→ Forecasted 4.8% reduction in 2025 GO issuance compared to 2024
→ Dunkelflaute conditions expected in Central Europe impacting renewable production 🌫️
→ First year since 2022 projected to reduce overall market surplus
Demand Outlook and Policy Developments
→ Germany’s 2024 cancellations up 2% year-over-year showing slower growth 🇩🇪
→ Italian Energy Release Scheme replacing government auctions from 2026 onwards 🇮🇹
→ Heavy industry receiving subsidized renewable energy in exchange for production commitments
→ Demand diversifying across Europe beyond traditional German dominance
→ CSRD guidance updates still pending clarity on corporate requirements
Strategic Market Considerations
→ 2026 forward prices commanding significant premiums reflecting improved market balance expectations
→ 2027 showing even stronger pricing as analysts anticipate continued oversupply reduction 🫗
→ Conservative hydro production anticipated through winter and spring affecting supply
→ Renewable buildout slowing across Europe impacting long-term GO issuance → Market positioning for multi-year improvement despite near-term weakness
Stay informed with our quarterly market updates to navigate the evolving GO landscape!
#GuaranteesOfOrigin #RenewableEnergy #EnergyMarkets #Sustainability
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit podcast.soldera.org
