The Guarantees of Origin market in shock

The market of Guarantees of Origin (GOs) keeps growing in Europe, but in shocks. It is not an ideal signal for new entering companies and for investors. A solid market with clear movements is typically preferred for trading but the GOs has decided otherwise. Or is it not its fault?

To be more accurate, we ought to say that the GOs market has been victim of its success, but also, it suffers from the classical difficulty of having free market mechanisms for a politically sensitive product. The good news is that progressively more countries adopt the GO as the way of tracking the energy. It comes from every angle. We now have various green gas guarantees of origin, we have The Netherlands adopting Full disclosure since the 1st of January, Hydrogen GOs are born and subsidies are progressively giving the way to the voluntary market.

The challenges arise when all changes occur at the same time. Worse: in some countries such as France, the offer came all at once, against the demand which is gradual. The adoption of Auctions as the way to supply the French GOs to buyers forced a large chunk of the offer into the market, in one single monthly event. This is a brutal way of feeding the offer side, and this has hurt the whole value chain as well as companies living from a product valuation. In general, having subsidies falling off brought new supply in large quantities at once. This is affecting prices in Spain and Germany.

Zooming out, we are very pleased to see that Europe is moving towards a general use of GOs and its market-based mechanisms. Only its adoption is source of local quakes, with continental repercussions. Time will smooth the price curve and Europe will then have its perfect accounting system for its energy.

More & Better

Commerg responds the general need in Europe for transparency and information with a series of premium products. In the coming weeks, the GO market will have more reports, and tools to give access to trading. Companies will be able to Auction their GOs via the platform and control who they trade with. Please get in touch for more information.