Going green on the energy market

The versatile service provider Markedskraft also conducts guarantee of origin trade for its customers.

Markedskraft is a partner for customers and a full-service operator on the energy market. Typical customers are electricity suppliers, electricity producers and large industries. In addition to physical and financial portfolio services, the company also provides high-quality short and long-term market analyses and guarantee of origin (GO) and emissions trading. The sister company Wattsight produces the market analyses.

Markedskraft’s strength is its presence in all Nordic countries. This geographic dimension was significantly enhanced in 2018, when Markedskraft acquired Energiameklarit Oy, which was owned by Finnish energy companies. The goal is to continue to increase the market share.

The company has offices in Finland, Norway, Sweden and Denmark and it also operates in the German power market. The head office of the owner, Arendals Fossekompani – and that of Markedskraft – is located in Arendal in southern Norway. Markedskraft has 50 employees, 6 of whom are based in Finland.

“We have MiFID licences in all the Nordic countries. We’re an independent service supplier  and we have no market position of our own,” explains Country Manager Markku Vaitomaa.

“Price formation for the customer is completely transparent in our service – the customer only pays us a portfolio management fee, and the actual price of the product is invoiced straight through. This is especially important in the markets like GO-market where the reference price is not publicly listed. According to our philosophy, it in the long term costs less for the customers to manage the risk themselves using products available on the market than to pay for it in the product’s margin.

In particular, small and medium-sized electricity companies tend to outsource their electricity portfolio management and risk management.” Markedskraft’s customers include also large process industries that are also electricity market parties themselves.

“We encourage our customers to be active on the market, and we share our expertise with them. The market develops when many different parties participate in it, and this is beneficial to everyone involved.”

Guarantee of origin trading requires skill

Handling GO trading is part of the range of services offered by Markedskraft. The customer base is broad, because both electricity producers and large electricity users require GO certificates. An increasing number of companies give their customers a promise regarding the use of renewable energy in production, and this trend continues to spread. In GO register terminology, the company cancels a certain number of certificates in order to verify its promise to act in an environmentally friendly manner.

“This type of trading is also a matter of risk management. The company benefits from systematically purchasing and selling GO at appropriate times. Of course, a good portfolio manager has to monitor price development throughout the year. The price varies in the same way as any other product. The price of GOs went rapidly up during 2018, causing additional expenses for many parties,” says Markku Vaitomaa.

Rather than trading in GOs for itself, Markedskraft always acts for its customers. It handles transactions in the GO register on behalf of the customer, and Markedskraft is aso an account holder in the register. The company also trades for customers who have their own GO account.

“We typically enter the information of the customer´s  new power plant in the GO register. We provide Fingrid with the reports and verification documents needed to demonstrate that a plant meets the requirements set for green energy production,” explains Portfolio Manager Janne Savolainen from Markedskraft.

“Dealing with GO matters with Fingrid is straightforward and Fingrid’s customer service responds quickly. The majority of purchases and sales take place electronically, but we also communicate person-to-person by phone call or e-mail weekly. Fingrid does a great job as registrar,” comments Savolainen.

He was part of the reference working group that helped prepare the register.

“Fingrid has developed the activities in a good and transparent direction. The register is also logical and easy to use – it corresponds well to the situations that arise on a daily basis.”

What kind of GO certificates will be requested in the future? Will guarantees associated with biogas or hydrogen be introduced to the market?

“There will always be pioneers and perhaps we’ll see some new products one day. If our customers show interest in such products, we’ll certainly be interested as well,” says Savolainen.

 

Markedskraft
• The Norwegian-owned service provider Markedskraft was established in 1992, acquired the Finnish company Energiameklarit in 2018. Majority owner: Arendals Fossekompani.
• The focus area is the Nordic countries, with offices in Finland, Sweden, Norway and Denmark
• MiFID licence in all the Nordic countries.
• Sister company Subsidiary Wattsight provides market leading energy market analysis.
• Transparent solutions and pricing, independent, no market position of its own.