Montel Marketplace: Making green markets more transparent
To celebrate the launch of Montel Marketplace, Montel's CEO, Tom Nyblin explains why we've launched the platform, what the future outlook for Guarantees of Origin could be and why the time for more transparency in green markets is now.
The Green Transition has grown to include more players than ever in recent years, where does Montel fit in?
Unlike many businesses associated with tackling climate change, Montel has not (until recently) had much of a link with decarbonisation! However, we have spent the last 30 years reporting real-time energy market news and data, so our expertise has naturally extended to cover green trading and the impacts of renewable generation replacing fossil-fuelled plants. From that perspective, you could say that we feel our role is to help guide businesses through these changing times as market drivers change.
So, what is it that Montel are doing to help?
For a while now, we’ve offered advisory services for anyone wanting to know how to navigate this changing energy landscape, whilst we’ve also launched our own dedicated ‘green’ news desk, focused solely on news relating to decarbonisation through our Energy Transition Weekly newsletter. Beyond the news, we’ve started-up services such as Montel AI which helps renewable generators make their production outputs more predictable, something which is important given that recent policy developments suggest that being imbalanced as a generator is going to become more punitive.
Now though, we’ve launched Montel Marketplace – a free to use, publicly accessible platform, where buyers and sellers can meet new contacts and trade Guarantees of Origin (GOs).
This is just the latest iteration of Montel bringing transparency energy to markets. Since we founded our company back in 1989, this has been the fundamental principle running through our business."
Trading platforms for renewable certificates already exist. Why is this different?
Put simply, because it’s free! However, there is much more to that statement than just not having to pay to access the platform. Our motivation was not necessarily to save parties money with this venture, but more to create something accessible to anyone with just a log-in.
The important part of this is that anyone can see the agreed prices for trades, bringing a level of transparency to the traded renewable certificates market never before seen, owing to the fact that these certificates are mostly traded on a bilateral basis at the moment.
By making the platform easy to use and access, we want to give everyone the chance to make trades based on a publicly available market price.
Then it’s a platform for anyone with an interest in GOs?
We want all parties trading these certificates to come and join the marketplace, help establish a value for them through trading and in turn ensure that everyone along the renewable power value chain, from generator to end consumer is realising an agreed, ‘fair’ value for the certificates they wish to buy or sell.
We don’t have a view on what that value would be, the marketplace will decide that, but data that we have seen suggests that some end users are currently buying GOs at many times the price they were bought for.
Both existing players and our own clients have been telling us for some time that a platform such as this is needed."
Why do you think no-one has attempted to do this for free before?
Montel is somewhat unique in our approach to this, I agree! Since the founding of our company in 1989, providing transparency has been the fundamental principle running through the business. Back then, we were reporting on factors such as changing power outputs from generators, which affected prices across, what were then, newly liberalised energy markets. This time round, we’re trying to ensure market value in different ways.
Bilateral trading works for the established players, and they get what they need, but small players often trade outside the spreads because they simply don’t know what a fair price is. We aim to create a spread you can trust based on liquidity and transparency.
Until now, it’s been difficult to bring together enough trading parties to get a liquid market, but Montel is now in a position to do this, given our links with a lot of the market players. It can’t be underestimated how tough it is for these smaller players to find new trading partners either, so our other big hope for Montel Marketplace is to make trading easier for everyone.
So why launch this platform now?
Without wishing to state the obvious, the market has now developed to a point where there is sufficient demand for a platform like this. We had feedback from existing players and our clients saying this was needed in the context of the green transition and in response to schemes demanding the ability to show these certificates.
We also see the potential to establish a successful marketplace now as we expect developments in the renewable certificates market in the next 2-5 years, such as changes in the granularity of certificates – which are currently an annual submission - but could become daily or even hourly to be more accurate in their reflection of generation and consumption.
If and when that happens, we’ll be looking to make sure the platform can keep up, with plans to allow for automated trading, contract generation and trade recording via blockchain. From the user’s perspective, it would be as simple as setting a price and letting the platform do the rest.
We know that bringing all renewable certificate traders to Montel Marketplace could take time, so that’s why we’re in it for the long haul. As policy developments drive changes in the schemes, you can be sure we’ll be adapting the platform and implementing the latest technology to ensure we can continue making green markets more transparent.
Take a deeper look at Montel Marketplace and sign up yourself here: