Mapping the GO market infrastructure: Why the industry needs more tech advancement to handle rapid growth
The battle against climate change is picking up the pace, and GOs are more in demand than ever before. Social and environmental shifts in the EU and green initiatives have accelerated the GO market’s growth beyond what was predicted even just one year ago. As a result, the needs of the market have already outgrown the functionality of the existing infrastructure.
The GO market is still a relatively young industry. While accurately predicting the future of any market is impossible, we can make some tentative predictions by comparing its path to other, more established markets, such as the electricity market.
These comparisons reveal that infrastructure-wise, the GO market is still in its infancy regarding trading, especially settlement processes, and with the market’s rapid growth in recent years and expected continued growth in the years to come, the GO market needs technological infrastructure to keep up and continue on its current trajectory of growth.
How sudden growth in the GO market affects you
You may remember experiencing growth spurts as a child. Overnight it would seem like you’d suddenly outgrown all your clothes and desperately need a new wardrobe. The GO market is currently at this stage. Outdated technology can be compared to your favorite shoes as a child that suddenly became two sizes too small. Trades have become larger and more sophisticated, and solutions like spreadsheets that could cope with smaller, simpler trades are just not feasible as long-term, scalable solutions.
GO traders and other market participants are eager to leverage the new opportunities created by a growing market, but a lack of supporting infrastructure is standing in their way. Currently, GO traders are managing all their trades manually, using general tools such as spreadsheets to keep track of complicated inventory that is spread across various registries. This is slowing down their trading abilities. While traders are doing their best to take advantage of the market’s current boom, supportive infrastructure will allow trading activities to expand and reach their full growth potential.
How technological advancement can enhance your GO business
With the right technological infrastructure, market participants will be able to advance their businesses. Your data will transform from being a complex and time-consuming tool that needs to be managed manually to a valuable asset you can use to make data-based decisions at the ideal time for your business. Such a technological infrastructure will allow GO traders to lower settlement costs, speed up trade approvals, make working with counterparties and customers easier, streamline dealings with registries, and much, much more.
Current growth and technological infrastructure
The risk of growth outpacing technological solutions is not some theoretical challenge that will affect the GO market in the future – it’s here. Energy Attribute Certificates (EACs), specifically Guarantees of Origin (GOs) in Europe show a massive potential increase from approximately 900 million certificates in 2021 to between 2.5-8 billion certificates in 2030. Processing the current 900 million GOs is already stretching market participants and their resources to their limits.
The functionalities available through registries are far from enough, and the Association of Issuing Bodies (AIB) Hub platform is already operating at its limit. Producers, intermediaries, and consumers are relying on semi-manual, in-house solutions, creating new risks and inefficiencies.
These challenges have put the market at risk of becoming dysfunctional, and urgent action is required to grow the market’s capacity and develop technological infrastructure that can support current and future growth.
The sheer number of certificates is creating a massive demand for a solution that can improve processing. Without such a solution, the handling costs of each certificate will increase significantly, creating even more challenges for market participants already pushed to their limits. Additionally, daily operations and processing are at risk, as overtaxed GO traders struggling to navigate a siloed inventory will undoubtedly lead to oversights, missed deliveries, and overlooked payment obligations.
These challenges will cause both operational and reputational damage to a still-young band much-needed industry.
Bridging the gap with technology designed for the GO market
Third-party service providers are the market’s most viable solution. A shortage of skilled workers, time-consuming implementation, and budget restrictions all indicate that the market requires more focused support from specialists, but this will only create short-term improvement. To make long-term changes, a solution is needed that can increase efficiency and decrease the lifecycle costs of certificates for the foreseeable future.
CerQlar is a data infrastructure solution designed for the renewable energy certificates market with a focus on streamlining straight-through processing (STP) in all market functions and automating some of its most complicated procedures. The CerQlar platform offers a range of much-needed features, including a consolidated dashboard that collects all your data from across registries to present it in a clear, unified format. CerQlar allows you to focus on your trading strategies and leave the manual work to our automation technology. With CerQlar, you finally have the tools you need to keep up with market growth and continue scaling your trading.