Certificate trading kicks off in Sweden -- Satisfied broker

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Trading of green energy certificates in Sweden has been steady, despite a certain amount of hesitancy, following the long awaited introduction of the country's new market structure for wind power. The law came into force on May 1. It requires every electricity customer to buy at least 7.4% of their needs from renewable energy, demonstrating their compliance by securing the required number of green certificates. Electricity retailers can act on the behalf of customers.

The first actual trade, between Sydkraft Energy Trading AB and Kraft & Kultur i Sverige AB, was brokered by Finnish GreenStream Network (GSN), a major player in the Northern European green certificates market since 2000. Kraft & Kultur's Boris Benulic sees the deal as a symbol of the company's strategy. "Green certificates are expected to be an important instrument in promoting new renewable electricity production. We are offering our services to clients who are interested in the environment," says Benulic. During its two first years, Kraft & Kultur has won 150 municipalities as clients and is selling close to two million megawatt-hours of power to the Swedish market. About 10% of this is wind power.

New opportunities

Until recently, the Helsinki company had been concentrating on the market in the Netherlands, but with new opportunities arising in the Nordic region an office has also been opened in Oslo, Norway. In neighbouring Sweden, the green certificate trading system is being managed by Svenska Kraftnät, the Swedish national transmission company. In 2010, the target for green electricity quota is planned to be increased to 16.9% of electricity consumption.

Since brokering the first deal, GSN's Arne Jakobsen says the company has seen a steady flow of business, although, he adds, there is still a feeling of "wait and see" on the market. "It is too early to draw any conclusions about the market yet, but what we have seen is a willingness to do business which has been an encouraging sign. There is a substantial number of sellers in excess of SEK 200 and buyers up to SEK 160-170. The reason for this situation is that the authorities haven't yet clarified several items which will have an impact on the market. At this stage sellers do not need to go too low, at least not much below SEK 200, so that is the major hurdle at the moment. From the buyers' point of view there is quite a risk involved in going over SEK 175, the penalty level for the first year. Buyers obviously still need to buy to decide how much they are going to charge their own customers."

According to Jakobsen, there is significant selling activity among small generators of green electricity who will be losing their subsidies, so, therefore need to sell early to keep cash reserves up. He remains confident that business in general will increase. "I am quite convinced that there is a mechanism in this market that makes it worthwhile. There is a temporary reluctance, but that is easy to explain as the market finds it feet. I have actually been surprised that business has already been so brusque at this early stage.

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