The European Energy Exchange has acquired Grexel Systems, a leading European energy certificate registry and a key service provider to the clean power industry. The acquisition, which was announced in December and closed in early February, is intended to complement the German exchange’s strengths in the European electricity and emissions markets and position the exchange to play a bigger role in Europe’s transition to a clean energy economy.
EEX, a subsidiary of Deutsche Börse, runs a primary market for auctions of emission allowances and a secondary market for both spot trading in allowances and derivatives on emission allowances. Both markets are thriving amid a general revival of emissions trading in Europe. The exchange’s emissions futures and options grew especially rapidly in 2018, with volume rising 318% to 1,973 million metric tons of carbon.
With the Grexel deal, the exchange adds a key component in the clean energy ecosystem. Electricity in power grids is generated by many sources and the energy that comes out of a power outlet cannot be divided by its source of origin. However, European policymakers are trying to encourage renewable energy sources over fossil fuel. That’s where energy certificates come in.
The European Union’s European Energy Certification Scheme creates a way for producers, suppliers and consumers to virtually “unbundle” the renewable electricity in the grid. One EECS certificate is produced electronically for every MWh of energy produced, and the certificate is sold to the supplier and eventually to the customer. As a result, Europe’s certificate system makes it possible to treat renewable energy differently than other sources of power in the grid.
Grexel, based in Helsinki, estimates it has a market share of 42% of new certificates issued within the EECS and says that more than 10,000 businesses, including major energy producers and end users, participate in one or more of its 15 energy certificate registries in Europe. The network includes 10 registries for electricity guarantees of origin, four for biomethane, and one for hydrogen.
Grexel CEO and founder Marko Lehtovaara said his company made the deal as a way to grow the business further. “Through joining the EEX Group, we aim at further strengthening our market position and expanding our registry as a service business in Europe and beyond,” said Lehtovaara when the deal was announced.
EEX executives believe Grexel will complement the registry business it already owns through Powernext, its subsidiary that operates a natural gas market in France as well as France’s electricity guarantees of origin registry. “The acquisition of Grexel Systems in combination with Powernext’s existing registry business will enable us to actively develop the future market of certifying the origin of renewable and other forms of energy,” Peter Reitz, CEO of EEX, explained in a press release announcing the deal.
The Grexel deal is part of a longer-range program to support the transformation of European energy away from fossil fuels, according to an EEX spokesperson. The exchange sees its mission as designing new products and services that will help integrate renewable energies into tradable markets, and in particular, developing a market structure that better suits the special needs of renewable power generation.
“EEX Group supports the development of innovative solutions to meet future challenges of the energy industry driven by increasing decentralisation, digitalization and decarbonisation,” said the EEX spokesperson.