How to successfully enter multiple energy markets at once?

Ambitious market entry strategies often lead to seemingly endless pitfalls and delays. How can you avoid them?

Article by: Eszter Pontenagel

Entering multiple power and gas markets simultaneously is a natural step for many rapidly growing energy trading firms who are expanding their reach into wider geographical areas or new commodities. But this type of expansion usually leads to seemingly endless pitfalls and delays, most of which can be avoided by preparing thoroughly and setting realistic expectations.

So, let us take a closer look at the most common issues ambitious market entrants experience, why they occur, and how to avoid them:

What does entering multiple markets at once entail?

What is market access?

Entering one market at a time already is an extremely heavy administrative process, which consists of a multitude of KYC procedures, entry applications, requests for additional documentation, and post-entry market management to between three and five independent counterparties, depending on the target market. By itself, entering a market is a nearly full-time project, which takes the average entrant well over a year to complete.

What does it take to enter multiple markets at once?

When entering multiple markets at once, these requirements multiply quickly, leading to overlapping tight deadlines, the preparation of large amounts of documents in multiple languages simultaneously, and at times, even local expert assistance in multiple markets. ?

Successfully fulfilling these requirements while meeting all deadlines requires a very specialized network into each market you’re entering, as well as insight into the local culture and language.

How to enter multiple markets internally?

Many of the hurdles of entering a market internally stem from not having practical experience of entering the specific market before – from unclear requirements and endless requests for further documentation, to not having the optimal network. Let’s take a closer look at how to manage and minimize each:

Why do authorities have seemingly endless requests for additional documentation?

Most often, the frustrations of requests, which were not included in the original requirements from counterparties, are caused by unrealistic expectations. A certain number of additional requests is a normal occurrence in many markets and will, of course, depend on the counterparty requesting them and the setup of the applicant. Some counterparties... Read more.

Who sets tight deadlines when entering multiple markets?

To manage each deadline accordingly, it’s vital to have an overview of the reason each deadline is set in place. For example, when requesting further documentation, counterparties typically set a deadline for the new submission. Anticipating and planning around these deadlines can make a market entry more efficient.

Alternatively, some markets have what is known as “completion periods”, where all entrants need to... Read more.

Which mistakes can lead to delays and expired documents?

When applying for a license, a BRP agreement, exchange membership, or interconnector registration, submissions and attachments usually have a period of validity defined by each counterparty. A document, which is submitted after its period of validity, is known as “expired.” These documents may need to be reissued, retranslated, and relegalized according to relevant requirements.

To avoid the expiration of documents... Read more.

How to outsource market entry into multiple energy markets?

Entering markets for the first time can be a cumbersome process, especially for trading firms without a dedicated business development desk. Not having prior experience entering a market complicates the situation further due to the many problems that cannot be anticipated. ?

This is why many of our clients outsource their market entries to us at Time2Market – we have entered all these power and gas markets before; we have run into many of the roadblocks and can foresee and avoid them, providing a faster and more effective market entry.

Which tasks can be outsourced through Time2Market?

By outsourcing your market access, you can save yourself most of the administrative work of the entry procedure while you take advantage of our specialized industry network in all power and gas markets. ?

The onboarding of each new market onto your internal (or external) systems affects most departments in a trading firm, including scheduling, nominations, ETRM, and many others, and can be a very complex and time-consuming process. ?

Onboarding a new market requires many resources to be accomplished properly, and each new market multiplies those, creating additional deadlines and obligations.

If you’d like to find out what it will take to accomplish your target setup, get in touch with our team of experts by booking a meeting. Let’s discuss your current setup and see what Time2Market can do for you!

We deliver. You excel.

Please note that this publication is a preview of this article written by Eszter Pontenagel. You can read the full article for free on Time2Market's website.

Disclaimer: This article is intended for informational purposes only and should not be considered business or legal advice. The energy industry is extremely dynamic, and counterparties change their requirements frequently. ?As a result, the information discussed on this page is subject to change without notice.