Blockchain technology may still be in its early stages of development, but some of Europe’s biggest utilities have joined a project to test blockchain-based trades in wholesale power and natural gas markets.
Utilities from Enel SpA to RWE AG will start live trading based on blockchain technology in the fourth quarter, after tests that start in August, said Michael Merz, managing director at Ponton GmbH, the developer of the project. The utilities will use blockchain-based trading software developed by Ponton, called Enerchain, that allows anonymous peer-to-peer trading without using a third party.
Blockchain, the technology at the heart of bitcoin, uses a system of digital ledgers accessible via the internet to record transactions made directly between trading partners. Blockchain advocates describe it as an independently validated, distributed and unalterable digital transaction ledger. It may help the energy business to adapt to a more decentralized world with intermittent solar and wind power output. The technology is being tested by utilities from Vattenfall AB to grid companies such as Tennet Holding BV in areas from consumer electricity platforms to managing the network.
“Some utilities are taking part because they just want to test how blockchain works, others really want to find out whether it will pay off to use it in trading,” Merz said by phone from Hamburg.
Enerchain allows traders to anonymously send orders to a decentralized orderbook that can be accessed by other traders, according to a statement Monday. This may lower transaction costs by erasing the need for exchanges or brokers.
The participating 23 utilities paid 20,000 euros (US$22,000) to fund the final development of the project and aim to test trades in spot as well as forward power and gas contracts in different regions, Merz said. Other members include Vattenfall, Total SA and Iberdrola SA.
Ponton isn’t alone in aiming to apply blockchain to wholesale energy trading. Vienna-based startup Grid Singularity is also working on a decentralized digital platform to sell and buy energy.
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