European Utilities to Start Trading with Each Other Using Blockchain
European utilities are planning to use blockchain technology to begin direct trades with one another, Reuters reported. Blockchain in this instance has already been tested by energy operators for wholesale trading, but for now, it will go live only for a selected few.
Enerchain, the initiative in question, is “a forerunner of more possible uses of the technology by established energy players,” writes the news outlet. While regulators are calling for control and for users to agree to share data and avoid security breaches, this system could help speed a sector shift in Europe from fossil fuels to renewables, bypassing nuclear.
Managing director Michael Merz said the project will go live as soon as a legal entity to pool budgets is set, in the second or third quarter of this year, explaining, “Publishing orders and transactions via blockchain can replace trading via brokers. We have developed an order execution process that works just like a typical OTC (over-the-counter) market front end.”
However, it will take some time to see blockchain transforming existing mass market processes, experts say, as new infrastructure is needed and new regulation and industry standards must be embedded. Existing jobs are also at risk, says Christoph Burger, senior lecturer at ESMT, explaining, “Bear in mind that there might be job losses in areas such as controlling, legal, IT and administration.”
In either case, blockchain will enable the Revolution in the Energy sector, supporting its shift from a Producer-centric, top-down model, to a Prosumer-driven distributed model, Inese Dosé, Senior Consultant at PricewaterhouseCoopers Latvia, wrote in an opinion piece this March.
“The aims of established market players and new players are antagonistic: legacy players defend their market position whilst start-ups try to dislodge them. But both sides need to adapt to the changing energy sector and leverage the emerging opportunities to create value,” according to Dosé.
Meanwhile, not only utilities are looking at blockchain. China has filed more than half of all blockchain-related patents in 2017, BMW is reported to be dipping into blockchain to ensure the ethical validity of their materials, and the European Commission is offering EUR 5 million top prize in its Blockchain for Social Good contest (details yet to come).
Overall, USD 945 million was spent on blockchain solutions in 2017 and the spending is expected to grow on a robust rate, reaching USD 9.2 billion in total by 2021, according to the Worldwide Semiannual Blockchain Spending Guide, as reported.