Publications Bookmark and Share

Blockchain – A Step to the Next Energy Revolution?
The deregulated trading platform has been picking the interest of energy giants
AUTHOR: Lyudmila Zlateva

As renewable energy and storage solutions, along with the transformation of consumers into prosumers, have been reshaping the face of the energy sector around the world, the industry is facing another transitional moment. This time it comes from the outside and has the potential to be the next big thing in energy.

Until recently only known by adepts of virtual currencies such as Bitcoin, the blockchain concept made a splash in 2016 and has been eyed by a number of moguls all over the business spectrum, from finance and banking to energy and utilities.

So, what is blockchain?

In its core, blockchain is a technology allowing decentralised transaction over a P2P network which creates chains of transactions piled in blocks. Unlike historical trading platforms, the entire process foregoes centralized administration and control and uses virtual currency, such as Bitcoin or the equally dynamic Ethereum, smart contracts, etc. The required administration is done by computers (‘nodes’) in the network on a distributed principle, applying a complex algorithm. Each transaction in the chain of blocks is registered virtually forever and without the option to be modified. Hence the name ‘blockchain’.

While some observers raved about blockchain as, possibly, the first revolution in fintech in more than 20 years and saw in it a potential for more transparency and money laundering prevention, others did not jump on the praising bandwagon, deeming it as a perfect environment for unsanctioned (and possibly illegal) interactions. The open nature of blockchain and the shorter periods and options for completing transactions however, seem to be picking up adepts among financial institutions eager to be one step ahead of what seems to be an inevitable demise of banknotes and coins in the not-so-far future. Not to forget, diminishing regulatory costs has been a great factor of attraction giving a buzz to energy traders and utilities which happen to navigate regulations-ridden waters.

Skipping the middlemen

Recently energy companies have been keener to experiment with blockchain because it allows direct exchange among the members of the system. There have been a number of demo projects in this regard, such as a microgrid in Brooklyn, NY, which allows households equipped with PV panels to sell and buy energy among them. Power production is tracked by smart meters while transactions are registered in the Ethereum platform, giving blockchain an edge as a powerful enabler to distributed production and a premise for the emancipation of consumers from centralised utilities.

Then the banks came. When finance giants such as Barclays and HSBC said they were to test blockchain transactions, European energy majors used the created momentum to announce larger-scale developments.

Last year in Belgium, German B2B tech company Ponton demonstrated for the first time ever day-ahead power trading with delivery date November 5. For the purpose Ponton has developed a dedicated blockchain platform called Enerchain. A mere six months later, in May 2017 twenty big energy names such as RWE, Total and Engie, among others, announced that they will be splitting the cost of a pilot project for bilateral trading in life-size scale. According to Ponton their solution is to be integrated with the existing infrastructure of these partnering companies. Forward and spot trading of power and natural gas with physical delivery on regional markets is also in the pipeline, Ponton said.

Gains come with high stakes

While advantages of blockchain have been clear from the get-go, there are risks to be taken into account. First of all there are regulatory risks. How could a regulator be added to a system which supposes the lack of centralized control in the name of efficiency and transparency is a question yet to be answered. And due to the character of the energy and utilities business this might end up as dilemma without a solution.

Power, gas and commodities have been subject to a rising number of regulations, such as the upcoming MIFID II. Meanwhile companies have been innovating with an ever faster than ever pace forcing regulators to keep up with them. And blockchain accommodation claims by energy giants means that the strain on regulators to act faster is set to grow. Meanwhile European market participants have been putting efforts and means into developing trading mechanisms and platforms which could hardly be abandoned without a consequence and should rather see some degree of integration with blockchain, rather than compete with it.

Last but not least comes the quality control of the physical delivery of a service or a product traded in blockchain. While blockchain seems extremely applicable to financial transactions, it is unclear who would control the arbitration of conflicts created by unaccomplished contracts or bad quality.

This article was first published in Bulgarian in the July’2017 issue of Utilities magazine.

No published comments
Login to comment


20.03.2022  Teodor Bobochikov, Managing Partner, V-Ridium
Energy Transformation – Trends and drivers
Full text


No records in this category!


What kind of transport do you use to get to work?


We use cookies to ensure we give you the best browsing experience on our website. Find out more on how we use cookies and how you can change your settings.


What are cookies ?

A cookie is a small text file that a website saves on your computer or mobile device when you visit the site. Cookies are widely used in order to make websites work, or work more efficiently, as well as to provide information to the owners of the site.

How do we use cookies?

Website use Google Analytics, a web analytics service provided by Google, Inc. ("Google") to help analyse the use of this website. For this purpose, Google Analytics uses"cookies", which are text files placed on your computer.

The information generated by the cookies about your use of this website - standard internet log information (including your IP address) and visitor behaviour information in an anonymous form - will be transmitted to and stored by Google including on servers in the United States. Google will anonymize the information sent by removing the last octet of your IP address prior to its storage.

According to Google Analytics terms of service, Google will use this information for the purpose of evaluating your use of the website and compiling reports on website activity.

We not use, and not allow any third party to use the statistical analytics tool to track or to collect any personally identifiable information of visitors to this site. Google may transfer the information collected by Google Analytics to third parties where required to do so by law, or where such third parties process the information on Google`s behalf.

According to Google Analytics terms of service, Google will not associate your IP address with any other data held by Google.

You may refuse the use of Google Analytics cookies by downloading and installing Google Analytics Opt-out Browser Add-on. The add-on communicates with the Google Analytics JavaScript (ga.js) to indicate that information about the website visit should not be sent to Google Analytics.

Cookies are also used to record if you have agreed (or not) to our use of cookies on this site, so that you are not asked the question every time you visit the site.

Google Analytics Opt-out Browser Add-on

How to control cookies?

You can control and/or delete cookies as you wish. You can delete all cookies that are already on your computer and you can set most browsers to prevent them from being placed.

All about cookies

Managing cookies in your browser

Most browsers allow you to:
  • see what cookies you have got and delete them on an individual basis
  • block third party cookies
  • block cookies from particular sites
  • block all cookies from being set
  • delete all cookies when you close your browser

If you chose to delete cookies, you should be aware that any preferences will be lost. Also, if you block cookies completely many websites (including ours) will not work properly and webcasts will not work at all. For these reasons, we do not recommend turning cookies off when using our webcasting services.
} catch(err) {}