E.ON and Enel’s trade electricity via blockchain for first time

E. ON and Enel traded electricity for the first time via a new marketplace based on the blockchain technology (photo: iStock)
E. ON and Enel traded electricity for the first time via a new marketplace based on the blockchain technology (photo: iStock)

Energy companies E. ON and Enel traded electricity for the first time via a new marketplace based on the blockchain technology. On October 4th, the two firms completed a day-ahead contract of 1 MW power delivered in Hungary. Another transaction was completed using the same system between Wien Energie and Neas for a day-ahead gas in Germany.

Both exchanges took place live in front of the public at EMART Energy in Amsterdam, the annual event gathering energy traders.

The first peer-to-peer contracts over the blockchain were executed via Enerchain, a software developed by PONTON. The German IT company has been working for years to develop the operating system for energy wholesale trade based on this technology.

The blockchain allows to store and record data, and to execute transactions from the devices of all the parties involved in a secured way. Through this distributed system, it is possible to enter orders, create an exchange and legally close a deal in a transparent and trustworthy manner. Given its decentralized nature, the technology is increasingly seen as a solution to the need of market flexibility generated by renewables, as energy trading via blockchain does not depend on a central authority.

PONTON has been using this concept to develop the operating system for wholesale energy trade, which is currently being tested. A demonstration was presented at EMART last year, but the live trade was carried out on a local laptop. This year, instead, buyers and sellers were located remotely at their respective desks.

"The Enerchain initiative is a good example of open, cross-industry collaboration. We all believe in the enormous potential that blockchain technology has for the new energy world and especially for our customers," said Matthew Timms, Chief Digital Officer of E. ON.

“As P2P networks penetrate business communities, fundamentally new solutions can be found for instantaneous settlement, self-defined products, RFQing of load curve products etc. The blockchain is just like a distributed operating system, applications are only limited by the creativity of the users,” said Michael Merz, managing director of PONTON.

The first contracts in October were a milestone and possibly the precursor of a new decentralized marketplace for energy trading. The proof of content phase will continue until March 2018 allowing participants to use the system, test new products and perhaps revisit business processes.

Michael Frech, technical head of renewable energies group ARGE Netz , commented: “Currently, the great potential of blockchain technology in the Enerchain project has not yet been fully exploited. As the project progresses, the disruptive business models will become more in focus and will provide added value for operators of decentralized renewable-energy-systems and consumers.”

Blockchain for a distributed marketplace

The flexibility of direct trading is believed to help address the imbalances of an increasingly distributed marketplace where renewables play an important role. There are also savings to be made, as no access or transaction fees are demanded and market intermediaries are bypassed. In addition, the system allows developing new products. “If market participants, unusually, want to trade half an hour, they can submit the order without asking for any exception,” explains Merz. “On the other hand, in a centralised marketplace, one player defines the rules and participants agree or not to take part complying with them. With the blockchain, the rules are agreed by the market and this may be more complicated.”

As the use of the blockchain in the energy sector is being explored, Peter Gönitzer, General Manager of Wien Energie, said: “The Enerchain project is helping us to better understand the future potential of blockchain technology. We essentially expect this project to provide us with deeper insights into how the settlement of energy trading transactions can be simplified.”

Digital future

Across the industry, there is growing recognition that digital technologies will play an important role in managing systems with millions of wind and solar installations.

On September 19th, the Estonian presidency of the European Union organized a conference in Tallinn to discuss “where digital meets energy,” and how to improve cooperation between transmission system operators and distribution system operators. At the end of the meeting, 25 organizations representing the industry, including Solar Power Europe and Wind Europe, signed a symbolic political declaration in support of the digitalization of the energy sector and the new business models it will bring.

The declaration notes that the “shift towards more decentralized and variable solutions will alter conventional energy production, distribution and consumption” and recognizes the “vast potential of digital solutions […] and the need for better cooperation across all sectors”.

In June, Eurelectric, the organization representing electricity companies in Brussels, launched a working group to investigate the potential of the blockchain across generation, trading, supply and networks. A sign of the interest this technology is raising within this new digital agenda.

Companies that have joined Enerchain so far are Alpiq, Arge Netz, Axpo, BKW, Capital Stage, Centrica, E.ON, EDF Luminus, EnBW, Endesa, Eneco, Enel, Energie AG, Engie, ES FOR IN, Gas Natural Fenosa, Iberdrola, Leipziger Stadwerke, Neas Energy, Petrol, RWE, Salzburg, Statkraft, Statoil, Uniper, Total, Vattenfall, Verbund, Wien Energie.

Claudia Delpero

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