P2P Energy Trading on the Wholesale Market using advanced Blockchain-Technology
Pain Points in Energy Trading
With the expansion of renewable energy, trading becomes more challenging. The number of transactions is growing while average transaction volumes are constantly decreasing – and with it the trading margins. At the same time, an increasing number of small market participants would like to have access to energy markets but is so far excluded due to high entry barriers and transaction fees.
So, in order to stay profitable, it is crucial for energy trading organisations to explore cost reduction potential – which is well known as a promising core feature of blockchain technology. Besides that, a decentralized market offers new opportunities e.g. for trading of niche products or flexibility options.
PONTON’s Blockchain Solution
With Enerchain® PONTON has developed a blockchain based infrastructure, which improves the efficiency of OTC trading and which enables energy trading companies to bypass intermediaries like brokers, therewith potentially lowering transaction costs significantly. In addition, lower entrance barriers could attract smaller players, who provide new liquidity to the market. Last but not least the blockchain provides direct access to valuable market data generated by participants themselves.
All in all, Enerchain® offers peer-to-peer energy trading at the highest level of trust and redundancy while keeping costs to a minimum.
How it works
The Enerchain® technology stack allows energy trading organisations to anonymously send, receive and execute orders via a decentralized orderbook. All this is done peer-to-peer without a central marketplace operator. By providing open access to the Enerchain® APIs we enable our clients to implement the blockchain infrastructure to their already existing business environment.
The vision for Enerchain® is to become the “operating system” of energy trading covering the entire deal cycle from trade execution, through to regulatory reporting, nomination and settlement. Together with an open API approach where multiple vendors (e.g. trading front-end supplier) can plug in their apps and services, Enerchain® empowers the trading community to control the application stack themselves.
Due to the growing interest in Enerchain® the number of participants almost doubled from initially 23 to 43 European energy trading firms which joined forces in order to conduct a proof-of-concept, using PONTON’s advanced blockchain technology for peer-to-peer trading in the wholesale energy market.
Status and Prospect
The goal now is to set-up Enerchain® as a legal entity that is owned and governed by energy trading market participants and to address all remaining open questions so that Enerchain® can go into production mode within Q4 2018. For that purpose, various working groups have been set up by the participants. The working groups are tasked to look into regulatory and governance aspect, define trading rules and suitable products and they steer the developments focus, while PONTON continues to develop the software. Interested market participants are still welcome to join the early mover group.
Michael Merz, managing director of PONTON says: “The motto of Enerchain is ‘roads are made by walking’. It is an exciting endeavour to tap on no man’s land in trading. As P2P networks penetrate business communities, fundamentally new solutions are found such as 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.”
For further information please visit https://enerchain.ponton.de