Developing the Next Generation of Energy Trading Platforms Using Blockchain

Blockchain technology enables the implementation of energy trade.

FREMONT, CA: Electric automobiles have already significantly impacted the transportation industry. Fueling up at the neighborhood convenience store won't be necessary because of this. Instead, they'll be plugging in wherever they can find one—at home, at work, in parking lots, in malls, in amusement parks, and even on the side of the highway. Changes are afoot in terms of consumer and investor behavior. Suppliers of energy will change. And the way energy markets conduct business will change as a result. If suppliers and consumers use a wide range of generation methods, the contracts and pricing structures currently supported by meter-driven markets will become increasingly complex. In other words, the energy sector should expect to see a wide range of interactions between suppliers and consumers, resulting in marketplaces that are far removed from today's centralized and regulated systems. Blockchain will take center stage in the energy industry to deal with the oncoming complexity.

Eliminating inefficiencies: Energy is a commodity, like sugar and oil, that may be traded. There are no physical energy shops, but a vast network of producers, suppliers, brokers, exchanges and pricing index organizations are all involved in energy trading. The centralized IT systems that measure and record player transactions are not open. Either way, they are not friendly. That's about to change, thanks to the advent of the blockchain. This is good news and predictable because many energy markets are ill-defined, distorted by government subsidies, and characterized by high volatility and poor liquidity.

Diverse energy sources, including renewable and nonrenewable, and innovative business models, including end-users and communities of users, all contribute to the complexity. The energy sector is an early adopter of blockchain technology, which has already begun investigating the technology's potential for streamlining operations and reducing costs while also eliminating wasteful practices.

The future is 'smart': Energy traders can benefit from real-time tracking of commodity location and condition bots provide. Integration with enterprise resource planning (ERP) systems is planned. They will be able to choose the final terms of payment, laying the groundwork for blockchain-based intelligent contracts.

Markets in the energy sector are getting ever more complicated and turbulent. Despite wind dominance, the energy situation has become increasingly complex and uncertain. Wind power projects are protected from market volatility by government subsidies. This shifts the energy mix away from the old paradigm by raising the amount of the wind pie beyond what market forces will allow. In addition, blockchain eliminates the need for brokers and clearing houses in the reverse direction, reducing costs and friction. Energy trade will be transformed into something entirely new due to blockchain technology, which eliminates the current inefficiencies and problems.