Enerchain – the most successful blockchain project in the energy sector
07 August 2018
Energetics is a promising sector for blockchain. Today dozens of startups, for instance, Enerchain coin, Transactive Grid, LO3, and others are developing smart power grids that involve the distributed ledger technology among other things. Major companies like Siemens invest millions of dollars in such projects. Walmart has recently patented a blockchain-based power grid technology.
Not only businesses but also governments show their interest in such projects, for instance, back in March, the government of Chile announced plans to integrate blockchain in the power industry and store data on distributed ledgers.
How are decentralized power grids built? What are their advantages? Let’s analyze using the example of Enerchain, a large-scale and successful blockchain project in the energy sector that is carried out in Europe.
Power grids using smart contracts
Enerchain is not simply a startup but an energy initiative intended to establish a decentralized energy market in Europe. It will unite manufacturers and consumers in a single network helping to buy electricity without intermediaries. Enerchain did not run an ICO, German company Ponton is the initiator and investor joined by dozens of European companies.
Several enterprises are using the Enerchain network as part of their pilot projects: Vattenfall AB (German public utility) and Tennet Holding BV (power distribution company based in the Netherlands). The final launch of the platform is expected in late 2018.
How does a blockchain-based power grid work?
In a system like the Enerchain project, all participants form a peer-to-peer network using blockchain. ETRM systems of every participant are connected to the general network. As a result, companies can sell and buy electricity from each other using smart contracts.
A smart contract is a computer algorithm designed to close commercial deals. The contract is executed automatically as soon as one of the parties fulfills the conditions. The Ethereum network offers a variety of opportunities for building systems with smart contracts, so the Enerchain developers chose Ethereum as an optimal option.
Why is it convenient?
Participants of the Enerchain find the shift to the blockchain platform and the refusal from the traditional forms of trading to be progressive for a number of reasons:
• Simpler and more flexible business processes. Transactors do not have to fill in numerous documents.
• Reduced time consumption. Smart contract execution and transfers take a fraction of a second.
• Reduced expenses. No need to pay to the intermediary, as deals are carried out independently.
• Enhanced security and efficiency of trading operations. Information cannot be lost or changed.
• Transparency of processes. All participants can monitor deals.
Participants of the Enerchain
According to the Enerchain, it will be an open community accessible for most of the energy market players. Both hydrocarbon providers and green energy companies (owners of solar panels, water power plants, and windmills) will join the consortium.
Today the number of companies that support the project and are ready to participate is growing every month: there were 33 participants in late 2017, and now there are more than 40. They include large European power companies such as Enel and RWE; famous brands BP (British Petroleum) and Shell; banks ING and Societe Generale; trading companies Gunvor, Koch Supply & Trading, and Mercuria.
Energy trading on blockchain is an opportunity to make electricity cheaper, while it has a tendency to grow in price due to the lack of resources and the shift to alternative energy sources.
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