Use of Blockchain Technology in Energy Banking and Electricity Markets
Power system reforms worldwide have commoditized electric energy, and thus the electricity market has been developed. With this, trading of electric energy takes place in various time-domains like the day ahead, real-time, etc. These transactions take place over the counter (OTC) or Power Exchange (Px), which provide the market participants with the required platform and payment security. The transactions on OTC and Px requires a third-party platform and guarantee for contract and settlement, there incurs overhead cost. Since electric energy is a fungible commodity, it can be transacted very well with the old system like barter. Energy Banking is one such mechanism wherein one utility supplies the energy to another utility that needs it more and, in leisure, the energy can then be provided back. The requisite security of the transactions can be provided by blockchain technology. Energy banking is presently being done only on a MW quantum basis with no price tag, despite the cost being dependent on the demand-supply ratio. To ensure energy banking transactions in real-time and free from the perils of financial settlements, this article suggests the use of the Peer-to-Peer (P2P) model of blockchain technology for executing Smart Contracts mutually agreed upon by both parties and avoiding third party overhead costs.
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