Instantaneous energy trading systems using blockchain technology will be a reality within the next decade, according to one leading academic.
Speaking to Utility Week the director of the Centre for Financial Regulation and Innovation at the University of Strathclyde, Daniel Broby, said these systems could be in place within the next seven to 10 years, or even sooner.
He said he expected to see the roll out of “sophisticated” financial trading systems using blockchain to come within the next five years.
Broby said these energy blockchain systems would allow “instantaneous billing with the market rate as it is”.
“It will enable anyone with a solar panel on their roof to feed into the grid,” he explained.
“You can do that at the moment, but it’s not done on a second-by-second basis. It will also allow for better grid management. Fluctuations can all be better managed if you have an instantaneous pricing mechanism, which is part of a trading system linked into micro-producers.
“The technology is there to make an integrated network, which facilitates power trading. The vision people are now working out how to make it more of a reality. It’s just a question of determining the protocol, which is acceptable to market participants.”
Broby said academics at the University of Strathclyde are currently working on the “biggest flaw” in blockchain, which is how transactions are time stamped.
“If you are doing energy trading, the time stamp you get is relevant, because that’s the time stamp you want in order to get the price you paid for.
“The problem is if someone has a faster computer than you, they can work out the price fluctuations and get in front of you.”
He said the university has teamed up with the National Physical Laboratory, the Toronto Stock Exchange and the consultancy firm Z/Yen, to use an atomic clock and record trades directly on a distributed ledger.
The project has recorded more than 20 million transactions, time-stamping each with co-ordinated universal time over three hours of trading.
“This is an exciting trial that will have real world policy impact,” he added.
“It is at the cutting edge of both finance and technology, helping make money payments over the Internet cheaper, faster and more efficient.”