EDF Energy and UK Power Reserve have completed the first exchange of a capacity market obligation using the blockchain-based energy trading platform being developed by Electron.
UK Power Reserve purchased a 2MW contract for demand-side response (DSR) covering the 2017/18 delivery year from EDF Energy.
According to Electron, conventional trades can take up to five days to process, presenting a barrier to participation in the market, particularly for distributed energy resources such as batteries, electric vehicles and DSR.
The firm said incorporating capacity market trading rules into the platform has allowed compliance checks to be carried out automatically, bringing huge improvements to the speed and efficiency of transactions which can now be processed almost immediately.
As the platform is underpinned by blockchain, there is also a transparent, easy-to-check and auditable trail of trades.
Electron chief executive Paul Massara said: “This trade shows there is clear market interest in trading capacity market obligations.
“It demonstrates the market need for a flexibility trading platform, like the one Electron is building, that provides a level playing field and efficient trading environment, as well as being open to innovation”.
“Trading capacity obligations shouldn’t be slow and complicated, because the rules are very clearly defined,” added Electron strategy director Jon Ferris.
“However, the current systems inhibit the emergence of a flexible, liquid market. We believe that smart contracts could be used to pre-validate trades, which would enable trading to happen much faster.”
EDF Energy, through its Blue Lab innovation accelerator, has been a key contributor to the design of the platform.
The company’s head of business development, Chris Regan, said: “In order to help reduce electricity demand and ensure security of supply, it is critical that businesses participate in demand-side management and capacity market trades are one of the options available to business to make the most from it.
“This trade shows that the technology works, and it will provide a more efficient solution for our customers, allowing them greater flexibility for managing demand-side response”.
Sam Wither, head of UK Power Reserve, said: “We are delighted to be a counterparty in this historic trade and are hopeful of a future in which technologies like blockchain can be used to underpin leaner, smarter matching and enhanced liquidity in secondary and other markets.
“We are encouraged by the success of this trade and encourage the regulator and system operator to sit up and pay attention to the kind of progress which is taking place in our industry. The possibilities for creating a transparent and well-functioning energy system are endless and the benefits to consumers of a more efficient and liquid market are all too apparent.”