Use of blockchain in energy trading
International Business Congress, April 2018
Changing world
2
Sources: Uniper Global Commodities, US National Archives, George Grantham Bain Collection
Growth of automobile industry in early 20th century
Spread of smartphones in early 21th century
Blockchain: what is it?
“Blockchain is a shared immutable ledger for recording the history of transactions. A
business blockchain provides a permissioned network with known identities” IBM
Blockchain is a distributed, digital transaction technology that allows for securely storing
data and executing smart contracts in peer-to-peer networks*
• contains a continuously growing list of data records, the so-called blocks: • time-
stamped • shared • unalterable • connected to preceding blocks;
• blocks contain data and programs, batches of individual transactions, and executables
• transactions are verified by computers run by the network’s users, the so-called nodes,
in short intervals; they are distributed, public, and encrypted
A transaction platform based on Blockchain may be set up as a private network with
authorized access, for example as an internal strategy of a bank to reduce transaction
costs, or as a public network with open access
3
*One of possible practical definitions of Blockchain
Data exchange over the blockchain
4Source: Ponton
Applications and nodes are key for transaction and storing communication history
Successful validation is needed for execution of a transaction
Cost drivers differ along the trade lifecycle
5
post-deal execution
Deal
Capture
Confirmation
Dispatching
Invoicing &
Settlement
Cost Driver:
Double booking & reconciliation
Blockchain opportunity:
Use shared data to minimize
reconciliation and prevent double
booking
deal execution
Trade execution
Cost Driver:
Fees
Blockchain
opportunity:
Disintermediation to
reduce the fees
Sources: Uniper Global Commodities
Potential uses of blockchain in the energy sector
6
1. Platforms 2. Processes
P2P
trading
Trading
platforms
De-
centralized
generation
Auto-
mationGrid
manage
ment
Mobi-
litySales&
marke-
ting
Commu-
nication
Security
Billing
Metering
& data
transfer
Sources: ESMT Berlin, Dena German Energy Agency
Platforms: consortium overview for use of blockchain
7
Consortium: members of an ecosystem working together using blockchain to
address pain points and stimulate innovation in energy sector.
Sources: Uniper Global Commodities
Platforms: use of blockchain in energy trading (1/2)
Europe‘s first energy trade over the
blockchain of energy futures products
A consortium of European energy
trading companies testing the use of
blockchain for peer to peer trading
Aim is to achieve more efficient
operational processes and reduced
transaction cost: no admission fees,
no transaction fees, no clearing fees
Proof of Concept running until end
Q1 2018
8Sources: Uniper Global Commodities, Enerchain.ponton.de
Platforms: use of blockchain in energy trading (2/2)
First European energy trade executed November 2016 for Belgian power
October 2017 in Amsterdam gas day-ahead deal with NCG delivery and day-ahead
trade for power delivered to MAVIR (Hungary) shown live to public (over 100
participants)
9Sources: Uniper Global Commodities, Enerchain.ponton.de
Processes: development of small-scale LNG market (1/4)
10Sources: Uniper Global Commodities
Kaliningrad-2
150ktpa
Vysozk
900 ktpa
Kingisepp
Pskov
23
ktpa
Ust-Luga
Gate
1500 ktpa
Truck-to-ship bunkering
LNG
(Cryogenic Pipeline)LNG
Ship-to-ship bunkering
On-board expertise in setting up complex
truck-to-ship supply chain
ssLNG Bunkering
Vessel
Processes: Shipping industry. Why blockchain? (2/4)
11
With major portion of global trade carried across the oceans every day, managing and tracking the
paper trail of millions of shipping containers can be a very cumbersome task. This can also lead to
information gap among various stakeholders such as ship owners, suppliers / receivers, ports,
shipping operators, etc.
Blockchain can be a solution to these challenges. It is a distributed database with ability to allow
multiple parties to transfer and store sensitive data / information in a space called blocks that are
secure, permanent, anonymous, and easily accessible.
With blockchain, based on permission status, each stockholder can have end – to end visibility of
shipping containers. Thus ensuring improved transparency and traceability, reduced fraud and
errors and ultimately reduced cost and waste.
90% of goods in global
trade are carried by the
ocean shipping industry each
year.
(Source: IBM)
Consensus 2017: Blockchain
Could Save Shipping
Industry ‘Billions’.
(Source: Coindesk)
One Shipment can require sign-off from 30
unique organizations and up to 200
communications.
(Source: IBM)
Processes: shipping deal management (3/4)
12
Sources: Uniper Global Commodities
Processes: small scale LNG truck-to-ship bunkering (4/4)
13
Sources: Uniper Global Commodities
More roles, more transactions – efficient upscaling is key. Clear benefits from use of
blockchain are turnaround time reduction, increased visibility and reduced reconciliation
1. Align the request with the client
2. Purchase/nominate volumes at the
LNG terminal /liquefaction facility
3. Arrange truck loading with LNG
with the terminal operator
4. Move truck within the harbor
5. Load truck onto the ship
6. Move the ship to bunkering harbor
7. Move the trucks within the
bunkering harbor
8. Perform the checks according to
bunkering harbor
9. Perform bunkering
10. Invoice and monitor the payment
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