'World first' as blockchain underpins new 'green' electricity trading platform in Germany

Dr. Sönke Gödeke of Pinsent Masons, the law firm behind Out-Law.com, was commenting after public utility Wuppertaler Stadtwerke (WSW) in Germany announced that it has become the first organisation of its kind anywhere in the world to "commission a blockchain-based trading centre for green electricity". Pinsent Masons advised WSW on the project.

The Tal.Markt is based on blockchain technology, which enables the secure completion of contracts over the internet. In addition, the blockchain technology ensures that every kilowatt hour of green electricity is only sold once to the respective customer. It is the first time that customers can independently select their electricity producer and have real proof of where the delivered electricity is produced.

The solution enables customers to "buy their electricity from local eco-electricity providers and put together their own energy mix", according to WSW, which also said that the transactions executed are "counterfeit-proof".

The utility acts as an intermediary and is responsible for "the energy management of the trade" as well as billing, according to WSW.

Gödeke said there is increasing appetite in Germany for greener energy.

"The market share of green energy in Germany is about 17%," he said. "We have monitored the German energy market closely over the past couple of years and recognise an increasing public awareness for a 'think local, act global' principle also in terms of the energy market."

Blockchain has the potential to revolutionise power retailing, he said.

"Selling power directly from producer to consumers could save many wind farms and solar arrays within Germany that will no longer receive feed-in tariffs under the framework of the German Renewable Energy Act (EEG) in the future," Gödeke said. "The loss of these feed-in tariffs demonstrates the necessity to create new business models for green energy."

WSW's project is an example of broader changes that are happening in the German energy market. Public utilities and other energy suppliers are "currently changing their business models" to focus more on becoming service providers for new and innovative energy solutions, he said.

A study carried out earlier this year on behalf of Pinsent Masons found that Germany is the number one market in the world for investing in smart energy. The study reflected the views of senior executives from private equity firms, investment banks and sovereign wealth firms based around the world.

Blockchain technology can be used in a variety of contexts, including beyond the energy sector, but should not be viewed as an automatic solution in every case, Gödeke said.