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Transforming utilities through the power of blockchain

Business moves fast, but few changes are as sudden or wide-ranging as that which affected the German energy sector in 2011.

In the aftermath of Japan's Fukushima nuclear power plant disaster the German government announced that all nuclear power plants in Germany would close by 2022, posing serious issues for traditional energy utilities such as Wuppertaler Stadtwerke (WSW).

WSW had to find a new way to do business, and Pinsent Masons helped it harness two emerging trends to create a new customer proposition.

The challenge

WSW had to find a way to tap into those parts of the energy market which were growing, and it had to move fast.

It wanted to capitalise on customers' growing desire for using only green energy, and certainty of its source.

Pinsent Masons helped WSW conceive and develop a blockchain-based system for the purchase of the energy, providing users with unparalleled transparency and control of the source of their energy. It was called Tal.Markt.

This was a major legal, regulatory and technical challenge. As a public sector utility, WSW was subject to complex public and competition laws as well as energy regulations.

WSW had to find a new way to do business, and Pinsent Masons helped it harness two emerging trends to create a new customer proposition.

The solution

The innovative solution was the world's first blockchain-based trading platform for green energy. 

The system allows customers to buy units of energy from a range of domestic suppliers. Blockchain technology ensures that the units cannot be bought or sold twice, giving transparency and certainty to users that energy has definitely come from a particular source. It also affords energy-conscious consumers the reassurance that they can select specific types of renewable energies they wish to support.

The system used a further innovation, smart contracts, to provide back-up power when the chosen source of power was not available. This allowed WSW to provide customers with uninterrupted supply. The smart contracts not only defined the rules around an agreement in the same way that a traditional contract does, but also automatically executed it. This meant that a customer could enjoy both choice of energy source and security of supply if that source was not available.  

 

The result

WSW’s head Andreas Feicht said that Tal.Markt had the "potential to revolutionise power retailing". German newspaper Handelsblatt reported that the platform could become "a leading marketplace for personalised renewable energy in Europe".

The project was a success on the client's own terms because it:

  • devised an entirely new model;
  • demonstrated to the German market that WSW knew the meaning of innovation and how to put this into practice;
  • stole a march on competitors.

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