Blockchain Technology and Electricity Wholesale Markets: Expert Insights on Potentials and Challenges for OTC Trading in Europe

Abstract

In this manuscript, we investigate the adoption of blockchain for over-the-counter (OTC) electricity wholesale trading under the EU regulatory framework. Our analysis of the core legislation reveals six potential issues: (1) data immutability-related error correction, (2) personal data protection and immutability, (3) access to different data layers, (4) obligation and capacity to report, (5) identification of counterparties and (6) conflict of interest. These six issues were used as basis for a survey with experts in this field from industry and academia. The majority of our respondents indicated four major points: (i) reduction of transaction costs is the main expected benefit, (ii) the application of blockchain can be compliant with the current regulatory framework, (iii) a sandbox is the most welcome regulatory approach to reduce legal uncertainty, and (iv) the first use case to be commercially implemented is expected to be a P2P platform, ahead of a use case focused on post-trade processes. We believe that the results presented in this manuscript might serve as guidance for market participants aiming to enable the development of blockchain.