Trade wholesale power and gas without a central platform
Sector: Tertiary sector · Industry: Energy utilities · Organisation: PONTON GmbH · Maturity level: Production
Hamburg-based PONTON GmbH operates Enerchain, a decentralised order book that lets European energy trading houses close power and gas deals directly with each other. More than 40 trading companies, among them Enel and RWE, took part in the trial, and 23 utilities each contributed EUR 20,000 to fund final development. The underlying WRMHL framework achieves a block time of under one second and an average consensus time of around 200 milliseconds.
Documentation status
- Project status: Unknown — The first European blockchain energy trade took place in October 2016, and from 2017 live trading ran within the consortium; the current operational status of the wholesale platform is not clearly verifiable from audited sources, as the project focus later shifted to Enerchain Local for energy communities.
- Evidence: Evidence medium
- Editorial review: pending
Description
Hamburg-based PONTON GmbH has built a decentralized order book for the European electricity and gas wholesale market with Enerchain, involving over 40 trading companies. Until now, transactions in over-the-counter energy trading have been conducted via brokers and exchanges, which incur fees and make participants dependent on central operators. Through the distributed ledger, traders send anonymous orders directly to other participants and conclude deals without intermediaries.
The first European energy trade via blockchain was conducted in October 2016 at the EMART conference in Amsterdam; from May 2017 a proof-of-concept phase followed with 44 European energy trading companies. The technical basis is the WRMHL framework developed by PONTON, which supports a decentralized order book and achieves trading-suitable latencies with a block time of under one second and an average consensus duration of around 200 milliseconds. Traders send anonymous orders into the distributed order book, which all other participants can view, and then conclude bilateral deals without an exchange or broker in between. For the final development, 23 utilities each contributed 20,000 euros, and companies such as Enel and RWE started live trading after the test phase. The approach demonstrates that a distributed ledger can meet the latency requirements of a real trading market, which was long considered a disqualifying factor. Later, PONTON shifted the project focus to Enerchain Local for energy communities, which is why the current operational status of the wholesale platform is not clearly evident from audited sources.
Perspectives
B2B — organisations perspective
For energy trading houses, Enerchain means that bilateral contracts are possible without broker or exchange fees and dependence on individual platform operators is reduced. Companies in other over-the-counter markets can derive from this under which latency and liquidity conditions a decentralized order book is viable at all.
Employees perspective
Traders continue to work with an order book but without intermediaries in the settlement path, which changes the subsequent confirmation and reconciliation steps. In IT and trading support, a new task arises to operate one's own network node and connect it to existing trading and risk systems.
Benefits
General
- Bilateral contracts are possible without broker or exchange fees.
- Participants remain anonymous when placing orders and trade directly with each other.
- With a consensus duration of around 200 milliseconds, the ledger achieves latencies suitable for trading.
- Governance lies with the market participants themselves rather than a central platform operator.
B2B — organisations
- Lower transaction costs in over-the-counter energy wholesale trading.
- Less dependence on individual trading venue operators.
Employees
- Direct settlement path without intermediaries shortens subsequent reconciliation.
- New areas of expertise in operating distributed trading infrastructure.
Challenges
General
- A decentralized order book only works if enough trading houses participate and liquidity is generated.
- The current operational status of the wholesale platform is not clearly verifiable from audited sources.
- Connecting to participants' existing trading and risk systems causes significant integration effort.
B2B — organisations
- Without a central trading venue, counterparty risks must be secured bilaterally.
Technology foundation
Enerchain runs on the WRMHL framework developed by PONTON, which supports a decentralized order book as a distributed ledger and achieves a block time of under one second as well as an average end-to-end consensus duration of around 200 milliseconds. This latency is a prerequisite for a distributed ledger to be considered for energy trading at all, because otherwise orders become outdated faster than they can be confirmed.
Implementation examples
Enerchain peer-to-peer trading in European energy wholesale
In the European over-the-counter energy wholesale market, orders are processed via brokers and exchanges, which causes fees, makes participants dependent on central operators, and does not allow anonymous direct trading.
PONTON operates a decentralised order book with Enerchain, through which European energy trading houses trade electricity and gas directly with each other. More than 40 trading companies participated, with Enel and RWE starting live trading.
The first European blockchain energy trade took place in October 2016 at the EMART conference in Amsterdam, followed by a proof-of-concept phase from May 2017 with 44 trading companies. The platform runs on the PONTON WRMHL framework with a block time of under one second and an average consensus duration of around 200 milliseconds. 23 suppliers financed the final development with 20,000 euros each, and companies such as Enel and RWE moved into live trading after the tests.
Block time under one second and average end-to-end consensus duration of around 200 milliseconds; 44 participating trading companies in the proof-of-concept phase.
Transaction costs due to intermediaries, dependence on central trading platform operators, and the question of whether a distributed ledger can meet the latency requirements of a real trading market at all.
Tags
Energy trading, Decentralized order book, Wholesale, Peer-to-peer, Distributed ledger