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News headlines across the globe reported power price surges this winter. Whether you blame the increase in renewable energy usage, bitcoin mining, or an inefficient electricity system, higher and more volatile electricity pricing is forecast for the summer. You could change electricity suppliers, add self-generation such as solar panels or a state-of-the-art energy management system, but the reality is, you only control a modest percentage of your electricity costs.
At every stage of the electricity system—buying and selling, transporting and distributing electrons—inefficiencies are adding 200 percent and, in many instances, much more, to the cost of electricity. This winter’s electricity bills quadrupled in some markets.
Fragmented Power Markets
Electricity, which cannot be easily shipped in containers and pipes such as oil and natural gas, is transported over complex power grids where its voyage to your power outlet is often complicated and costly. Power suppliers must book a path on an electricity grid in advance. Adding to the cost is high congestion at grid nodes at busy times, leading to higher costs.
‘Real time’ electricity balancing and supply does not actually happen. The lack of true demand response in the electricity network can add 300 to 400 percent to the cost of electricity.
Bringing efficiencies to a highly fragmented market is a challenge with the current system. Electricity may be generated in France, sold on the power markets in Germany and transported to power consumers in the United Kingdom by various independent system operators across several countries. Each stage of the electron’s journey affects the end user’s price. Recall the California power crisis in 2000–2001 when power price manipulations by traders caused prices to spike 800 percent, and even hospitals lost power.
A Real Time Electricity Market
By placing the entire energy ecosystem on the blockchain, Bittwatt is bringing real demand response to power markets. This transparent, real time power market allows market players to make decisions and forecast power prices based on real time information. Christian Hagmann co-founder of Bittwatt developed the smarter electricity market platform after several decades of creating IT solutions for European energy market suppliers and operators. From the journey of electrons from large electricity producers to a household power outlet, Hagmann tracked billions of dollars in losses owing to inefficiencies in the trading, transportation and distribution of watts.
Bittwatt was designed to correct these shortcomings and create value generation opportunities for power suppliers, consumers and other market players. The Bittwatt founding energy firms (Bulgarian energy market coordinator and systems balancer Energy Market TSC, Romanian Power Supplier EVA Energy, and Macedonian electricity supplier Future Energy) sought to extract value from their own supply and trading of 1,000 GWh of electricity in the European power markets.
The solution was to conduct energy trading and supply via smart contracts on the blockchain. Benefits of the encrypted contracts include real time energy exchange data and system balancing mechanisms. The energy functions are embedded in the transactions, meaning execution and settlement take place automatically as soon as both parties sign off on the smart contract. Trading losses are another cost inevitably passed onto power consumers. On the Bittwatt platform, counterparty risk is reduced through credit risk screening of participants.
Power consumers can make decisions on power suppliers, purchases and usage based on real time market information. And if you do decide to switch to another power supplier, you can do so within 24 hours on the Bittwatt platform, versus weeks or months in some countries.
With the Bittwatt token, any market member can start trading electricity on the network, where one BWT equals one kWh, or about $0.12 at current electricity prices. The initial coin offering (ICO) began on April 1st and runs for 60 days.
Bittwatt and its ICO are being guided by its advisory team of startup, blockchain and cryptocurrency experts, including COSS co-founder Andrei Popescu (Bittwatt uses the COSS exchange and payment gateway) and successful serial Internet startup investor Rune Evensen.