(Montel) The Nordic power market could see its first trade using blockchain technology before the end of the year, as EU banking and financial market regulation tightens, said Fredrik Bodecker, founder and CEO of consultants Bodecker Partners.
“It might be possible to find a mix of physical contracts and blockchain trade which will make it possible to avoid complicated regulations under Mifid and other directives,” he told Montel.
The EU’s financial regulation Mifid 2 requires greater levels of documentation and transparency from participants in futures commodities markets.
Blockchain technology facilitates peer-to-peer deals, avoiding the need for using a bank or other platform as a mediator or for clearing and making the process simpler, cheaper and quicker.
“Existing market places will either have to cut their costs and fees, or cheaper alternatives will appear. Regardless of whether it is with or without blockchain, a marketplace for Nordic power outside EU and US regulations would be interesting,” said Bodecker.
Financial trading volumes for Nordic power have dwindled in recent years, hitting an 18-year low in 2017.
Structural changes to the market are a key reason for this, said Bodecker, who has two decades of experience in the sector from companies such as RWE and Dong Energy.
“The growth in renewables has reduced long-term hedging activity,” he said, pointing to the increased use of power purchase agreements (PPAs) to secure the sale of output from new wind farms.
Anton Tigerstedt, Montel
8 January 2018
Bodecker Partners AB is an independent partner-owned company active in the field of consultancy, analysis and management of energy price risks. We handle price risks within the fields of wind- and solar power, CHP, district heating, biofuel and gas.