Use of blockchain in energy trading

International Business Congress, April 2018

Changing world

2

Sources: Uniper Global Commodities, US National Archives, George Grantham Bain Collection

Growth of automobile industry in early 20th century

Spread of smartphones in early 21th century

Blockchain: what is it?

“Blockchain is a shared immutable ledger for recording the history of transactions. A

business blockchain provides a permissioned network with known identities” IBM

Blockchain is a distributed, digital transaction technology that allows for securely storing

data and executing smart contracts in peer-to-peer networks*

• contains a continuously growing list of data records, the so-called blocks: • time-

stamped • shared • unalterable • connected to preceding blocks;

• blocks contain data and programs, batches of individual transactions, and executables

• transactions are verified by computers run by the network’s users, the so-called nodes,

in short intervals; they are distributed, public, and encrypted

A transaction platform based on Blockchain may be set up as a private network with

authorized access, for example as an internal strategy of a bank to reduce transaction

costs, or as a public network with open access

3

*One of possible practical definitions of Blockchain

Data exchange over the blockchain

4Source: Ponton

Applications and nodes are key for transaction and storing communication history

Successful validation is needed for execution of a transaction

Cost drivers differ along the trade lifecycle

5

post-deal execution

Deal

Capture

Confirmation

Dispatching

Invoicing &

Settlement

Cost Driver:

Double booking & reconciliation

Blockchain opportunity:

Use shared data to minimize

reconciliation and prevent double

booking

deal execution

Trade execution

Cost Driver:

Fees

Blockchain

opportunity:

Disintermediation to

reduce the fees

Sources: Uniper Global Commodities

Potential uses of blockchain in the energy sector

6

1. Platforms 2. Processes

P2P

trading

Trading

platforms

De-

centralized

generation

Auto-

mationGrid

manage

ment

Mobi-

litySales&

marke-

ting

Commu-

nication

Security

Billing

Metering

& data

transfer

Sources: ESMT Berlin, Dena German Energy Agency

Platforms: consortium overview for use of blockchain

7

Consortium: members of an ecosystem working together using blockchain to

address pain points and stimulate innovation in energy sector.

Sources: Uniper Global Commodities

Platforms: use of blockchain in energy trading (1/2)

Europe‘s first energy trade over the

blockchain of energy futures products

A consortium of European energy

trading companies testing the use of

blockchain for peer to peer trading

Aim is to achieve more efficient

operational processes and reduced

transaction cost: no admission fees,

no transaction fees, no clearing fees

Proof of Concept running until end

Q1 2018

8Sources: Uniper Global Commodities, Enerchain.ponton.de

Platforms: use of blockchain in energy trading (2/2)

First European energy trade executed November 2016 for Belgian power

October 2017 in Amsterdam gas day-ahead deal with NCG delivery and day-ahead

trade for power delivered to MAVIR (Hungary) shown live to public (over 100

participants)

9Sources: Uniper Global Commodities, Enerchain.ponton.de

Processes: development of small-scale LNG market (1/4)

10Sources: Uniper Global Commodities

Kaliningrad-2

150ktpa

Vysozk

900 ktpa

Kingisepp

Pskov

23

ktpa

Ust-Luga

Gate

1500 ktpa

Truck-to-ship bunkering

LNG

(Cryogenic Pipeline)LNG

Ship-to-ship bunkering

On-board expertise in setting up complex

truck-to-ship supply chain

ssLNG Bunkering

Vessel

Processes: Shipping industry. Why blockchain? (2/4)

11

With major portion of global trade carried across the oceans every day, managing and tracking the

paper trail of millions of shipping containers can be a very cumbersome task. This can also lead to

information gap among various stakeholders such as ship owners, suppliers / receivers, ports,

shipping operators, etc.

Blockchain can be a solution to these challenges. It is a distributed database with ability to allow

multiple parties to transfer and store sensitive data / information in a space called blocks that are

secure, permanent, anonymous, and easily accessible.

With blockchain, based on permission status, each stockholder can have end – to end visibility of

shipping containers. Thus ensuring improved transparency and traceability, reduced fraud and

errors and ultimately reduced cost and waste.

90% of goods in global

trade are carried by the

ocean shipping industry each

year.

(Source: IBM)

Consensus 2017: Blockchain

Could Save Shipping

Industry ‘Billions’.

(Source: Coindesk)

One Shipment can require sign-off from 30

unique organizations and up to 200

communications.

(Source: IBM)

Processes: shipping deal management (3/4)

12

Sources: Uniper Global Commodities

Processes: small scale LNG truck-to-ship bunkering (4/4)

13

Sources: Uniper Global Commodities

More roles, more transactions – efficient upscaling is key. Clear benefits from use of

blockchain are turnaround time reduction, increased visibility and reduced reconciliation

1. Align the request with the client

2. Purchase/nominate volumes at the

LNG terminal /liquefaction facility

3. Arrange truck loading with LNG

with the terminal operator

4. Move truck within the harbor

5. Load truck onto the ship

6. Move the ship to bunkering harbor

7. Move the trucks within the

bunkering harbor

8. Perform the checks according to

bunkering harbor

9. Perform bunkering

10. Invoice and monitor the payment