EDF Energy has completed a 2MW trade of a Capacity Market obligation (CMO) with UK Power Reserve (UKPR) utilising a digital trading platform underpinned by blockchain technology.
CMO trading rules allow for capacity providers to trade all or part of their CMO for a delivery year with other eligible CM participants who meet the ‘acceptable transferee’ requirements.
This allows them to cover periods of unavailability due to planned and unplanned outages of generators and demand side participants, enabling the transfer of the risk of under-delivery which could otherwise draw penalties.
CMO trades can take up to five working days under the current system however the blockchain platform, built by Electron, incorporates the relevant trading rules to allow for automatic compliance checks.
This is said to save time and increase the speed at which trades can be approved, while the blockchain technology allows for transparency across the platform.
Jon Ferris, strategy director at Electron, said: “Trading capacity obligations shouldn’t be slow and complicated, because the rules are very clearly defined. However, the current systems inhibit the emergence of a flexible, liquid market.
“We believe that smart contracts could be used to pre-validate trades, which would enable trading to happen much faster. [This] trade shows what could be possible.”
Electron expect that the use of its platform to facilitate faster processes across the CMO, or secondary trading, market will allow for technologies like battery storage and demand side response to participate more readily by providing support for short-term capacity needs.
Chris Regan, head of business development at EDF Energy, said: “In order to help reduce electricity demand and ensure security of supply, it is critical that businesses participate in demand side management and capacity market trades are one of the options available to business to make the most from it.
“This trade shows that the technology works, and it will provide a more efficient solution for our customers, allowing them greater flexibility for managing demand side response and ultimately increasing the value of participating in the schemes with EDF Energy.”
UKPR head Sam Wither added: “We are delighted to be a counterparty in this historic trade and are hopeful of a future in which technologies like blockchain can be used to underpin leaner, smarter matching and enhanced liquidity in secondary and other markets.”