The world community attempts to build green economy which finds the solution to both environmental and fuel problems, promotes solutions to numerous social problems, improves quality and management efficiency and allows long-term economic growth sustainable to financial risks within the following 20-30 years.
Despite more modern ideas current opportunities involve the green economy in particular, as long as other approaches either compose a part of it (circular economy) or require more significant efforts and opportunities for their successful implementation (namely blue economy focused at opportunities of the residence territory).
It was found that the biggest problems in this way are the necessity to accumulate on a global scale financial resources composing of hundreds of trillions of dollars, technological obstacles and information asymmetry.
The last is the key problem as it hinders fast growth of technology and restrains actors of financial market from adequate estimation of subsist risks and project opportunities connected to green economy establishment.
The scope of information cycle and information exchange opposed the idea of sustainable growth goals – the transformation of world economic system into “green edge”, where the interests of international economic relations’ actors on behalf of the real sector economy and financial market would come together.
It was due to appearance of blockchain technology that cryptocurrency users were first experiencing its advantages (quite high level of safety, speed of transaction at corresponding market and opportunity of anonymous participation), and later the rest of the financial market gradually shifted transactions to the use of this technology. Indeed, the emission of financial tools and transactions at the real estate market changed into instant operations, which allowed to save in some cases hours and even weeks of precious time.
Energy market does not stand aside of this process and the biggest energy companies have also started to develop interaction systems for suppliers and customers of energy resources based on this technology. In fact it’s about shifting from intermediaries to direct cooperation with contractors. This allows an increase of operations and paves the way for collection, processing and analysis of a vast capacity of nonfinancial information which derives from agreements, is unified and necessary both for energy market actors and financial sector representatives (physical properties of fuel, electric energy, etc.).
Along with the presence of super-power computers, artificial intelligence systems and machine learning, the existence of a powerful system of information exchange, its storage and processing as well as managerial decision making on its basis are meant.
As a result, banking institutions and investment funds will have access to necessary information regarding the level of nonfinancial risks of a company, product (scope of greenhouse gases emissions, harmful substances, etc.) due to “well-organized contracts”. This allows to reduce time required to receive necessary information in a unified form and will cut related costs substantially which makes loan and investment resources more accessible.
Besides that, the opportunity of automatic control of both energy and financial systems appears where demand and supply of energy and financial resources will balance automatically.
History repeats itself. This is well reflected in case of USSR State automated system of record keeping and information processing (SARKIP abbreviated).
Indeed, during 1960-1970 the system found by academician M. M. Glushkov allowed to encompass military-industrial complex, having set conditions for effective management of processes within the limits of this area.
Unfortunately, in view of objective (technological constraints) and subjective (directors of enterprises used to falsely increase results) constraints the academician’s idea of a global system (money turnover and real production) for collection, processing of data and managerial decision making has not been implemented in full capacity.
However, at the beginning of the 21st century a large-scale project started with formation of “smart nets” within the bounds of US energy sector.
This project under the US government motion has been figured out to take place by 2030 and provides for investment of almost 400 billion into formation of nets which would allow to monitor its real-time condition, collect and process information regarding production and consumption of electric energy.
This facilitates the shift from traditional sources of electric energy production to renewable ones substantially (drops in electric energy production from renewable sources have to be taken into account) and provides for real-time monitoring of volumes, structure of consumption at energy market.
On the one hand, such opportunities allow consumers of produced electric energy to control volumes and structure of consumed product personally. At the same time, “smart” system of electric energy production and consumption gives opportunity to centralize both energy and information flows. And similar information is important not only as a way of energy system balancing at a time of partial renewable energy increase on a global scale, but also is the basis for evaluation of scope of black economy which is used by the International Monetary Fund.
Along with “advantages” of blockchain technology such system allows automating production and consumption processes and makes purchase and sale of produced energy (as well as the process of transfer of title) automated and fast. Prospects of artificial intelligence create conditions for automatic management of it based on data which moves within the limits of the system and are stored by distant but at the same time closely interrelated users.
Any global changes and related projects require substantial financial resources and its owners’ desire to invest into green projects in particular. In this case it’s important to gain interest of financial world representatives to develop an idea or technology. Likewise, it happened in the case of blockchain technology which demonstrated its huge opportunities in several directions at once: transactions, clearing services, commercial operations finance, client/partner identification, syndicated loans.
It’s important to note the fact that the first application of this technology was connected to the launch and functioning of cryptocurrency, which should have made up for the core disadvantage of existent currency – to eliminate monetary aggregates manipulation on behalf of the centralized issuers (like the National bank).
The fact of presence of algorithm which eliminates chances of such manipulations attracted numerous users of such system, profiteers, which led to substantial fluctuations of this asset at the market. At the time of quick development of first cryptocurrencies the financial market was thoroughly observing the results of such experiment with the involvement of numerous users from different states and continents.
As long as it was clear that the technology lived up to expectations and demonstrated such high level of safety and opportunity of fast financial transactions, the representatives of financial sector in cooperation with IT companies started development of technical solutions for different directions of their activity.
In such a way, at the beginning of January 2018 representatives of international transactions market announced testing of blockchain technology’s properties in their activity (for instance, Western Union, MoneyGramm). Besides that, platforms for emission of financial tools and clearing agreements (Digital Asset Holdings), commerce at the financial market and client identification (R3, Hyperledger) already function.
Energy market reply
Along with active application of blockchain technology at the financial market energy companies attempt to use its advantages in their business. In particular, European Union energy companies conduct testing of blockchain technology application for electric energy market sale.
For instance, testing site of electric energy market sale within European Union states named Enerchain has been launched since May 2017. The biggest EU energy companies: E.ON, RWE, Uniper, Total, Statoil, OMV, Enel, Engie, etc. are a part of this system at the moment.
Certain utility companies of European cities also joined this chain. At the time there are about 40 participants on behalf of utility companies and energy companies. Active electric energy trade between actors of the market has been taking place since October 2017. The main features and characteristics of Enerchain system are:
– disclosure of information about financial status of companies among participants online;
– availability of information about origins of electric energy. In this case priority is given to electric energy deriving from renewable energy sources based on usefulness of nonfinancial indicators and costs of greenhouse gas emissions;
– the system allows access to financial and nonfinancial (“full sustainability”) indicators when participants analyse a contractor’s status; insurance and investment companies have access to this system and can conduct operations on risks insurance and investment agreement.
Along with this, Germany has launched pilot project on use of blockchain technology in decentralized electricity transmission systems and stabilization of electric system operation in May 2017. The participants of pilot project are:
– electricity transmission system operator TenneT (provides access to electricity transmission systems, conducts events on management and stabilization of electricity transmission systems operation);
– IBM (developer of software for blockchain technology use);
– Sonnen GmbH (supplier of storage batteries, smart meters, additional technical equipment for apartment owners and private houses).
This pilot project participants are owners of houses with installed solar panels, wind stations and storage batteries, which are connected by means of smart meters, smart sockets and blockchain technology to the virtual net.
Apartment owners can connect the blockchain system by installing storage battery in their buildings. By doing so, Sonnen GmbH conducts free installation of smart meters and other related equipment.
In this case, blockchain participant from one side of Germany (for instance, southern part) is able to buy electric energy from the participant residing on the other side of Germany (for instance, northern part) at a lower cost.
Moreover, participants of decentralized electricity transmission systems are able to receive electric energy from renewable sources for free in 10 years. As of December 2017 the quantity of decentralized electricity transmission systems participants amounts to more than 4 thousand.