As cool as this may seem, trading power on the blockchain should hopefully not look like this (via Pixabay).

Fujitsu’s blockchain project lets consumers trade electricity with each other

B-to-B sales by power customers can take the strain off the grid and encourage green energy production

A new blockchain-based energy trading platform that encourages corporate energy consumers to trade power among themselves when the grid is strained by high demand led to a 40 percent improvement in efficiency in a simulation, Japanese multinational Fujitsu announced on Jan. 30.

Fujitsu unveiled the results of the pilot project at the ENEX 2019 Energy and Environment Exhibition conference in Tokyo. Working together with with power distributor ENERES, the firms were able to decrease the amount of power the utility had to generate by making it available from other sources.

The system is environmentally friendly in two ways, Fujitsu claims. It reduces traditional “dirty” power generation during times when utilities would otherwise have to expand output, and it encourages the production of renewable energy by giving small producers a way to sell it.

When faced with a spike in consumption, utilities now have a system called demand response in place, in which large power consumers like factories and retail stores are paid to decrease the amount of power they use during periods of peak demand. Companies called aggregators act as middlemen, matching utilities’ power reduction requirements with consumers who can meet those demands on a one-on-one basis, and handling payment. Right now, the success rate of demand response can be low, Fujitsu maintains, with consumers often unable to meet utilities’ needs.

In order for consumers to meet their energy reduction goals, they currently have to physically cut power usageessentially, turn off the lights. Fujitsu’s platform would let the consumers buy power from other consumers, making it easier to meet power reduction quotas.

It first determines the amount of energy available for sale from consumers with excess power and matches it with buy orders from consumers seeking to meet power reduction goals. This speeds the ability of consumers to let the aggregators know if they can meet their goals. The platform also optimizes the sell and buy orders, reducing waste.

The transparent blockchain also ensures the accuracy of the buy and sell orders.

This is just one of many ways that companies, many of them VC- or ICO-funded startups, have been using blockchain technology to revolutionize the energy industry, often focusing directly on environmentally friendly generation methods like solar or wind power.

Energy-focused blockchain startups raised $322 million between Q2 2017 and Q1 2018, according to Green Tech Media. Add in Q1 2017 and 54 energy focused blockchain startups were launched, its research found.

As Modern Consensus reported earlier this month, blockchain projects are being used for everything from tracking oil sales by the world’s largest producers to enabling green energy buyers to trace the source of their power back to an individual wind turbine or solar farm.

But one of the most important benefits of introducing blockchain to the energy sector is its ability to eliminate middlemen, said a PwC paper, “Blockchain – An Opportunity for Energy Producers and Consumers?

“A key applicationwhich we will return to throughout the course of this study as our basis for evaluating the potential of blockchain technology in the energy sectoris to develop a decentralised energy transaction and supply system,” the study said.

This is one way in which Fujitsu’s platform differs from most blockchain energy companies’ technology: it does not eliminate the middleman. Instead, the aggregators would continue to oversee the complex and time-sensitive process of helping utilities seeking power savings during times when energy use is high—for example, at hours when people get home from work and turn on air conditioners and televisions, spiking demand.

But it also uses the efficiencies consumer-to-consumer blockchain-based smart contracts offer power companies as they seek “to better manage the pressure on supply and to manage demand,” says Bob Feghali, co-founder and corporate development and membership officer for the Energy Blockchain Consortium.

While those efficiencies remain a goal of many blockchain-based startups in the energy industry, “we will continue to see hybrid implementations where the middlemen continue to add value,” he said.

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Leo Jakobson, Modern Consensus editor-in-chief, is a New York-based journalist who has traveled the world writing about incentive travel. He has also covered consumer and employee engagement, small business, the East Coast side of the Internet boom and bust, and New York City crime, nightlife, and politics. Disclosure: Jakobson has put some 401k money into Grayscale Bitcoin Trust.