The European Commission today published a document on the digitization of the energy sector. As part of its action plan, it will develop an experimental platform for blockchain-based energy trading. It also mentions actions to restrict the use of energy for crypto mining during the current crisis.

With regard to power trading, it generally involves renewable energy projects where households can provide solar-generated power to the local grid or microgrid. These energy sellers are compensated using blockchain for trading and transaction tracking.

Europe’s experiment will focus on how people respond to price signals and identify potential barriers to adoption, be they legal, regulatory, fiscal or technical.

Some regulatory problems have already been identified. A blockchain-based platform, Equigy, aims to balance energy among the crowd. It was founded in 2020 by four major European energy grid companies, Terna from Italy, swissgrid, TenneT and AGP from Austria.

TenneT and TransnetBW have proposed changes to German regulations to allow so-called redispatch for small distributed power sources. The grid operator uses redispatch to avoid congestion by adjusting incoming power from power plants, or in this case, prosumers.

Blockchain miners lock

Europe’s action plan also targets energy-hungry proof-of-work blockchains like Bitcoin. Given the current energy crisis, he suggests that European countries implement “specific and proportionate measures to reduce the electricity consumption of crypto miners.” If load shedding is required on electrical systems, then mining should be shut down. In the longer term, it asks countries to remove tax breaks for crypto miners.

Furthermore, it plans to develop an energy efficiency label for blockchains with international cooperation.