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Blockchain Technology

Blockchain technology enables direct contracts between energy consumers and

power producers. Therefore, all consumers must comply with energy laws, espe­

cially the laws relating to energy safety and risk management. The function of meter

operators will change; they will no longer need to gather and monitor data them­

selves, since all information on use and transaction is immediately and precisely

shared using the blockchain technology through smart contracts.

To deliver electricity directly to consumers from a power supplier and complete

a financial exchange between the parties on blockchain technology, both the parties

must integrate within the system. Since the energy consumer (see Figures 7.1 and 7.2)

will continue to use power from the network, the consumer will eventually be the

meter operator. The practical challenge begins as the question remains whether the

consumer can effectively understand and adhere to the technicalities relating to

meter reading (PricewaterhouseCoopers, 2016). Blockchains are still to be imple­

mented in energy market communication systems. A blockchain model in the energy

industry can create a substantial financial and organizational obstacle. One signifi­

cant barrier stopping the implementation of transaction models based on blockchain

is that they must conform to existing regulatory requirements (Diestelmeier, 2019).

Any of the advantages that a decentralized P2P relationship structure would offer

are then missed.

A blockchain roll-out will have a significant effect on energy market competi­

tiveness. There is a possibility that small or local firms will face fewer obstacles,

while big investors will be financially affected. Conversely, many experts believe

there is a solution to this (Löbbe & Hackbarth, 2017). Setting up private blockchains

with lucrative offers for consumers will allow them to remain in the market (Löbbe

& Hackbarth, 2017). In such a case, small vendors will fail to include them in the

transaction model of the energy market. The existing insecurity regarding legal and

regulatory approval is another hurdle for blockchain implementation in the energy

industry. Compared with the anticipated blockchain-based energy model, the exist­

ing regulatory structures are focused on a simple distribution of corporate and legal

obligations.

7.4  LEGAL AND REGULATORY CHALLENGES

With every dramatic transition to new technologies, blockchain poses a range of

legal concerns. Legal concerns vary from private to public international law and

from financial to energy laws and regulations, based on the nature and scope of

blockchain applications. Some of the legal concerns of blockchain relating to energy

industries are highlighted here.

7.4.1  Applicable Law

The topic relating to applicable law is the first issue posed in blockchain. In block­

chain, jurisdiction is important since the parties of each transaction will be in sepa­

rate countries. Hence, determining the applicable law will be challenging. For each

transnational transaction in blockchain, all the parties to the smart contract will feel