Korea’s energy market adopts blockchain for bidding process
The Korea Power Exchange (KPX) currently revealed a blockchain-based energy bid evaluation system for the Korean energy market. KPX is a specialized non-profit, independent of the electric utilities and manages the Korean electricity market, energy distribution, and the wholesaling process. The company is liable for the power market’s operation, including bidding, metering, pricing, and settlement of power transactions between generators and retail companies.
KPX stated it has been utilizing the blockchain-based proposal evaluation system from the commencement of this month. It described a three-step process. The evaluation committee evaluates the bids utilizing an app, and the assessments are stored on the blockchain. The evaluation results are automatically posted on the website, checking manipulation or modifications, and providing transparency.
The pricing of electricity in Korea blends market and nonmarket forces. KPX anticipates electricity demand for each trading day and accepts bids from generation companies for the possible capacity a day in advance. KPX determines the wholesale price according to a pricing mechanism rather than a pure market mechanism.
Nevertheless, there are various loopholes as the mechanism could be manipulated, and wholesale prices could be decreased or inflated to particular profit parties. The Samsung scandal is a firm example of bribing government officials for corporate advantages. Meantime, the OECD predicts that 10-30% of the procurement contract value is lost in mismanagement and corruption. It appends that procurement prices could be decreased by 20% by reducing bid-rigging.
KPX utilized Hyperledger Fabric to create the electricity bidding system and diminished the evaluation process to one day from the previous five days. “The power exchange will play a leading role in spreading the fair-trade culture through transparent business selection through the operation of a blockchain-based proposal evaluation system,” Ji-yeon Han, Head of Financial Management Team at KPX in a statement.
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