The Korea Power Exchange (KPX) recently unveiled 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 responsible for the power market’s operation, which includes bidding, pricing, metering, and settlement of power transactions between generators and retail companies.
KPX said it has been using the blockchain-based proposal evaluation system from the beginning of this month. It outlined a three step process. The evaluation committee assesses the bids using an app, and the assessments are stored on the blockchain. The evaluation results are automatically posted on the website preventing manipulation or alterations and providing transparency.
The pricing of electricity in Korea combines market and non market forces. KPX forecasts electricity demand for each trading day and receives bids from generation companies for the available capacity a day in advance. The wholesale price is determined by KPX according to a pricing mechanism rather than a purely market mechanism.
However, there are several loopholes as the mechanism could be manipulated, and wholesale prices could potentially be reduced or inflated to benefit particular parties. The Samsung scandal is a stark example of bribing government officials for corporate benefits.
Meanwhile, the OECD estimates that 10-30% of the procurement contract value is lost in corruption and mismanagement. It adds that procurement prices could be reduced by 20% by eliminating bid-rigging.
KPX used Hyperledger Fabric to build the electricity bidding system and reduced 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 told Energy Daily.
Yesterday, Ledger Insights reported on a WEF trial exploring blockchain for transparency in government procurement transactions.