SunContract is an energy trading project from Slovenia that will utilize blockchain technology to raise funds and bring efficiency and transparency to the energy market. SunContract promises to build a decentralized energy trading market.
At first glance it might sound silly that someone would build a platform for energy trading on the blockchain, however with so many energy/blockchain projects popping up lately this seems like a highly potential future use case of a blockchain.
Right now the traditional electricity market works in such a way that the power plant generates electricity and sends it to the grid where a (smart) meter collects all the necessary data. Distribution system operator (DSO) and Transmission system operator (TSO) handle transportation of electricity in the grid and guarantee that your TV works and your phone is charged.
The next part of the middleman chain is the retailer. Retailers buy electricity for a relatively low price from power producers and resell it with a high margin to end consumers. Usually, the retailer’s name is on the invoice you receive every month. Classical retailers have problems with inefficiency and high costs related to late payments and bureaucracy. In this system, small customers pay high fees while the service they get is not very user friendly.
How will SunContract work?
SunContract strives to modernise the energy sector that is known to be rigid and slowly evolving. However, that does not mean SunContract will have to build a new grid or build new power plants. The focus of SunContract is on optimising retailer’s work and make it less costly and more user friendly. Investments into infrastructure would be too expensive.
Lowering the margin of the retailer will drive down price of electricity for the end user and small producers will get a higher compensation. End customer and small producer will bid on SunContract’s trading platform and settle internally, meaning that SunContract will act as a pool of independent producers and consumers.
The beauty of this system is that it does not need new grids – it uses existing distribution lines, (mostly) existing meters, power lines and is managed by established operators. The SunContract pool empowers small producers and customers to trade freely in the electricity market – not without middlemen, but without the unnecessary ones. SunContract plans to attack the unnecessary middlemen in the energy sector much like Bitcoin attacked the unnecessary middleman in finance.
SunContract’s team believes that the future of energy markets is in renewable technologies and storage capacities. Big part of the team is well established in the energy sector so it undoubtedly has the ability to build great products. CEO of SunContract, Gregor Novak, was already involved in development of first Slovenian energy exchange as the head of IT. There are several other specialists in the team that will help with their expertise in IT, finance, security and blockchain – look them up on their website.
Right now the electricity is (mostly) produced in big power plants that use high voltage power lines to transmit electricity over long distances. Building high voltage transmission network is expensive and has problems with loss of electricity. Most of these plants use polluting energy sources such as coal, which is a threat to the environment.
SunContract’s main focus will be on solar and other renewable energy. This kind of reminds us of what Tesla and SolarCity are doing – Elon Musk surely knows what he’s doing. Solar power plants are one of the most environmental-friendly sources of energy and the photovoltaic technology is advancing rapidly. Solar energy production is more and more efficient every year. Moreover, storage capacities are improving each year – perhaps SunContract will tap into energy storage as well in the long term.
SunContract token sale started on June 28th and will last until Ethereum block number 4104830 is mined – approximately at the end of July. Funds are being raised via a Smart Contract that accepts Ethers (ETH) in a transparent way. At the time of writing, SunContract has already collected over $1.2 million from over 900 different participants. 1 Ether will net you 11,500.00 SNC tokens in the first week of the token sale. You can read more about the project on their official website – https://suncontract.org/ – or you can join their Slack channel https://goo.gl/HqHzP9.