Power markets rely on intermediaries to facilitate trade. In wholesale markets, these include brokerage companies, power exchanges, system operators, and others. In retail markets, retailers and utilities trade on behalf of customers. Rarely in the power sector do end consumers exchange directly with producers without intermediate support.
The emergence of blockchains has led to questions about the need for market intermediaries. Blockchain technology offers a way for untrusted parties to reach agreement on a common digital record, a function not previously available without trusted institutions. In the power sector, market intermediaries often provide additional services that are critical to the functioning of the power system. Power exchanges protect market participants from counterparty risk, while transmission and distribution network operators ensure system reliability. Blockchains are unlikely to replace these functions. Nonetheless, blockchains could reduce or eliminate the need for brokers in wholesale energy trading, and could help drive the development of local peer-to-peer (P2P) energy markets.