The blog post cites data from the government of the Russian Federation, which revealed that total debt for electricity as of Sept. 1, 2019, hit 1.3 trillion rubles ($15.7 billion), of which 800 billion ($12.6 billion) was accounted for by households.
The system — initiated by Rosseti and developed by the Russian distributed ledger technology (DLT) startup Waves — aims to automate and make transactions between energy producers, suppliers and consumers more transparent, as a Dec. 10 blog post from Waves has outlined.
Russia’s national energy grid operator Rosetti is testing a blockchain solution for payments in the retail electricity sector.
Domestic energy sector battling debt
Waves indicates that the main driver for the project is the inefficiency, opacity and mounting debt that currently besets the domestic industry.
Pain points reportedly include consumer non-payments, failure of some payments to reach manufacturers, siloed or inaccessible data, and inaccurate metering calculations by intermediaries.
The results of an initial, successful pilot of Waves’ blockchain solution — involving 400 households in the regions of Kaliningrad and Sverdlovsk — was first presented at the Electric Networks Forum in Moscow earlier this month.
The project’s next phase will see Rosetti implement the system across the entirety of both regions and is expected to start early next year. Ultimately, the partners envision rolling the solution out nationwide.
Partnership with Russia’s largest private bank
Waves’ solution, which incorporates smart contract technology, enables households to monitor their energy consumption in real time using an app, and automates payments between consumers and energy suppliers in the network. Among its features, the app can recommend users to switch to more suitable tariffs based on their data analytics.
The solution is directly integrated into electricity meters and involves a partnership with Alfa Bank, the country’s largest privately-owned bank.
In a statement, Denis Dodon, director of the Alfa Bank Innovation Development Center, emphasized the importance of partnering with a Russian DLT startup, characterizing the project as a national platform that forms part of a national program.
As reported, Russia is pursuing blockchain development across multiple national infrastructural and urban projects, while the future of decentralized, private cryptocurrencies remains uncertain.
Blockchain in global energy innovation
Last year, South Korea’s largest power provider, Korea Electric Power Corporation, announced it would be using blockchain and other innovative energy solutions to develop its next-generation micro grid.
This month, Cointelegraph reported that the second-largest power utility in Japan has chosen to extend its trial of a blockchain-powered system for transacting renewable energy credits.
Russian Prime Minister Introduces Bill to Allow Fintech Sandboxes, Blockchain Included
The Russian government may soon allow the creation of regulatory sandboxes for companies working on cutting-edge technologies like artificial intelligence and distributed ledgers.
Introduced in a new bill on March 17 by Prime Minister Mikhail Mishustin, the plan does not directly mention blockchain or cryptocurrencies, but an explanatory note mentions distributed ledger as one of the technologies that could be explored in the new “experimental regulatory regimes.”
Such regimes can be established to live-test the new technologies in medicine, transporation, distant learning, financial markets, online commerce and other sectors. The bill gives Russia’s regulators scope to deal with novel tech in a more flexible way, the document says. It’s also suggested that the country’s regions would be able to set up their own local sandboxes.
The Bank of Russia, the central bank, will be supervising the sandboxes related to fintech. Representatives of the Economic Development Ministry, which initiated the bill, told the Russian newspaper Izvestia that fintech projects operating within sandboxes would be subject to lighter regulation regarding cash reserves, financial reporting and foreign currency controls.
Olga Shepeleva, a senior expert at the Center for Strategic Research, a Moscow-based think tank that helped draft the bill, told CoinDesk the law should have already been passed as a part of the government’s program on developing the digital economy in Russia. However, there were concerns that such a law would excessively skew the power balance in favor of the executive branch.
“The main idea is that the government can choose to make a temporary exceptions from laws and regulations” for the sandboxes, Shepeleva said.
The Bank of Russia has already been running a regulatory sandbox for fintech projects, and has even reported successfully testing a blockchain-based tokenization pilot by the mining and smelting company Nornickel.
However, the central bank’s sandbox only helps to model the possible uses of the new technologies, but does not allow businesses to test their use cases on real clients; neither does it provide the means for expert and public control over such experiments. The new bill will allow the creation of sandboxes in which real businesses will be working with real customers, Shepeleva explained.
Russia’s central bank has consistently maintained a skeptical stance towards cryptocurrencies and has recently said it’s involved in drafting legislation that will block crypto marketplaces from operating in the country, though ownership would likely be tolerated.
Mikhail Komin, research director at the Center for Advanced Governance in Moscow, said Russia is unlikely to become more accepting of cryptocurrencies anytime soon, saying: “For sure, the coronavirus pandemic and the financial crisis makes the government look for unorthodox solutions, but crypto is not a part of that.”.
“The Bank of Russia is interested in lowering uncertainty in the financial and foreign currency markets caused by the volatility of the Russian ruble, and it believes cryptocurrencies would add even more uncertainty”, Komin said. «The Bank of Russia’s position remains the winning one in this argument.»
