An energy project built on the Ethereum blockchain is helping some citizens in Germany find cheaper alternatives for their electricity needs. The project, Lition, was launched earlier this year and now supplies energy to over 700 homes in more than 10 cities scattered throughout the country.
Lition is a licensed energy supplier and services large cities such as Hamburg, Munich and Berlin, among others. It allows consumers to connect directly with both large and small energy producers by using the strength of a blockchain.
Typically, an energy supplier – whether generating solar, electric or some other type of energy - sells its energy production to an intermediary, who resells it to consumers. However, those intermediaries are typically large multinational corporations that limit the choices available to the end client. This is what prompted the creation of Lition, according to its founder and CEO, Richard Lohwasser. The idea is to eliminate the middleman and allow the consumer to receive the best price possible.
Explains Lohwasser, "Our energy exchange connects customers and producers directly. Producers put their energy on the exchange and then customers can buy it. Usually buying directly from producers is limited to energy suppliers that are big corporations. We're bringing the exchange to the consumer, so consumers can pay for the energy they want."
Customers are able to save an average of 20% on their energy costs by eliminating the intermediaries, according to Lition. It also is a boon to the power plants, which can see an increase in revenue by as much as 30%.
Lition gives consumers the ability to choose from several options, while focusing strongly on green energy. It allows customers to select from biomass, solar or wind and then choose their preferred option. When a selection is made, the consumer pays directly to Lition and the payment is processed via an Ethereum smart contract. From there, the energy is automatically delivered to the consumer.
According to Lition’s website, "Lition's … blockchain technology simplifies the process of buying energy directly from green producers of any scale by employing transparent smart contracts that allow consumers to circumvent all of the complexity of energy distribution brokers."
There have been some obstacles to overcome along the way. Lohwasser indicated that the Ethereum network has been slow for realizing the transactions, with customers sometimes having to wait as long as 30 seconds to receive an acknowledgement of their order. This is being addressed through a partnership between Lition and software giant SAP, which has resulted in the creation of a hybrid network that operates between both private and public blockchains. The CEO added that Lition manages the consensus layer, while SAP administers the smart contract layer.