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The Peculiarities Of Energy Trade On Digital Platforms Using Unconventional Contract Structures
 
PIIS231243500022519-8-1
DOI10.18572/2410-4396-2020-3-78-84
Publication type Article
Status Published
Authors
Lyubov I. Shevchenko 
Affiliation: MGIMO University
Address: Russian Federation, Moscow
Timur R. Kulakhmetov
Affiliation: Legal Protection Center Law Firm
Address: Russian Federation
Journal nameEnergy law forum
EditionIssue 3
Pages78-84
Abstract

Digitalization shall spur the development of market mechanisms and competition, especially in retail electricity markets, by making information available to all stakeholders, including regulators and consumers. It will be difficult to implement initiatives to make sure consumer demands are met at all times without studying global practices of using unconventional contract structures in the energy sector and the impact of the energy transition on public relations. At the same time, the absence of an effective regulatory framework that would allow us to take full advantage of unconventional contract structures for their further application in the energy sector can result in technological inferiority in key areas of the smart energy sector in terms of both technology and standardization. As the Russian regulatory framework for the regulation of public relations using unconventional contract structures is still in its infancy, it makes sense to turn our attention to other countries’ distributed generation development regulation practices that gave impetus to change the industry and use digital platforms.

Keywordsenergy law, Russia’s Energy Strategy until 2035, digital revolution, unconventional contract structures in the energy sector, digital platforms
Received06.08.2020
Publication date04.09.2020
Number of characters18839
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1 The use of digital platforms as a means of energy trade with multiple participants implies the establishment of contractual relations within autonomous energy systems based on previously unknown structures for which law enforcement practice is still lacking in most countries. This necessitates an analysis of causes for the occurrence of such structures as a result of changes in the public environment and the evaluation of the impact of the energy transition (Energiewende, a transition from carbons to renewable energy sources) on the use of innovative technologies in contract-based energy trading relations.
2 A transition of Russia’s energy industry to a digital platform is required by both general economy targets established by decrees of the Russian President and in specific orders. In the energy sector, the key focus of digital development, as established by the President, is implementation of intelligent power grid management systems based on digital technology. This task is included in Russia’s Energy Strategy until 2035 and the concept of the Russian Intelligent Energy System national project that aims to transform the Russian energy system according to the global trends of blurring divisions between producers and consumers due to advances in the accumulation, distributed generation and smart grid technologies.
3 Back in 2003, A. Bard and J. Söderqvist pointed out the need to identify the role of the reigning information technologies in the historical process and internal dynamics of digital networks for the understanding of the key aspects of the ongoing information revolution. Indeed, society development stages related to invention of writing, printing, electricity, advent of the microprocessor technology and personal computers revolutionized the society, the culture, the mode of life. Naturally, industrial revolutions were preceded by changes in the ways we store and process information. In this regard, when examining the peculiarities of emerging regulation of digital energy supply using unconventional contract structures, we shall dwell on the transformations of public relations caused by radical changes in information processing, because these transformations have reshaped the society completely. Therefore, as the Fourth Industrial Revolution elements (the Internet of Things (IoT), Big Data) continue to penetrate the energy sector, energy deliveries are becoming inseparably linked to exchange of data on the delivery process.
4 Speaking of the use of innovations in the energy sector, it should be emphasized that such processes are complex as they are predetermined by the regulation of relations in the digital energy sector only in combination with the digital economy. Thus, the objective of the digital energy sector is to reduce the cost of energy transfer transactions between the consumers using innovative technologies. Therefore, transformations will affect above all the relations between civil commerce stakeholders, and not technological processes. As correctly pointed out by V.V. Romanova, “the goals of the National Technological Initiative, the national goals, and the strategic tasks of the development of the Russian Federation for the period up to 2024 are closely linked to energy security conditions, while clearly suggesting an innovation component in relation to the use of digital technology in the energy industry”. V.V. Romanova noted that “poor innovation performance, inferiority in terms of the development and implementation of new and promising technologies (including those of the digital economy) are the key economic security challenges and threats as stated by the Economic Security Strategy of the Russian Federation until 2030”.
5 In 2019, the International Renewable Energy Agency published a report stating that application of digital technologies, such as smart grids, the Internet of Things (IoT), big data, and artificial intelligence, in the energy industry accelerate the use of renewable energy sources in the new smart generation and distribution systems.
6 The use of digital platforms to buy and sell energy remotely makes it possible for multiple energy system stakeholders to enterin contractual relations simultaneously. This requires a new approach to deal with management difficulties. Such an approach is being developed and tested around the globe under different names (Internet of Energy, Transactive Energy, Energy Cloud, FREEDM Systems). In Russia, this paradigm is the backbone of formation of a technological vision under the Energynet National Technological Initiative (Roadmap) and underlies the ongoing IDEA (Internet of Distributed Energy Architecture) development.
7 V.V. Romanova analyzed the provisions of the Energynet National Technological Initiative and concluded that “a legal framework needs to be developed to regulate the use of digital technologies for metering of extracted, produced, supplied, delivered, transported, stored energy resources, operation of power systems and facilities, activities and interaction of energy market players in contractual regulation and settlement of disputes”.

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