Business Area Markets, the energy trading branch of Vattenfall, a leading Swedish power company wholly owned by the government, is testing potential applications of blockchain.

Announced this week, the firm has joined forces with 22 other European energy trading firms in an effort to build a peer-to-peer trading system in the wholesale energy market using the technology.

The trial, according to statements from Vattenfall, is being hosted by Ponton, a company based in Hamburg whose encrypted software allows trading organizations to anonymously send orders to a decentralized order book.

The proof-of-concept will run until the end of 2017, and if successful, participants intend to start live trading on the platform.

Vattenfall and other trading firms expect to be able to buy and sell energy without going through a centralized energy marketplace, thereby saving money. Today, BA Markets trades either via energy exchanges or directly with counterparts through brokers and broker platforms.

"On average, we enter into 1,400 deals per day across all energy commodities and markets," said Kilian Leykam, trading business development manager at BA Markets, adding:

By switching to a peer-to-peer system, the firm expects to operate more efficiently at lower transaction costs, which would enable the trading of small-scale production and consumption that involves, for example, private homes with solar panels.

Still, Vattenfall is not the only energy giant experimenting with blockchain technology use cases.

Earlier this month, a group of energy firms including BP and Austrian utility giant Wien Energie announced that they completed a blockchain energy trading trial. Further, in the US, states like New York, as well as the Department of Energy have embarked on similar efforts.

Vattenfall image via Hieronymus Ukkel/Shutterstock