Russia’s national energy grid operator Rosetti is testing a blockchain solution for payments in the retail electricity sector.

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.

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.

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.

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.