INTRODUCTION

Global electricity markets have few technology platforms that provide liquidity and hedging options for participants or end users. Efforts to combine electricity with blockchain have focused on large generating and consuming companies meeting the innovation expectations of their investors around the world by developing centralized technology platforms without really allowing users to coexist in energy transactions in a decentralized way^[1] .

To participate in the North American or European electricity markets requires authorizations issued by the corresponding regulators, high working capital and guarantees.This limits the participation of potential companies and users as it isdirectly related to their financial capabilities. Given that the marketscalculate the total possible credit exposure; as for example in the market^[2]of the Electric Reliability Council of Texas (ERCOT), based on the operationsperformed and considering a period of time during which the markets charge andpay the purchase and sale of energy according to the positions made by eachparticipant and this varies according to the market that can be from 7 to 45days.

Within North America there are 10 electricity markets that allow theparticipation of companies in different modalities of buying and sellingelectricity, within them there are 7 in the United States^[3] ;Electric Reliability Council of Texas (ERCOT), California Independent SystemOperator (CAISO), Midcontinent Independent System Operator (MISO), PJMInterconnection (PJM), Southwest Power Pool (SPP), New England IndependentSystem Operator (NEISO), New York Independent System Operator (NYISO), 2 inCanada; Alberta Electric System Operator (AESO) & Independent ElectricitySystem Operator (IESO) and 1 in Mexico operated by CENACE.

In Europe, thereare 22 countries that allow private investment and that use a variable marketprice to charge or pay electricity prices, only a handful of OTC markets allowusers to execute trades, only through a market participant or a broker.

PROBLEM

The electricitymarkets require a minimum capital to start operations, in Mexico, for example,the company requires a constituent capital between 1 million pesos and 50million pesos, depending on the modality, and CENACE requires at least 1million pesos (40 to 50 thousand dollars) just to sign a market participantcontract. Afterwards, a compliance process must be passed where financial,technical and operative capacities must be accredited to start the activities of buying and selling electric energy^[4].

Each market hasits own restriction to activate a market participant, but to initiateoperations there must be compliance on credit exposure, where each market hasits own rules to determine the amount of financial guarantees and the type ofinstruments accepted. In the markets there are two ways to measure the exposureof market participants, one is the net amounts due from their commercialoperations or known liabilities and the second is the estimated potentialliability or credit exposure, which is calculated in different ways but in all cases, the sum of both should never exceed the collateral posted by market participants^[5].

In addition, there are international energy futures markets, where transactions can be madewithout knowing the counterparties through authorized operators who are theintermediaries, and they are the ones who approve the purchase and sale offers, who settle and who allow the entry of users, whether they are market participants or speculators.

Through its services, users can place forward risk positions and trade “calls” and “put”options on commodities such as gas, oil and electricity. Currently there are 5companies at international level covering different markets where it is possible to trade future positions and options where they use the prices published by market operators to settle (collect and pay) users in arrears. Toenter marketing it is necessary to^[6].

^[1] Information obtained from the website https://energydigital.com/top10/top-10-energy-companies-using-blockchain-technology

^[2]Information obtained from the website https://www.ercot.com/files/docs/2020/08/18/2020_08_Credit_Management.pdf

^[3] Information obtained from the website https://www.epa.gov/green-power-markets/us-electricity-grid-markets

^[4] Information obtained from the website https://www.cenace.gob.mx/Docs/14_REGLAS/Manuales/Manual%20de%20Garant%C3%ADas%20de%20Cumplimiento%20[DOF%2016-03-16].pdf

^[5] Information obtained from the website https://bpmcm.caiso.com/BPM%20Document%20Library/Credit%20Management%20and%20Market%20Clearing/Credit%20Management%20and%20Market%20Clearing%20V11_redline.pdf & https://www.cenace.gob.mx/Docs/14_REGLAS/Manuales/Manual%20de%20Garant%C3%ADas%20de%20Cumplimiento%20[DOF%2016-03-16].pdf

^[6] TomJames "Energy Markets, Price RiskManagement and Trading" John Wiley & Sons (Asia) Pte Ltd, 2008, p.34.

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Table 1. Energy Futures Markets