Blockchain in the Energy Sector: A Turning Point for an Entire Industry
Uses for blockchain are shared on a regular basis. Usually, the energy industry usually tends to get put behind more “exciting” opportunities. Yet, there are a total of 65 promising blockchain use cases within the energy and utility sectors. Despite them flying under the radar, a joint effort of World Economic Forum, Stanford Woods Institute for the Environment, and PwC have recently put them together into a report.
This report states that distributed ledgers could improve the current state of the energy sector. It would benefit both producers and consumers alike. A smart application of blockchain can open new opportunities for energy distribution.
Here’s the list of what the energy industry could get by using blockchain-powered solutions:
- Reduced costs of energy production
- Lower expenses for energy consumers
- New business models
- Opportunities for clean energy and environmental sustainability
- Increased transparency
- Better data privacy for all sides
- Removal of all costly intermediaries
- Top-end security
Of course, this is just the tip of the iceberg. Blockchain energy solutions might change the industry and bring about a new era of blockchain.
Energy Sectors Are Already in the Midst of Disruption – Blockchain Just Offers a Better Way to Pull it Off
The global energy sector is already faced by multiple disruptors aiming to fundamentally transform how electricity markets operate. Pushes for total digitalization, challenges associated with decarbonization, ideas of decentralization, the growing need for electric mobility, etc.; all of that is currently applying pressure on the energy industry.
Obviously, the fact the demand for energy is at an all-time high does little to defuse the situation.
It’s more fitting to view blockchain technology as a solution to disruption rather than yet another cause for concern. That’s why we restrain from calling blockchain a true disruptor for the energy industry; as far as we’re concerned, blockchain holds the keys to the ideal future of this sector and is not another problem that needs dealing with.
Once we come to grips with such a point of view, we are able to utilize it. Blockchain empowers us to make the most out of everything putting pressure on the energy sector at the moment. We could be paving the way for all true disruptors to make a positive mark on the way energy is produced, distributed and consumed.
Blockchain Use Cases and Applications – Building Blocks for a Rejuvenated Energy Industry
Blockchains and distributed ledger technology (DLT) are the extra push for legacy energy sectors. And, if used wisely, they can put an end to siloed infrastructures and numerous process inefficiencies plaguing the field.
While it would entail sizable investments of both time and money, experimenting with blockchain could transform it. New use cases in the energy industry could provide more control, improve visibility, increase operating efficiencies, and streamline regulatory reporting. The value of energy blockchain might jump to somewhere around $18 billion in just a half a decade.
It has a broad number of applications across the power sector, from local microgrids to large-scale energy trading. Here’s a closer look at specific use cases that clearly illustrate the incredible potential for blockchain energy solutions:
A whole new market with no costly intermediates
Unlike how the current market operates, blockchain platforms differently for electricity distribution. It can connect end-users directly to the supplier, enabling consumers to purchase energy directly. This will satisfy the energy needs of its customers without having to depend on local utility companies.
Just like all blockchain, energy blockchain systems would be capable of operating without the need for an intermediary. Sure, the pipelines would need to be installed. After they’re installed, a blockchain is fully able to manage them on its own. Obviously, self-executable smart contracts would play a major part in any scenario.
A study by Consensys projects that blockchain-based energy platforms could reduce consumer bills by around 40%. This would be enough of a game-changer as it cuts consumer’s expenses almost by half, giving a considerable competitive edge.
Bullet-proof regulatory reporting and compliance
One of the most promising aspects of energy blockchain is the introduction of a reliable platform for recording transactions. Right now, regulatory entities are putting pressure on E&R companies to detect noncompliance or other regulatory issues.
Unfortunately, with the technologies we currently have at our disposal, this process is a tremendous challenge. It requires gathering, filtering, and analyzing the data without error. Of course, exposing corporate information also places the company in a tough spot; which is the main reason why we need better methods of sharing sensitive data.
The incorporation of blockchain and energy platforms can bring ultimate transparency. It will act as a regulator need to securely access clean, tamper-proof data. On the other hand, it would also allow energy companies to retain strict control over the accessibility of information.
A far more efficient network
The end-to-end process of producing, converting, and delivering energy entails an incredible number of steps and phases. In addition, it requires cooperation between a long line of participants who do not always see eye to eye. From major energy companies to government inspectors to individual service providers and consumers, there are multiple downsides. The current process of supplying power is highly disjointed and too siloed to ever reach the desired levels of efficiency.
With smart blockchain implementation, however, we can create a platform that supports the entire end-to-end process of power supply. Efficiency and traceability would improve across the board and, as a result, would minimize the energy squander. Naturally, the possibilities will grow as we continue to combine decentralized networks with Internet of Things (IoT) devices.
The allure of independent microgrids
Another promising idea for combining blockchain and energy systems is the concept of microgrids. Microgrids are localized networks of energy production that operate independently of centralized power generation facilities.
By using microgrids, suppliers would be able to receive easy and faster payments. Their main advantages are better transparency, security and efficiency would prompt consumers to give microgrids a try instead of sticking to standard supply chains and their shortcomings.
In addition, these kinds of blockchain platforms would evolve way that allows the selling of surplus power back to the grid, so there would be a way for consumers to even cut a profit by the time the bill comes due. The same can also be used on a larger scale by major utilities – it’s possible to connect several microgrids so that suppliers can trade energy amongst each other, unveiling a whole new business model totally unlike anything we’ve currently got in place.
Peer-to-peer energy trading
While wholesale energy distribution is a natural focus for most companies, it’s not the be-all-end-all for every energy firm out there. Far from it, in fact. A Blockchain In Energy report by Wood Makenzie from a while back shows that 59% of blockchain energy projects are building peer-to-peer energy markets, showing an interesting trend to create a truly inclusive and flexible energy market.
Blockchain energy trading allows consumers to buy and sell excess energy from other consumers. This benefits the masses because it reduces control from central authorities, plus it allows users to be truly in charge of their energy supply. Additionally, secure and real-time updates of energy usage would ensure any peer-to-peer transaction occurs as smoothly and safely as possible.
Finally, another thing worth pointing out is that the implementation of blockchain technology within the energy sector can drastically lower expenses even for centralized suppliers currently ruling the industry.
Costs associated with labor, multi-system maintenance, data management, data visibility, settlement delays, and inter-system communication can all take a plunge, all of which would have an amazing effect on the bottom line – which, is probably the main incentive to challenge the status quo of the energy industry.
Interesting Blockchain Energy Projects Currently Making Waves in the Sector
Here are some of the most exciting and promising projects that clearly outline how strong of a revolutionary punch the use of blockchain in energy sector truly holds:
- RobotinaRox – The RobotinaRox platform is based on a bold idea of turning the energy systems that power your home into a full-fledged cryptocurrency environment. Thanks to some clever incorporations of blockchain and IoT, the team behind RobotinaRox enables its users to trade and earn cryptos before subsequently transforming them into actual electricity.Besides granting total control over your power expenditures, all sources of energy in the RobotinaRox network are of the eco-friendly kind, so there’s a strong sense of preserving the natural environment that goes in hand with this blockchain initiative.
- Lightency – This French green-tech startup is also developing a blockchain-based peer-to-peer electricity trading platform. All the energy comes from local sources, which drastically lowers cost and increases efficiency. Through microgrid implementation, Lightency also ensures better grid control and stabilization.
- Grid+ – This company develops both hardware and software solutions that aim to bring next-generation efficiencies to energy markets. The main goal of Grid+ is to provide additional savings for consumers of energy – with the help of decentralized technology and smart automation, this ambitious project ensures its users see dramatic reductions in home energy costs.
- Ondiflo – Unlike the three examples that came before it, Ondiflo aims to improve the supplier’s side of the energy process with enterprise-grade blockchain solutions for oil and gas companies.Since it launched back in February 2018, this company dedicates its efforts to creating a platform for all ticketing-based services. Through its lofty platform, Ondiflo is hoping to solve prominent issues with identity, data sanitation, financial settlements and field capture errors.
- Drone Energy – This US-based startup makes energy grids more efficient through an industrial smart grid technology that pairs high-density computing to match producer supply and demand.Drone Energy developed an energy supply architecture that maximizes utilization, processing power, and profitability, granting sustainable energy management through the aid of blockchain implementation.
Blockchain Implementation: A Decentralized Recipe for a Better Energy Industry
By turning to blockchain, we can create value for the entire energy industry. All involved parties stand to greatly benefit from sustainable systems where energy generation, distribution and consumption are a smart combination of clean resources, flexible markets and cost-effective solutions.
What’s more, unlike deploying decentralization in banking or even across real estate markets, the use of blockchain in energy sector does not call for a total overhaul of the current industry. In fact, as we explained earlier, blockchain could be precisely what the energy industry needs to weather the current disruptive storm it finds itself in.
Improved accuracy of trade, fewer security risks, faster access to data, more efficient settlements and invoicing, peer-to-peer energy trading, fair distribution of power, etc. – blockchain holds the keys to that and much, much more. That’s precisely why we feel like decentralized ledgers are bound to play a major role as we get our energy sector up to par with where we want it to be.