Blockchain technology’s advantages in the field of electric energy: Blockchain technology is one of the fastest growing technologies in the world and it has all the potential to transform the energy sector. The power industry has been consistently mobilized with several innovations like rooftop solar, electric vehicles, and smart metering. Power and sustainability are often less recognized in the use cases for the blockchain. On the other hand, the World Economic Forum, Stanford Woods Institute for the Environment, and PwC had recently released a joint report in which they identified more than 65 existing and emerging blockchain use-cases for the same.
These use cases included new business models for the power markets, real-time data management, and moving the renewable energy certificates onto the blockchain.
Blockchain technology can help improve the efficiencies for the utility providers by keeping an eye on the chain of custody for the grid materials. It also offers unique solutions for the distribution of renewable energy.
In the meanwhile, the oil and gas companies are usually concerned about privacy and trade secrets and thus, These private blockchain networks offer an interim solution until the public blockchains can implement the necessary features related to privacy.
The main benefits of blockchain in the field of electric energy are:
– Reduced cost
– Environmental sustainability
– Transparency for stakeholders
A blockchain technology records and verifies the transactions. It does not require a central entity in order to maintain or validate the ledger. Blockchain can be used to deal with complex electric power systems.
Earlier in 2017, several start-up companies had raised over $300 million to bring blockchain technology to the energy sector. Some of these start-ups wanted to boost up their existing markets to trade electricity while others were hopeful of using blockchain to track the production of clean energy. In the meanwhile, others proposed using blockchain to make it feasible to pay for charging EVs, raising funds to deploy clean energy, and managing customer appliances.
Since the electric energy sector is highly regulated, the policymakers play an essential role in determining the potential of blockchain.
Theoretically, the transactions on the blockchain network can be processed and verified with fewer intermediaries and lower transaction fees along with a greater security. The electric energy systems are heavily regulated across the world and its utilities often have a monopoly over delivering the electricity.
Peer-to-peer transactions
This is one of the most popular applications of blockchain in the field of electric energy. It turns the electricity grid into a peer-to-peer network in order to enable customers to trade electricity with one another. For example, it buys and sells excess rooftop solar power.
With the decentralized network, you can use the existing distribution grid and conduct virtual transactions that do not change the physical flow of electricity. The existing distribution grid comes with reliability and monetary benefits. Notably, these are difficult to replicate in a peer-to-peer network.
Even if the blockchain technology does not replace the grid, it enables more participants to trade electricity. In the areas of the developing world where electricity grids may be unreliable or nonexistent, there are opportunities for true peer-to-peer grids in order to emerge from the power vacuum.
Grid transactions
Several other electricity trading applications are less radical than a decentralized peer-to-peer network. These are more likely to gain commercial traction and support from the incumbent regulatory authorities. These ‘grid transactions’ relate to the electricity trading in the electric power system where the power grid remains integral, even though its form and function changes.
Additionally, the transaction data is transparent for all the participants in an order to enable them for more efficient trading. Some of the wholesale markets can spread their pool of participants as the blockchain network has the potential to deal with the multitude of smaller transactions overwhelming the centralized system. Therefore, several businesses and even households can participate and sell their excess distributed generation into the market. They can also respond to the prices that reflect the demand of the grid at each moment.
Besides, the blockchain technology supports new markets to enhance the existing wholesale market. With the help of the decentralized ledger, the wholesale markets, these days, can effectively set the prices for the bulk quantities of power on the basis of the customer’s demand in a significant region. Similarly, on the more local scales which are served by the distribution grid, no such market can exist that takes into account the quick differences in customer’s demands on local distribution capacity.
It is pertinent to mention that the Blockchain technology can play an essential role in enabling such distribution markets that need to process far more transactions in comparison to the current practices of wholesale markets.
Financing
The use of blockchain technology to raise funds for the energy projects includes the second largest category of initiatives in order to apply the blockchain to the electric power sector. It does not include the start-ups that enable ICO to raise funds and then develop. Instead, this category includes ventures which are primarily focused on using cryptocurrencies to raise funds for the energy projects.
The Blockchain technology can make it easier for renewable energy projects in order to raise funds.
They attract more potential investors in renewable energy projects enabling a multitude of smaller investors. The blockchain funding ecosystems might also allow smaller investors and individuals to invest in projects to which they might not access.
Sustainability attribution
One of the most quick applications of blockchain in the field of electric energy is its potential to record and trade attributes of sustainability. Currently, the blockchain system tracks if such attributes are centrally managed, complicated, and vulnerable to fraud. Besides, the categorisation of platforms stops seamless trading of attributes.
The blockchain technology enables transparent, accurate, tracking and trading of these attributes. This accelerates the clean energy deployment and reduces the carbon emissions.
Therefore, several utilities and firms are participating in the pilot projects using Origin.
Electric vehicles
Electric vehicles are still facing substantial barriers when it comes to the customer adoption. Here, the Blockchain networks enable private owners of charging infrastructure in an order to sell charging services to the owners of electric vehicles. This could help improve the appeal and uplift electric vehicles.
Notably, there are several utilities that are seeking the assistance of blockchain networks in an order to manage their assets in a better way. All in all, the blockchain technology provides much energy in the field of electric energy.
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