Blockchain In Energy Sector: Applications And Opportunities
Blockchain in energy sector could be the future of renewable, clean, and affordable energy across the globe. In the past, some research has portrayed blockchain technology in a negative light when it comes to energy generation. In fact, a publication credited to the nature journal opined that blockchain would skyrocket global warming to a dangerous level, however it not . The main objective of this article is to address the aforementioned claim and also enlighten you on ways that blockchain in the energy sector could promote affordable and renewable energy.
In simple terms, blockchain technology is a decentralized ledger that records data and has the ability to speed up transactions. This technology also facilitates a highly trusted transfer of value without the involvement of traditional intermediaries. It will interest you to know that many industries are already experimenting with blockchain technology. When you talk about the use of blockchain in the energy sector, there are more ways than one.
Over the past few years, there have been technological advancements that have had positive impact on the energy sector. This is to tell you that blockchain technology isn’t the first, but has the potential to be the “messiah”. With the digital peer-to-peer platform that comes with blockchain, green energy producers will be directly connected with power consumers. At this point, blockchain application in energy sector brings a power shift.
Application of blockchain in the energy sector will empower consumers to take control of their energy usage and reduce energy bills. With blockchain, affordable energy is within the reach of its consumers.
Successful Use Cases Of Blockchain In Energy Sector
In the past years, we have experienced rapid increase in the number of pilot cases involving blockchain in the energy sector. For instance, in April of 2016, the residents of Brooklyn in New York successfully traded renewable and affordable energy using smart contract on the Ethereum blockchain network. The blockchain platform helped improve trust and visibility amongst the residents that took part in the transaction.
There is also a similar case in Australia where residents of Perth and South-Western Australia can buy and sell excess solar energy with anyone that is connected to the Western Power network. These pilot cases tell you what to expect from blockchain application in renewable energy. Effective war against global warming will really receive a great boost if blockchain is considered; especially in carbon credit, micro grid billings, utility and energy economics.
How Blockchain Application In Energy Sector can Help Prosumers
There are ways that blockchain technology can greatly improve the energy sector. Some of such ways include the following:
Microgrids is arguably the most perfect application of blockchain in energy sector especially in decentralization. Prior to the advent of blockchain, the grids are already distributed by definition and application. In 2014, there was a prediction by Navigant Consulting that the microgrid market will grow to almost $30 billion dollars by the year 2030. As against this prediction, there is a total decline in the speed according to the Navigant’s research director Peter Asmus.
Introducing blockchain in energy sector will signal a rapid growth potential inc the coming years, the result of the pilot applications reaffirms my claim. This is because, blochchain technology offers some advantages in the delivery of microgrids. One of such advantages of using blockchain technology in microgrids is the interoperability that it provides between producers, suppliers and consumers that makeup the microgrid.
It will interest you to know that this is actually the main objective of the Energy Web Foundation, a nonprofit international organization that aims to bring blockchain technology to all areas of the energy industry. In fact, the Energy Web Foundation is building a core blockchain that is specifically streamlined to the energy sector. Another advantages of blockchain in energy sector is the ability to use smart contract to efficiently oversee the generation and distribution of renewable and affordable energy.
Among the many ways that blockchain in energy sector can positively impact affordable energy generation is energy trading. Oil, gas, coal and other sources of energy in the energy market are constantly been traded between producers, distributors, and financial institutions. For instance, Vakt, a blockchain driven energy platform advertises that its platform has the capacity to offer up to 40 per cent of savings across operations. This only happens because shared ledger is used to store the details of transaction thereby eliminating intermediaries.
Challenges Of Blockchain In Energy Sector
As great and promising applying blockchain in energy sector seems, it also comes with certain challenges that you need to be aware of. First, regulatory and legal frameworks in the relevant market must be adapted in order to fully utilize blockchain renewable energy. Considering the technical challenges, scalability is the greatest challenge here. Interoperability and energy efficiency also need to be critically looked into.
According to Peter Bronski from the Energy Web Foundation, they are currently making use of a Proof-of-Authenticity-based approach to consensus. This is because of the belief that degree of validator’s oversight will be very important, especially to the regulators in the energy industry. For the fact that proof-of- authenticity (PoA) do not make use of the intensive cryptographic computations employed by proof-of-work (PoW), any chain using it has the ability to attain greater capacities.
Top 5 Companies Spearheading Blockchain For Renewable Energy
There is no doubt that blockchain could become the future of renewable and affordable energy. The opportunities that comes with blockchain in energy sector abound, and by simply increasing efficiency, blockchain could substantially reduce carbon emissions. Below are the leading companies that have taken the lead in the use of blockchain technology for renewable and affordable energy:
This is a blockchain driven Energy Company located in Estonia. It will interest you to know that Estonia currently have a 100 per cent digital energy grid and this has really made the implementation of a blockchain platform easy for WePower. By using blockchain technology, WePower provided its customers with the possibility of monitoring energy prices and the ability to diversify their energy portfolio.
It is the belief of WePower that by helping small clean energy producers gain access to the energy market and helping the citizens gain access to cheaper and decentralized electrical grid, power returns to the people.
This is also another blockchain driven Energy Company with the main objective of providing clean and affordable energy to the people. Aside from developing Australia’s renewable and affordable energy market, Power Ledger also offered cheaper prices to local consumers. By utilizing the peer-to-peer trading provided by blockchain, Power Ledger has set up microgrids that links clean energy producers and new residential developments.
By simply providing producers and consumers of energy with a platform to monitor energy production, sources, and prices, Power Ledger is already driving the development of clean and affordable energy in Australia.
Acciona Energy and Iberdrola
A company out of Spain, Acciona Energy and Iberdrola both uses the United Nation’s Sustainable Development Goals (SDG) as their framework for clean energy production. Their objective is to help Spain move away from the use of fossil fuel for energy production. Acciona Energy is the first utility to make use of blockchain technology to certify the origin of its energy consumers. Iberdrola on the other hand made use of similar platform in its pilot program.
I believe that you can see that blockchain in energy sector has really spread wide in terms of adoption.
This company is located in New York United States and it is a community based approach to blockchain utilization. In its approach, the utility power provider maintains the electrical grid that delivers power but energy is generated, stored, and traded locally by the community members for a more sustainable, affordable, and clean energy. Here, instead of the use of an independent utility company, community members will be able to contribute electricity through their own solar panels, or electric cars to the microgrid for other members of the community to buy and trade.
With such set up, any excess energy will be stored amongst the members of the community and thus provide the opportunity for Brooklyn energy consumers to be a step closer to being self-sufficient energy wise.
The Sun Exchange
This blockchain based energy company is located in South Africa and it focuses on investment driven solar installations. The business model is one that ensures that the local community is able to benefit from affordable and clean energy while investors help to fund and develop several other projects. The Sun Exchange Company makes use blockchain-based smart contracts to reduce the needs as well as cost of physical administration.
It is quite evident that blockchain in energy sector has come to stay, all you need to do is seek ways to maximize the benefits.