“Anything that can conceive of as a supply chain, blockchain can vastly improve its efficiency- it doesn’t matter if its people, numbers, data, money.”– Ginni Rometty, CEO of IBM
Blockchain technologies are gaining traction at an ever-accelerating rate, disrupting many industries. According to Statista, global spending on blockchain solutions is projected to reach about 12.5 billion U.S. dollars by 2022.
Blockchain use cases go far beyond cryptocurrencies, which is the first and one of many applications of blockchain-powered technologies. An advancing development of blockchain allows many industries to deploy it in many new areas, including the energy sector.
Energy Industry is Looking for Innovations
The era of large-scale power plants is rapidly going down. As the demand for energy is growing at an unprecedented rate and an increasing number of issues of scarcity and environmental impact associated with conventional energy sources are coming up, the energy industry is forced to look for alternative innovative solutions in order to meet emerging problems.
One of the main goals for the utility sector is to accommodate the growing volumes of embedded renewable solutions based on available resources, be it a river, the wind, biomass feedstocks, and/or the sun. According to research, provided by Sciencedirect, 24.6% of the gross electricity consumption in the United Kingdom in 2016 was generated by renewable energy sources (RES), with onshore and offshore wind farms and PV solar plants alone accounting for over half of the total 35.7 GW installed RES capacity, namely 44.9% and 12.5% respectively.
With rapidly advancing technologies, RES are undergoing major changes. The new solution of storing surplus energy has jumpstarted a wide adoption of innovative RES applications, such as smart meters or AI-powered microgrids. However, Softengi believes that the major disruption is coming with blockchain technologies, which are able to ensure the security and stability of operational processes.
Blockchain: Decarbonization, Decentralisation, Digitalisation
On the brink of a new era of digital transformation, energy supply companies consider blockchain as one of the leading innovations in the power sector. According to a survey led by German Energy Agency, 20% of 70 surveyed executives working in the energy segment see blockchain technology as a game-changer for energy suppliers, while more than half of them are considering implementation or have already implemented blockchain solutions into their businesses.
Blockchain or distributed ledger technologies (DTL) are decentralized and shared data structures or ledgers that allow peer-to-peer transactions by eliminating central management. This technology can securely store digital information, as it keeps all data either on a great many decentralized computers or on every computer, making it impossible to hack. In essence, blockchain-powered technologies provide a new way of handling data more securely and less expensively.
Now blockchain is gaining much traction in the renewable energy segment, providing consumer-driven power generation. Many energy companies have already started to reap benefits which include enhanced efficiency, operational cost reduction, process automation, improved security of supply, as well as facilitation of low-carbon solutions.
Blockchain: Go Renewable
Distributed ledger and stabilization of grids
Democratizing of information due to blockchain technology by decentralization of databases allows energy companies as well as individuals to make better-informed decisions. Blockchains also assist in network management of distributed networks, asset management, as well as achieving greater flexibility of services.
Small renewable energy installations are spreading at a rapid pace. More and more people are seeking clean, affordable, and sustainable energy. However, installations such as rooftop solar panels may create huge stress on electricity grids, which rely on centralized power plants. By implementing blockchain-powered technologies for peer-to-peer energy trading, the power can get decentralized and the grid -stabilized.
According to Statista, the most prominent application of blockchain is peer-to-peer transactions, which account for 36% of all blockchain initiatives, as can be seen from pile chart below.
With peer-to-peer digital platforms, which are based on blockchain technologies, green energy producers and consumers can be connected directly. Moreover, blockchain enables individuals and entities to trade surplus energy with each other at a lower cost.
Transparency and authority
Blockchain technology secures every transaction with specific encryption, making it immutable, and the records of transactions can not be hacked. These features of blockchain can significantly enhance regulatory and auditing compliance.
Electricity tracking and blockchain
With the ability of blockchain technologies to track electricity, companies can motivate energy consumers to go green. Some companies have started to reward their users who generate renewable energy with digital tokens to be used for paying carbon credits.
Projects Leveraging Blockchain
Peer-to-peer trading platform
The United Kingdom-based company Electron utilizes blockchain technologies to create a more flexible and efficient system for the energy market by offering its consumers and producers a peer-to-peer trading platform.
Using an online platform, users can trade excessive energy more efficiently. Additionally, Electron gives consumers a chance to monitor energy production, including sources and energy prices. With blockchain technology embedded, data transfer becomes more secure and faster, sparking, therefore, the spread of clean and affordable energy.
The Brooklyn Microgrid
In Brooklyn, Siemens, teamed up with LO3 energy, has initiated a pilot project which relies on blockchain-powered technology. The Brooklyn Microgrid enables users to power their homes by using local renewable energy sources. Consumers, who produce “home-made” energy, can sell the surplus of produced energy to neighbors. As this application is fully decentralized and cryptographically secured, users are provided with an accurate list of transactions, decentralized accounting, as well as smart metering.
The SolarCoin is a blockchain-based digital token, introduced by the SolarCoin Foundation in order to reward solar power producers and promote the transition to more sustainable energies. Users receive one SolarCoin for each MWh of solar energy produced. The project also helps to finance renewable energy-powered electricity generation facilities.
Innogy, a German energy company, teamed up with the automotive supplier ZF Friedrichshafen and Swiss bank giant UBS to develop a new payment system called “Car eWallet.” The main idea is to provide users of individual electric vehicles with their e-Wallets to store digital tokens which can be spent on different purchases, in particular, automatic paying of tolls. DTL-based wallets not only enable full automatization of processes and a high level of functionality but allow electric vehicles to send stored energy back to the grid to balance demand.
RES Data Management
In order to provide energy producers and consumers with better efficiency and control over their renewable energy sources, Softengi offers RES data management based on blockchain technology. RES data management system is able to record, store, and track energy data, which include market prices, energy law compliance, and marginal costs. The transparency, enabled by blockchain-powered technology, eliminates the risks of intentional corruption and accidental clerical errors.
As the world is turning more and more to renewable energy sources, blockchain is paving its way toward a more sustainable environment. By implementing blockchain-based solutions, both energy supply firms and energy consumers can reap benefits from transparent and tamper-proof systems providing electricity grids, as well as off-the-grid areas with more affordable and sustainable energy.