Blockchain Technoloy in the Energy Industry!

Hello dear readers and members of AVALO-energy,

in this post we want to share a very interesting article about Blockchain Technology in the energy industry with you. You can find the original source in the end of this post.

The explosive surge in Bitcoin prices at the end of 2017 brought blockchain technology to the attention of governments and the public…

This new technology is, in effect, an eco- system comprising a secure, digitized but communal and decentralized ledger, recording transactions as they occur in successive blocks. It validates or certifies transactions and conserves inviolable logs which are accessible to all the chain’s members. This new technology is potentially revolutionary. In the not too distant future, blockchain technology could transform services like marine insurance, finance and trading of energy, commodities, manufactured goods and even diamonds.

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Energy trading, billing and climate research

Several pilot studies involving small to large scale energy trading, billing and payment systems are currently underway around the world. In New York, neighboring householders are selling power to each other in a blockchain provided by technology provider, LO3 Energy. In Australia and New Zealand also, Perth start-up Power Ledger enables neighbors to buy and sell surplus power.

In Europe, a group of energy firms including BP, Wien Energie and Eni Trading & Shipping recently completed a 12-week trial of energy trading facilitated by Canadian blockchain startup BTL. Guy Halford-Thompson, co-founder and CEO of BTL, said in a statement, “having demonstrated the reductions in risk and cost savings that are achievable we now have an opportunity to deliver the first successful blockchain-based application to the energy market.” On a bigger scale, Centrica, Engie and Royal Dutch Shell have joined forces to launch the international blockchain, the Energy Web Foundation.

Trials for billing and payments using blockchain are also underway. For example, RWE’s power utility subsidiary Innogy has tested how well blockchain technology can authenticate and manage the billing process for hundreds of autonomous electric-vehicle charging stations in Germany and California. In Germany, the Motionwerks blockchain distribution ledger bill payments system is making traditional payments for electric car charging redundant.

Experiments with blockchain among solar power operators are more diverse. An interesting pilot project, by Electraseed in Africa, provided over 100 sets of autonomous solar kits forming their own electricity networks, in which trades are managed through blockchains. If viable, Electraseed aims to have provided around 100,000 units by the end of 2018. Some solar power operators have issued their own crypto currency, the solar coin, worth 1 megawatt of electricity. To date around 150,000 megawatt hours of solar energy in over 24 countries have been paid for in solar coins. Members of a solar electric chain project can contribute valuable data for scientific research and climate studies.

Potential of blockchain for the energy sector

Blockchain technology offers energy companies the opportunity to make significant cost-saving and process efficiencies which, in the recent era of low oil and gas prices, are too compelling to ignore. There is the possibility to increase efficiency and reduce costs of procurement of goods and services. More revolutionary still is the possibility of incorporating smart meters in a blockchain, in which computers could automatically reconcile demand and supply in real time to better balance the grid. It has even been suggested that blockchain could simplify the co-ordination of decentralized electricity resources among individuals along with their platform and networking capabilities.

“The prospect of being able to track particular electrons via a blockchain as they move onto or off the energy created has captured the imagination of many companies” says Daniel Siek, of Pepper Hamilton, a U.S. Corporate and Securities Practice Group. Essentially, this means that blockchain should not only save money but, more importantly, could transform the way that energy is produced, stored and consumed.

Blockchain also has the potential to transform maritime insurance for marine freight traffic and perhaps, even more significantly, customs clearing and documentation. Maersk, a leading global tanker fleet owner recently completed a 20-week blockchain proof-of-concept trial for securely sharing shipping data for maritime insurance in collaboration with management consultancy EY, Microsoft and ship brokerage firm, Willis Towers Watson alongside several insurance businesses. Shippers and owners of oil and LNG around the world would be major beneficiaries.

Challenges to pioneers

A big issue is security. Blockchain shares large quantities of encrypted confidential information and transactions amongst members of the chain. Yet, this makes them no safer than any other software. The technology, still in its infancy, is offered by numerous small providers so until a few big tech platforms emerge, security will be a challenge.

Given the vulnerabilities of computers, the cloud and internet to hacking, governments around the world need to tighten their data security regulations with new data standards to protect confidentiality, ensure the integrity of systems and at the same time conserve the advantages of blockchain technologies. A way forward can be seen by Europe’s latest General Data Protection Regulation.

Blockchain technology is still in its infancy and like many innovations, is streets ahead of the regulators’ rules, knowledge and understanding leaving them to play catch-up with this rapidly developing technology. However, there are isolated examples of energy regulators accommodating this innovation. For example, Singapore’s Energy Market Authority has just launched a new set of regulations on blockchain in its energy market. Meanwhile, some U.S. states including California and Vermont, are developing new sets of regulations to aid the application of blockchain technology.

Currently, it is technology companies that are providing blockchain technology to energy companies. The dilemma for the energy industry is whether to provide these services in-house by buying the software services and hardware providers, or to rely on external providers. A similar dilemma faces car manufacturers, confronted by the move towards electronic cars which require rechargeable batteries. In both cases an industry is grappling with a technology that is, for the present, outside its core competence.

Source of the article: https://www.eniday.com/en/sparks_en/blockchain-energy-business/