The Energy Sector and Blockchain
- Most of us take energy for granted. We turn on a light and it works. It powers our homes and the economies of the world. Over the past century, low-cost electricity has powered the biggest improvements in quality of living to the most people in history. But this incredible transformation has taken a toll. We've dug deep holes to extract coal, oil, and natural gas providing us with a steady supply of energy and a planetary hangover.
From climate change to poor air quality to ground pollution and disease and poisons in our rivers and oceans and more, we've paid a hefty price. Still, our appetite for energy is increasing. Fortunately, a mix of power efficiencies in our devices, the promises of renewables such as solar, wind, and thermal as well as safer nuclear options may create new opportunities that mix power abundance with lower cost and less impact to the planet.
There is political and economic motivation to drive much more energy innovation. One of the most speculative areas is the role of blockchain technology in the energy sector. The energy sector like many others generates a high volume of transactions. There are a wide range of participants in any energy interaction. Consider energy generators, distributors, traders, regulators, and industrial end users as the core players.
In the flow of energy from the generation source to the consumer, there are a myriad of these stakeholders, additionally billing and cash flow moves between independent participants. It's a complex ecosystem that requires extensive trust and intermediaries. At a basic level, blockchain technology seems well suited to securely recording and storing transactions and thus increasing integrity and trust. In addition, an energy blockchain could provide secure storage of ownership records, in particular in the field of energy certification.
Here are three use cases. First is the verification of renewable electricity and of emission allowances. In the second case, a register that records and regulates the ownership and current state of assets such as smart meters, networks, and generation facilities. And the third, smart meter data could be shared with a wide variety of consumers without compromising privacy or security while also offering the opportunity to generate income from sharing.
The next area is in the domain of energy billing. We'll look at billing for Electric Vehicles or EVs. As more people buy EVs, we'll eventually require an extensive network of perhaps millions of charging stations. When an EV parks say in a supermarket parking lot, it's an opportunity for charging. While many payment systems exist, an efficient billing mechanism could be provided by the blockchain. As we explored in my blockchain basics course, the slock.it solution enables secure, efficient blockchain transactions between devices without needing intermediaries, for example opening a bicycle lock with a smartphone.
In fact, a startup called Share&Charge allows anyone who owns an EV charger to become a provider. This could be an excellent bridge option as the EV charger network gets built or perhaps it is the shape of things to come. Traditionally, there are major energy producers who provide energy either carbon or non-carbon based directly to customers or through a distribution provider, but this model which hasn't changed in decades has the potential for future disruption.
In particular, when industries and homeowners begin to produce their own power using solar and wind for example, a marketplace where the consumer also becomes the producer is well within the realm of possibility in just a few years. The potential trading and interactions between players becomes very interesting indeed. Let's assume that an entire sizable neighborhood of homeowners generates their own power. This neighborhood has microclimates so sometimes one side of the neighborhood is cloudy while the other side is sunny.
When the cloudy side needs power and assuming the sunny side produces more than it needs, the excess power could be sold to the cloudy side. A great way to facilitate this will be to use a blockchain that uses smart contracts to manage the energy trades. Over time, homeowners would accumulate cryptocurrency that could be converted to say dollars or could be used to directly purchase products. Several companies are already developing and testing this technology.
Using a theorem technology, Grid Singularity supports many of these use cases. Power Ledger is another cutting edge blockchain-based platform for energy trading. Electron in the UK is building a platform for microgrid trading and also for smart grid data management. Finally, SolarCoins are earned from homeowners who produce solar power. Authenticating the generation of power results in the collection of SolarCoins.
The SolarCoin blockchain is a tradeable digital currency that can be converted into a local currency or used directly with a variety of retailers. It's a model for incentivizing solar power usage. SolarCoin gets its value from being the product of power generation which produces the proof of work. It's clear there's a lot of energy in the blockchain energy space. There's a lot of investment happening. I recommend keeping a close eye on this market.
▶️ DTube
▶️ IPFS