February 7, 2018
For a long time, energy industry has been strongly centralized and regulated. As authorities make an attempt to protect consumer rights, there has been a heavy centralization, control and usually a monopoly power in a country. As a result, consumers have very few or even no option to choose from when it comes to an energy supplier. As an energy like electricity plays an essential role in our daily lives, we have to fully depend on an exclusive electricity provider.
Therefore, we use the central grid and pay the defined prices set by centralized corporations without any ability to choose the type of electricity we want to consume. Moreover, this energy causes a lot of pollution. Also, it is inefficient to be transmitted and distributed over large distance.
Thus, when renewable energy first started to pop up, everyone started dreaming of distributed energy production. Can you just imagine that if every home had its own solar panels or heat pumps or wind turbines, how much more efficient and clean our energy production would become?
However, it is unlikely to use green energy on a daily basis as having a solar panel on your rooftop or setting a wind plant next to your house is too expensive and complicated.
Blockchain is a database of transactions distributed among multiple computers. It solves two major problems in the online world: transacting without the need of a trusted intermediary, and making sure those transactions can’t later be altered, removed or reversed. Besides, Stephen Callahan – Vice President, Energy, Environment & Utilities, Global Strategy, at IBM (1) – also stated that “What the internet did for communications, blockchain will do for trusted transactions, and the energy and utilities industry is no exception.”. In fact, blockchain development appeals to the energy industry in several ways.
Firstly, due to market liberalization and development of renewable energy, blockchain offers a way to better handle the increasingly complex and decentralized transactions between users, large- and small-scale manufacturers, retailers and even traders and utilities.
Secondly, Blockchain’s use of tokens also can offer an approach to reward users for saving energy, and for small-scale transactions between individuals with solar panels who are both producers and consumers, known as “prosumers”.
In addition, being able to add “smart contracts” onto the blockchain would also make it is possible for transactions to be automatically generated down to the smallest level where meters and computers could autonomously reconcile supply and demand.
What’s more? Daniel Sieck, US law firm Pepper Hamilton, also stated that: “The prospect of being able to track particular elections via the blockchain as they move onto or off the energy grid has captured the imagination of many companies”.
Blockchain can offer us all of those things that would not only save money but also revolutionise the way we produce, store and consume electricity, what Steve Harley, DHL Energy president, calls “internet of electricity”.
The answer is yes. According to The World Energy Council (2), decentralised or distributed energy is expected to grow by 20 percent in 2025. Therefore, this is a massive opportunity for blockchain development to make a huge contribution to renewable energy market. In fact, there has been some energy companies making great investments into blockchain development.
For example, Power Ledger (3), an Australian startup raising US$26 million in an initial coin offering (ICO) in October last year, is building platforms to enable commercial operation of microgrids in Thailand and India and two commercial buildings in West Australia. Moreover, it recently created a 200-customer trial microgrid with power retailer Origin Energy (4) in Sydney.
In addition, Energi Mine (5), a UK-based startup, launched a blockchain-based platform to reward energy-saving users with tokens that they can use to pay their electricity bills.
Furthermore, Grid+, a American-based startup, is going to launch its first retail device next year in Texas, using the Ethereum platform to allow users, who are both tradition consumers and owners of solar panels and batteries, to purchase and sell electricity at wholesale prices (6).
One more example is SolarCoin which is a digital currency like Bitcoin. Unlike Bitcoin which is mined by letting a computer work out some computations, SolarCoin is mined by producing renewable energy. Specifically, if your solar panel creates 1 Mwh of energy, you will receive 1 SolarCoin.
Yes, obstacles still remain. The major problems blockchain has to face in renewable energy market are the entrenched nature of the incumbents, and considerations about blockchain itself, which is less than a decade old.
Martha Bennett, an IT industry analyst at Forrester, points to a “misunderstanding just how immature the technology is”. Then there is the regulatory landscape. As the energy sector is a regulated industry, widespread adoption of many possible blockchain use cases will require regulator buy-in. There are signs of that. Singapore’s Energy Market Authority launched a sandbox for energy innovations in October last year, while U.S. states including Vermont have passed legislation designed to help apply blockchain development. Therefore, blockchain may help incumbents rather than disrupt them. However, many individuals choose to capture, store and sell power. There will still be a lot of users who won’t bother.
On the other hands, there is an argument that blockchain will empower individuals by automating much of the drudgery of switching between sending power to the grid and receiving it. In other words, blockchain will change user behavior and utilities will only be used when prosumers’ demand and supply don’t match.
To sum up, like the network protocols in the early days of the internet, blockchain will drive dramatic transformation of the renewable energy industry and unlock value for everyone involved.
Infinity Blockchain Labs is a visionary R&D company engaged in intermediary and RegTech services employing blockchain technology. We focus on forming alliances with established businesses and regulatory institutions across various industries, as well as providing collaborative incubation for early stage blockchain projects.
IBL aspires to empower Vietnam to become a global leader in blockchain development and therefore are committed to sharing information to nurture a passionate, educated blockchain community. One of the ways we maintain our role as ecosystem pioneer is by helping create educated blockchain enthusiasts. We are committed to sharing information and resources to help Vietnam become a blockchain hub through conferences, courses, contests, alliances, workshops, speaking engagements and incubations. Information regarding topics like hard forks helps people become more familiar with key blockchain concepts and thus able to adopt the technology.
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Contact: Nicole Nguyen PR@blockchainlabs.asia