Blockchain Technology Will Transform the Power Industry
What began in the world of finance has moved into the power sector. Blockchain, a nascent technology most often associated with cryptocurrency, is a new frontier in the energy space, changing the way power is traded, with new business models for peer-to-peer and wholesale transactions, and a growing number of projects worldwide.
The power industry has undergone a transformation over the past several years, with utilities embracing new technologies, new sources of generation, and relying on data to make their operations more efficient.
Another emerging technology also could be transformative. Blockchain, originally devised for digital currency such as bitcoin, has moved into the energy space, allowing digital information to be distributed across networks. The idea is to allow consumers, be they individuals or commercial enterprises, to buy and sell energy directly between one another, in a peer-to-peer (P2P) trading manner. Blockchain is well-suited to this because it creates a transparent, auditable, and automated record of energy generation and consumption. It can result in energy efficiency and cost savings.
“There are dozens of potential applications of blockchain technology in the energy sector,” said Jesse Morris, chief commercial officer of the Energy Web Foundation (EWF), an open-source, scalable blockchain platform founded in 2017 to “accelerate the commercial deployment of blockchain technology in the energy sector.” Morris told POWER: “Some [applications] have to do simply with making the mundane more efficient, and making sure a basic transaction between a utility and their customers is a good one. For example, many utilities offer green power purchase programs for their customers. Programs like these [and markets for Renewable Energy Certificates (RECs) in general] have noble intentions, but are highly manual, opaque, inaccessible for most smaller participants, and largely unable to support higher-level functionality [such as consumption-linked purchasing or carbon-impact selective purchasing].”
The New York-based Indigo Advisory Group, which works with utilities and energy companies on market strategies, technology, and innovation services including blockchain, has studied use cases for decentralized generation, grid management, metering, electric vehicle (EV) charging, and the Internet of Things, which includes blockchain applications for the “Connected Home” market. As an example, blockchain technology helps solar power generators (Figure 1) feed excess electricity into the local grid, or sell it to other customers, and receive compensation directly from the customers rather than relying on a third party.
