Globally investment in blockchain technology is expected to reach $34.7 billion by 2025 as per a report by Premium Market Insights (PMI).
Given the expanding use cases of the technology in the energy sector the steady increase in investment isn’t surprising. The technology offers breakthrough solutions to make lives easier, reduce cost, add transparency, and preserve privacy and maintain confidentiality between parties wherever required in the industry. Blockchain is proving itself to be a game changer for the energy markets.
Among many applications of blockchain technology, energy sector isn’t recognized so easily. Contrarily, blockchain has proven transformative for the sector. Ethereum Enterprise blockchain, can accelerate growth in energy sector with the help of smart contracts and system interoperability. The technology stands as a new medium of growth for the industry. The use of blockchain technology has led to growth of new business models in the energy market. Application of the technology also include real-time data management and moving carbon credits or renewable energy certificates onto blockchain.
Use-cases of blockchain technology in the energy sector
The World Economic Forum, Stanford Woods Institute, and PwC have outlined 65 ways in which the technology is helping the energy market.
1. Improve efficiency: DLT (Distributed Ledger Technology) can improve the efficiency for utility providers by tracking the chain of custody for grid materials. Complex systems like petroleum trade that require participation of multiple stakeholders – refiners, jobbers, governments and regulatory bodies – can reduce cost associated with the complex process and reduce process in efficiency.
3. Safeguard privacy and trade secrets in oil and gas sector: Private blockchain networks offer data per missioning and selective consortium access to pre-approved parties
4. Peer-to-peer energy trading: A peer-to-peer energy market where individuals can share their excess energy with one another is on the rise. It’s an expanding market and nearly 59% of blockchain companies are dedicated to it.
5. Electricity wholesale distribution – Retailers have been found to be the source of inefficiency in consumer electricity market. They own very small percentage of grid infrastructure. Typically, they are involved in billing and metering. These are services which can be easily resolved with blockchain. Using blockchain along with IoT devices allows consumers to buy electricity directly from grid.
5. Electricity Data Management: Blockchain will allow consumers greater control over their electricity usage. Electricity usage data is often misreported due accidental clerical errors or intentional corruption. In all cases – intentional or accidental error, the financial cost is detrimental to business. Blockchain-based application will allow consumers to access real-time data usage. Additionally, transparency will reduce monetary exploitation.
- Cost reduction in oil and gas – Oil and gas industry has a complex trading system. With blockchain-based systems in place, the industry can reduce cost associated with maintenance of various trading systems. It can also reduce cost associated with labor, data management, and inter-system communication. In a demonstration conducted by BTL Group, ENI, BP, and Wein Energie reduced cost by 30-40% in facilitating and tracking gas trades with the help of blockchain technology.
Blockchain in action in energy sector
Some organizations that are already in this area are:
- Power Ledger: This Australian company along with French green energy retailer ekWateur plans to offer French residents the opportunity to customize their energy mix using blockchain technology. Power Ledger plans to do so by creating microgrids – a group of interconnected loads and energy resources. In theory, microgrids are separate and self-sustaining. Many blockchain energy companies feel microgrids are the future of energy consumption.
- VeChain: VeChain is collaborating with Shanghai to optimize business processes, reduce operation costs, improve the supply chain efficiency in the energy sector. And ultimately be able to build and offer “Energy-as-a-service” ecosystem.
- Grid+is a New York-based blockchain energy company focusing on wholesale energy distribution.