Blockchain, a nascent technology has completely baffled the financial world with its versatile capabilities. The transparent, tamper-proof and secure Blockchain enabled system is slowly captivating the entire economy to adopt its wide range of applications in their sectors. It seems that what started in the financial sector has now paved its way to transforming the energy sector with its inherent properties as well.
The Energy sector has witnessed a revolution with the adoption of new technologies, new sources of power generation, and relying on digital data platforms.
Blockchain technology can act as the new frontier in the Energy sector revamping the way energy is traded, with new business models for peer-to-peer and wholesale transactions. This would drastically increase the number of projects globally.
Challenges plunging the Energy Sector
The world is crying havoc to fulfill its surging energy need and it seems that we are seriously lagging in terms of renewable energy adoption. There are many geopolitical and financial hurdles troubling the energy sector.
The world is no stranger to the threats of Global warming. Yet there is a lack of proper energy financing in improving the efficiency of current energy resources, researching and developing alternative renewable resources. We should also not forget to mention the geopolitical tussle over carbon emission by developing and developed countries.
With rising customer expectation on efficient energy provision, the governments, and local authorities across the globe lack a regulatory mechanism to monitor the energy sector and also to mention the energy infrastructure inefficiencies and constraints. These are just a few challenges perturbing the energy sector but there are also many challenges rising within the energy sector that needs to be addressed.
Blockchain use cases in the Energy Sector
The world craves for a cleaner and sustainable future. Blockchain technology in the energy sector has the potential to improve the efficiency of current energy practices and processes. It can accelerate the development of IoT platforms and digital applications while also providing innovation in P2P energy trading and decentralised generation. Let us see how Blockchain can contribute to our diverse energy needs.
Blockchain for energy company operations – Integrating Blockchain with smart contracts and smart metering, companies can provide automated bills to customers and distributed generators. This will make the system more accurate and efficient. Blockchain incorporation with Artificial Intelligence can be used to identify customer energy patterns and thus enable tailored and value-added energy products provision. Blockchain incorporation would make metering and billing extremely cost-effective and transparent. Blockchain’s inherent features also assure to safeguard data privacy, identity management and resilience towards cyber-threats.
Managing Energy trading and markets – The energy sector requires the involvement of numerous third-party intermediaries like brokers, trading agents, exchanges, price reporters, logistics providers, banks and regulators. This makes energy distribution a slow and time-consuming process.
Blockchain and smart contracts would help save time and resources by initiating a direct trade between a consumer via autonomous trading agents cutting out the middle-man.
The transparency and immutability of Blockchain would also improve auditing and regulatory compliance.
Energy Grid management by Blockchain – The inherent features of Blockchain would improve control of decentralised energy systems and microgrids. Blockchain would also provide a secure data transfer platform and data standardization for smart devices in the smart grid. The smart grid includes several devices like smart meters, advanced sensors, network monitoring equipment, control, and energy management systems.
Decentralised Energy sector – A decentralised Blockchain-enabled wholesale energy trading would reduce transaction costs and trading volume. It will also provide transparent data for access from several parties, enabling small-scale consumers, to participate in energy markets.
Blockchain would create a P2P local energy marketplace that would provide a solution for local optimisation of energy systems. P2P energy trading reduces strain on power networks or defers expensive reinforcements. It also provides RES (Renewable Energy Source) producers with additional revenue streams and decreasing energy costs for end-consumers.
A Disrupted Energy sector – Good or Bad?
Blockchain promises many new possibilities which will alter the norms of the current Energy sector and completely transform its operations and mechanism. A Blockchain empowered Energy sector would give rise to a new era of sharing economy, benefitting energy system operations, markets and consumers.