.jpg)
Image Credits: elenabsl/shutterstock.com
Probably best known as the driving force behind cryptocurrencies like Bitcoin, blockchain is being touted as an emerging force that could disrupt a broad range of industries.
The energy industry is considered to be one of those industries. In particular, blockchain will likely facilitate more clean energy and technology solutions.
In the past, individual consumers have had a relatively one-way relationship with energy: Households and companies paid for energy they used from the grid. Those with rooftop solar or some other kind of renewable energy solution have had a bit more of a reciprocal relationship, having the ability to sell surplus energy generated by renewable energy to the grid through utilities. However, even this setup is fairly static and inefficient.
Through blockchain, households can have much more control over their relationship to energy. Blockchain can facilitate an energy-sharing economy, one that includes an exchange of power among consumers and offer more control over climate impacts.
Blockchain is a decentralized ledger that functions as a peer-to-seempeer network and links transaction records through cryptography. When used in the energy sector, it can allow customers to trade with each other. Just as mobile payment platforms like Venmo allow for the exchange of funds through a peer-to-peer platform, blockchain can allow for the secure, peer-to-peer exchange of energy.
Blockchain can also enable producers to raise capital by issuing energy tokens, which investors can either use to buy energy or resell. The result of this would be a multidimensional platform that could facilitate a smarter, cleaner power grid.
This disruption will likely stimulate the growth of renewable energy, as tokenizing energy will help solar, wind and other clean energy producers to effortlessly connect with buyer and investors. Because this is a distributed approach, the middleman, in the form of energy utilities, is eliminated.
One example of what this dispersed system looks like on a small scale is the Brooklyn Microgrid Project. The project is based on solar panels that have been installed on five buildings, with excess energy from the panels is sold to nearby buildings. While all of the buildings in the project are still attached to the grid, energy transactions are handled via blockchain and smart meter technology.
In Estonia, a blockchain-backed smart grid and an independent energy provider are supporting a choice-driven energy market. Under the system called WePower, consumers who have bought in are provided with credits to spend on various energy products and can make purchasing decisions based on real-time power production and prices.
The country’s completely digital grid has made it easier for WePower to promote clean energy solutions, with blockchain establishing essential trust for data sharing, creating liquidity and supporting a high level of accountability.
Energy Management Services
By supporting smarter energy usage, blockchain will enable automated, energy management services. By doing things like lowering a thermostat when a house is empty or shutting off lights that aren’t needed, energy management businesses will be able to deliver savings while optimizing usage for the grid. Since requires countless small modifications all on a real-time basis, many of which have implications for many different parties, blockchain must be an integral part of such a system. By supplying management and optimization services for many households, energy businesses will capture value from the grid and have the option to pass value on to users.
This approach comes with one major caveat: It requires users to openly share their usage information, something that many businesses and individuals are reluctant to do. Blockchain will need massive buy-in to reach its true potential as a disruptive tool. Until then, start-ups and small communities than adopt blockchain for clean energy will be at the forefront of the movement.
Sources and Further Reading
Disclaimer: The views expressed here are those of the author expressed in their private capacity and do not necessarily represent the views of AZoM.com Limited T/A AZoNetwork the owner and operator of this website. This disclaimer forms part of the Terms and conditions of use of this website.