Utilities are beginning to take notice of the transformative potential of blockchain technology.
Increasingly, blockchain technology is highlighted as being potentially disruptive for the energy industry. Applications are being explored globally and startups are recognising the vast opportunities that the technology offers.
In April this year, the alleged world’s first blockchain managed energy transaction occurred in Brooklyn, NY, as one resident sold excess energy from his solar rooftop installation to a neighbour, paid for and recorded through blockchain. [Blockchain Transactive Grid Set To Disrupt Energy Trading Market.]
The technology has vast uses across various industries as it leverages decentralized peer-to-peer internet technology, where both computers and people share a distributed ledger.
Supporting distributed trading, blockchain software involves transactions that are stored in virtual blocks. These are interconnected, creating a complete history of all past transactions that have occurred within a particular network. Potential use cases for blockchain are being developed in many different industries, particularly where it is desirable to accelerate transaction times, remove centralized market control, reduce the cost of performing transactions, and ensure trust between different market participants.
With the energy industry becoming more and more complex and competitive, blockchain can definitely play a crucial role.
Blockchain tech opportunities for utilities
While many use cases have been proposed for the energy industry, the one gaining the most traction at present is peer-to-peer (P2P) power trading, where owners of small-scale generation can sell excess generation direct to other consumers. Today, centralized control of distributed energy resources (DER) restricts to whom and when DER owners can sell their energy back to the grid. A blockchain-enabled P2P model allows much greater flexibility and could be a powerful enabler for truly customer-centric transactive energy. The earliest adopters of blockchain have been stakeholders rather than utilities-currently, those leading the research into blockchain are the owners of DER and startups seeking to sell directly to them. But, this may well be changing as utilities see the opportunities involved.
Endesa Energy, a Spanish power utility, has just announced that it is planning to open a blockchain laboratory to support the development of blockchain-based solutions for the energy sector. The new blockchain-specific lab is set up with the aim of accelerating new blockchain applications and use-cases for the energy sector while looking to transform the current model of infrastructure in the energy industry.
The utility, through its open collaborative platform Endesa Energy Challenges, is calling for applications from those who are looking to develop distributed ledger solutions to become a part of its blockchain laboratory. The open call is inviting participants from across the world, be it individuals, startups, companies or universities. Selected winners are to be announced in April next year and the utility will commence developing those projects alongside the successful applicants.
New technology for a new energy future
The initiative is the latest among several endeavors to implement blockchain solutions in the energy industry to create a transparent and efficient new-age distributed grid for the sustainable energy market. The technology has already seen implementation in peer-to-peer transactions among users of solar panels to trade excess energy in Australia. In August, Power Ledger a Perth-startup, announced trials that would determine how solar-energy adopters would buy, sell or exchange excess solar energy on a blockchain, instead of the traditional grid.
Power Ledger chairperson, Jemma Green, says that the technology will create citizen power stations and that network operators should see this an opportunity to maintain grid utilisation because it will encourage consumers to sell excess energy rather than store it which will see grid utilisation decline.
The announcement by Endesa lauds blockchain as an ancillary technology that enabled the development of bitcoin that can transform the way business is conducted across the world. The utility goes on to describe it as an almost incorruptible digital ledger, Endesa added, pointing to information (stored on the ledger) that can never be deleted.
Endesa views the platform as a place to learn; make controlled mistakes, check to see what implications there may be; and understand the rules in a decentralised world where there is still a long way to go.
There is no question that there is a long way to go but innovative technology like Blockchain will certainly make the journey towards the new energy future a lot smoother and it’s these technologies that utilities should be taking notice of if they want to remain viable.