In addition to this, ‘smart contracts’ allow supply and demand to be controlled in an autonomous and decentralized manner. Peer-to-peer transactions can be executed directly with no middle men or central body involved. This offers considerable potential for reducing the cost of transactions, automating processes and making these more flexible.
Start-ups and companies in the energy sector have also become aware of the opportunities linked to blockchain technology and are developing solutions that will revolutionize the way we think about the energy sector. One idea is, for example, to use blockchain to allow energy to be sold directly from energy producers to energy consumers. Other businesses are working on solutions that will reduce the transaction costs involved in delivering energy to consumers, streamline billing and clearing processes and create novel forms of energy infrastructure and unconventional schemes for investing in and incentivizing the use of renewable energy.
Decentralized energy supply – peer-to-peer energy trading
One pioneering example of how a decentralized energy supply can be put into practice is the Brooklyn Microgrid project from New York City. The TransActive Grid joint venture, which was initiated by LO3-Energy and ConsenSys in 2016, uses the Ethereum blockchain to provide a local community-based electricity grid that can be operated in parallel with the main public grid. It allows for solar energy to be sold directly from one neighbour to another, with buyers continuing to be able to choose the source of energy they prefer. In emergencies, the microgrid serves as a backup power supply for the main grid.
Australian company PowerLedger has developed a peer-to-peer renewable energy trading solution that is also based on blockchain technology. By using smart contracts, individuals can sell any excess electricity directly on to final consumers via a market place, with the billing being done automatically. The project seeks to make the supply of energy more robust, affordable, emissions-free and to give people around the world control of their energy supply.
Wholesale energy traders are also showing great interest in using blockchain technology. At the 2016 EMART conference, which was held in Amsterdam, the Enerchain tool, which was developed by PONTON, was put to the test and passed with flying colours, with energy being traded directly from peer to peer. The Enerchain tool seeks to cut out the middle man out of electricity and gas trading thereby reducing costs and improving the security of the entire system.
Streamlining and improving energy infrastructure
Electric mobility is the buzzword of the day. However, one of the key challenges is how to provide a sufficient number of charging stations. Share & Charge is trying to find an answer to this question and improve Germany’s electric charging infrastructure. The company’s idea is for individuals to install their own private charging stations and to share these with other users. The charging stations can be located via the Share & Charge App. Individuals decide for themselves how much they want to charge other users for using their private charging station. By using blockchain technology, the electricity consumed is billed automatically and the transactions involved can be traced virtually in real time.
Investing in renewable energy by using blockchain technology
WePower has adopted a unique strategy to the shared use of grids and networks by linking up producers of renewable energy with consumers and investors. The WePower platform allows energy producers to issue energy tokens based on the Ethereum blockchain and therefore raise capital. The tokens represent the amounts of energy produced and delivered. In order to finance new investment projects, energy producers can sell energy at times when prices on the market are low, thereby raising capital that can be invested in renewable energy projects. The technology ensures that the energy transactions are transparent.
The projects described here are only a few of many examples showing how blockchain technology can be used in the energy sector. Even though some technical challenges remain and a number of regulatory changes will need to be made, blockchain has the potential to revolutionize parts of the energy sector, and ultimately, the entire industry.
About the authors:
Felix Mago, is Head of Blocktech Institute & Head of Innovation Management at QuadriO, which is part of the Smart Systems/Smart Infrastructure Hub Dresden/Leipzig. He is a long-time blockchain expert, has authored a bitcoin manual and heads the Berlin-based Blocktech Institute. In his role as Head of Innovation Management at QuadriO, he assists companies from different industries as these transition into the digital age and enter the world of blockchain.
Jacob Friedrich, Event manager at Blocktech Institute & Blockchain Consultant at QuadriO. Jacob Friedrich is a blockchain enthusiast and event manager at the Berlin-based Blocktech Institute. His work is about showing the potential that blockchain technology has and helping people use it in practice.
