Blockchain technology is to bring efficiency and reduce costs in the energy sector
The blockchain technology has recently shown quite a robust growing trend, particularly in the financial sector. One of the key attributes of the technology is its drift towards a decentralised system which can save time and money. Amongst other sectors, there is also an enormous potential for the technology to be used in the energy sector and can disrupt the traditional ways of maintaining transactions. It can be used for both wholesale and localised trading of electricity.
Like many other sectors, the energy sector itself is reshaping by embracing new emerging technological developments such as smart grids, microgrids and advanced energy storage solutions. The way energy is used and acquired has also been changing, for instance, electric vehicles to promote the V2G market, while environmental regulation to underpin renewable energy. With so many options available in the future to supply and consume power, one of the major issues can be managing the documentation of transactions. Blockchain can help the energy sector by reducing transaction costs while maintaining energy records in much more precise and decentralised way.
In the US there is already a trend towards the application of blockchain in the energy sector as some utilities see it as a disruptor in the coming years. Pacific Gas & Electric has planned for two blockchain pilot projects. Ameren also announced its plans for a pilot with Omega Grid.
Siemens and LO3 Energy in Brooklyn developed the Brooklyn Microgrid which allows users to trade (buy and sell) their excess energy locally through blockchain technology. We understand that peer-to-peer (P2P) energy sales are comparatively cheaper than buying it from the national grid. The system is also able to show users the energy source allowing them to choose between renewable and non-renewable.
We understand that the two major factors driving the demand of blockchain in the energy sector are the cost reduction and efficiency. The blockchain technology is likely to help open a new era of P2P energy and solar rooftops market.
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