Applications of Blockchain Technology in the Energy Market
Blockchain technology is an emerging IT-driven development supported by cryptography. The technology is considered one of the biggest transforming mechanisms expected to change the face of various industries in the coming years. Decentralisation is the main attribute behind the blockchain technology which is not only providing power to all market participants but also increasing the transparency in the system. The absence of intermediaries and middlemen also provides benefits by reducing costs.
Like other industries, the energy sector has also started implementing the blockchain technology to decentralise the system and bring more efficiency. The blockchain applications in the energy sector are becoming increasingly common.
There are different mechanisms working in the energy sector using blockchain technology, but the most common one is a peer-to-peer (P2P) energy trading platform which is connecting consumers, producers and prosumers. Meanwhile, blockchain technology is promoting a shared economy, where even through small investments, the renewable energy generation can be started and the areas having poor energy transmission system can benefit from it.
A solar PV project can be installed on rooftops, and the resulting amount of surplus energy can be shared with neighbours or peers. It does not only reduce the cost of energy but also reduces the burden on the national grid. Such peer-to-peer and distributed ledger system will enable the energy sector to build an independent, transparent and safe power infrastructure with relatively low cost.
A large number of start-ups has started working on blockchain applications in the energy. In Brooklyn, LO3 and Siemens started providing energy through peer-to-peer energy trading platform where customers can buy and sell the power using blockchain technology. Similarly, in Germany, TenneT and Sonnen collaborated for stabilising the wind energy supply from the northern part of the country to the southern part. Several pilot projects are also started in Australia for buying and selling of solar energy through blockchain.
This article is based on the 2018 edition of our recently publish report “Opportunity Assessment of Blockchain Technology in the Energy Sector”.
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