Since the past decade or so, the world’s energy systems have become more complex – caused by the increasing usage of renewable energy sources and storage, as well as the popularity of fully electric vehicles. As such, the conventional energy management can no longer keep up. How do power generation companies manage excess energy coming from a homeowner who has solar cells installed, and sell it to another who does not? This has encouraged numerous industry players to focus their attention towards blockchain technology, and its potential to disrupt the energy market.
Introducing electricity trading markets
Digital currencies represent blockchain’s most “traditional” and conventional use case. Here, the tech enables the trading of tokens from one person to another, in a decentralized manner that no longer requires the use of a middleman. Similarly, in the energy sector, blockchain can empower peer-to-peer and grid transactions for energy consumers and producers.
A P2P energy network allows homes and businesses to buy and sell electricity produced via solar panels, or distributed batteries. The transactions are bound to be transparent, secure and immutable, thus making it easier to buy energy at the cheapest price. Grid transactions, on the other hand, provide a new method of electricity trading that is based on the current power system. With such a system, power grids remain integral, while their functions and forms become adaptable to new market demands.
Facilitating the mass-adoption of electric vehicles (EVs)
While they’re certainly becoming popular, EVs are still facing several challenges. At this juncture, the charging infrastructure is insufficient and lacks market standardization. With the help of blockchain, charging station owners will be able to monetize and standardize (or even automate) their services – leading to more EVs on the road, as a result.
Owners of EVs can also plug onto the sharing economy easily, by putting their vehicles on the rental market – again, using blockchain technology. As a result, the cost of financing the vehicle can be lowered, or even fully covered. Just imagine, your EV being unused for 8 hours each day, while you go to work. If only it could be utilized to bring income for you; this would be the perfect setup.
Providing an eco-friendly approach
Climate change has in the past few years become a much larger concern; even China is stepping up its game to move towards clean energy and pollution reduction. Therefore, more and more governments are actively trying to limit emissions and protect the environment. Blockchain can be a powerful tool in this regard. Its tracking capabilities can be leveraged to keep score of emissions, and whether it comes from renewable sources. In other words, a blockchain adoption in this case will lead to increasing environment sustainability.
Some of the other possible advantages include logistics and supply chain optimisation, settlement of energy trades, trustworthy billing, electric mobility, and more. Several research studies have shown that a market-wide blockchain standardization of the energy industry will also decrease manufacturer’s costs, which can be passed down as savings to consumers.
The reality, and the future
While blockchain is heralded as the potential saviour of mankind, the reality is that the energy industry currently lacks the infrastructure needed to fully adopt blockchain. It will likely take many years before it can be thoroughly implemented on this market. Doing so would also require a joint effort between governmental agencies, energy giants, consumers groups, and businesses.
Despite the drawback, small-scale testing of blockchain-based energy services is already being carried out, as energy companies and start-ups are aware of the technology’s potential in saving the world, as well as lining their pockets.
Cover photo by: Anita Anyango
Daniel is a digital currency expert, writer, investor and ICO consultant. He writes for several top cryptocurrency publications, and will soon kick-start his entrepreneurial career in fintech, where he hopes to innovate. In his free time, Daniel enjoys travelling and collecting all sorts of thrilling experiences.