Blockchaintechnology is a chain of blocks used to store and transmit data in a distributed manner, creating a decentralized data ledger. Despite the relatively early development stage, blockchain solutions in the energy sector are highly potential.
Energy
companies, ranging from utility providers to oil and gas enterprises are
recognizing the transformative impact of blockchain technology. Blockchain
technology has the potential to transform the energy sector. The energy
industry has been consistently catalyzed by innovations including rooftop
solar, electric vehicles, and smart metering. Now, the Enterprise Ethereum
blockchain presents itself as the next emerging technology to spur growth in
the energy sector through its smart contracts and systems interoperability. Of
the many use cases for blockchain, energy and sustainability are often less
recognized.
The main benefits of blockchain in the energy sector are:
- Reduced
costs
- Environmental
sustainability
- Increased
transparency for stakeholders while not compromising privacy
Blockchain in the energy industry:
smart contracts
The
technology of distributed ledgers uses smart contracts, which offer new
opportunities to create various automated tools for the energy sector. That
includes individual customer service platforms and the entire energy system
structure, including payments, signing contracts, blockchain-based energy
exchanges, enabling registration of transactions, and saving their history on
the blockchain.
The
energy industry can use blockchain and
smart contracts for:
- Excluding
intermediaries in decentralized business models,
- Making
payments,
- Verifying
transactions,
- Increasing security of decentralized data storage.
In
an energy system based on blockchain technology and smart contracts,
consumers would manage contract data. They would define the conditions of
electricity consumption. Therefore, blockchain enables producers’ direct
connection with consumers and thus decentralizes the energy trading system.
Smart
contracts used in blockchain can provide automatic control over energy storage
installations and energy transmission within the network. Smart contracts would
help to keep a balance between energy supply and demand. If more energy
was produced than needed, it would be possible to channel this surplus into
energy storage systems automatically. On the other hand, stockpiles’ power can
be available when the energy supply is too low and does not keep up with the
energy demand.
Distributed accounting is another benefit of blockchain, as it improves network functioning and energy storage. Blockchain enables decentralized storage of all transaction data. Distributed accounting would allow keeping distributed, secure, and tamper-proof register of all energy flows and transactions.
The Blockchain Use Cases in Energy:
·
Wholesale
electricity distribution
·
Peer-to-peer
energy trading
·
Electricity
data management
·
Commodity
trading
·
Utility
providers
·
Oil
and gas resource exploration
·
Oil
and gas resource storage and transportation
· Refined resource management and sale
Another common use case for blockchain within the energy industry is the development of cryptocurrencies for monetary payments. Several utilities have already begun pilot projects to enable such transactions. For example, Marubeni Corporation (MARUY) accepts cryptocurrency payments in some regions of Japan. In certain scenarios, the utility of Blockchains goes beyond payments. For example, Bank moon, a South Africa-based blockchain startup, partnered with Usizo to enable cryptocurrency monetary payments for Bitcoin-compatible smart meters located in remote areas.
But this is just the start. Blockchain could lead to further changes within the energy ecosystem. For example, a distributed ledger with several energy consumers and producers could lead to multiple rates within markets instead of the single utility-set rate that is currently prevalent.
The energy sector is already embracing blockchain technology on several fronts, but the impact is likely to become more evident as blockchain and the energy sector evolve over the next decade.
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