How Will Blockchain Impact the Energy Sector
Blockchain promises to accelerate transactions and slash costs by facilitating value transfer without the traditional involvement of an intermediary. Blockchain application has been, by far, most prominent in the financial services sector. In fact, many non-techies mistakenly assume the term blockchain is synonymous with cryptocurrency and more specifically, Bitcoin.
The energy industry has often been slow in recognizing and aligning itself with technology trends and blockchain has been no different. That’s perhaps partly due to the nature and legacy of the energy industry where government is often deeply involved. Government bureaucracy doesn’t ordinarily lend itself to innovation and dynamism.
Nevertheless, the power sector is gradually realizing that blockchain technology holds tremendous potential. It can revolutionize an industry that is increasingly interconnected yet more decentralized than ever; conditions that are ideal for blockchain use. Here’s a look at the ways blockchain will impact the energy sector.
At its most basic application in billing, blockchain cryptocurrencies can be used to make bill payments. Beyond that, smart-metering when combined with blockchains and smart contracts can offer a wide range of automated billing options for both power generators and consumers. Utilities could benefit from pay-as-you-go platforms, energy micro-payments and pre-paid meter payment solutions.
Sales and Marketing
Sales strategies and tactics could be customized to fit environmental concerns, consumers’ energy profiles and individual preferences. Blockchains in tandem with artificial intelligence techniques could extract insights that illuminate otherwise hidden energy consumption patterns and thereby enabling the provision of targeted, personalized and value-adding energy solutions.
Markets and Trading
Blockchain-driven distributed trading platforms will disrupt traditional market operations such as commodity trading transactions, wholesale market management and merchandise risk management. There are currently blockchain systems under development for green certificates trading. Errors in trading transactions can be accurately identified much quicker thus saving time that would otherwise be spent on blind troubleshooting.
Blockchains can enhance the automated control of micro grids and decentralized energy systems. Creation of local energy marketplaces founded on localized distributed energy trading platforms could increase energy self-production and self-consumption. On the downside, this could potentially negatively affect the revenues of large energy distributors and increase tariffs for consumers as regulators seek to shield large players from the shocks of falling revenues.
Internet of Things (IoT) and Big Data Management
Eventually, the IoT wave will sweep the energy industry. It’s already happening as smart meters, network monitoring equipment, advanced sensors and energy management systems rapidly proliferate the sector. The enormous data captured from these diverse sources has to be aggregated, analyzed and acted on. Blockchain technology could be used to facilitate the communication and coordination of IoT devices through data standardization, transmission and storage.
Grid Management, Integrity and Maintenance
Blockchains could optimize flexible resources and integrate energy infrastructure. It speeds up the identification of defects thus preventing losses occasioned by unscheduled downtimes. Data gathered from blockchain can be the basis of a model that predicts events, enables anticipatory planning, promotes worker safety and maintains asset integrity.
Data Security and Access Management
Blockchain’s cryptographic capabilities are ideal for the protection of physical and virtual assets. The technology could be deployed in the management of digital and physical access control. Blockchain can strengthen data confidentiality and consumer privacy. It can secure information from hacking and minimize the risk of fraudulent trades.
In a world moving from fossil fuel dependence to green energy sources such as solar and wind, blockchain can facilitate the sharing of energy resources between multiple users. Peer-to-peer energy trading systems can give residential consumers the ability to automatically sell their excess renewable electricity to neighbors. Blockchain helps build an accurate and reliable record of transactions underpinned by transparent information sharing.
Blockchain smart contracts could speed up and simplify the process of switching energy suppliers. Both residential and commercial consumers could, using a service such as EnergyBot rates, evaluate the service provider with the most attractive billing rate and even compare the average cost of electricity between states. Smoother mobility could intensify competition and push down energy tariffs.
The transparent process and immutable records that result from adopting blockchain technology can improve the quality of auditing and the certainty of regulatory compliance. It eliminates guesswork from the process by guaranteeing the authenticity of a utility’s operational and financial information.
The effects of blockchain in the energy sector are already being felt. This revolutionary technology’s influence on energy generation, distribution, consumption and storage is only bound to grow.