Blockchain technology could create a paradigm shift in the power industry, helping companies move away from traditional business models with complex operating structures.
That’s the opinion from GlobalData, whose analysts argue blockchain has the potential to address the key challenges facing electric utilities: high operating costs, aging grids, security, regulatory compliance and personalised customer service.
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Archi Dasgupta, Disruptive Tech Analyst at GlobalData, said, “Blockchain could be the leading enabler of decentralisation, democratisation, and liberalisation in the power industry. Using smart contracts, the technology can empower bilateral settlements in real-time by eliminating midpoint delays steering to a significant reduction in the operational costs of utilities.”
Dasgupta said although blockchain technology started scaling, use cases are still largely dominated by proof-of-concept projects and small-scale production deployments.
“Mass-scale commercial adoption is still three to five years away as there are several challenges to be addressed including deployment costs, the requirement of power to run the setup, and more importantly, the need to develop common standards and regulations,” Dasgupta said.
“Electric utilities are similar to banks in the way they are centralised and highly regulated, hence it is crucial to creating an ideal set up for the implementation of transformative technologies such as blockchain.”
An analysis of GlobalData’s Disruptor Tech Database reveals interesting real-world use cases of blockchain in the power domain and select startups and electricity companies working on them.
- Decentralisation of power through blockchain has been giving rise to trading platforms like that implemented in the Brooklyn microgrid by LO3 Energy where power can be purchased or and sold directly within a peer-to-peer (P2P) network, eliminating the need for intermediaries. This will not only lower costs of both utilities and consumers but also present network transparency.
- Australia’s crypto startup Power Ledger known for developing decentralised energy trading platforms on blockchain launched its first commercial deployment in the US. Its distributed P2P blockchain network allows consumers and businesses to sell their surplus solar power in their neighbourhood without a middle man.
- European transmission system operator TenneT’s pilot with Sonnen using blockchain based on IBM’s Hyperledger framework can enable energy storage systems within the network to absorb or discharge excess power within seconds and minimise transmission gridlocks.
- Lithuanian startup, WePower, has been working with Estonia’s transmission system operator Elering. WePower managed to upload 26,000 hours and 24TWh of energy production and consumption data from the smart meters of Estonia on to the Ethereum blockchain, which led to the creation of 39 billion smart energy tokens that are tradable.
- Capitalising on blockchain’s potential, P2P energy networks are able to create a decentralised marketplace connecting electric vehicle (EV) drivers and charging station owners for mutual benefits. German startup Motionwerk has launched a blockchain-based P2P energy sharing project Share&Charge, which enables users to share their private electric charging stations for money.
- Other startup examples piloting with blockchain to disrupt the electric power include Drift, Electron, FlexiDAO, Grid+ and Riddle&Code.