Read what our MD has to say about Blockchain. Everyone nowadays is talking about the Blockchain. What is it and is it really going to transform the Energy and Utilities industry as it is doing the financial services sector.
Lets first understand what blockchain is and how it affects the Utilities industry?
A blockchain is a continuously growing list of records, called blocks, which are linked and secured.
Each “block” represents a number of transactional records, and the “chain” is what links them together. As records are created, they are confirmed by a distributed network of computers and paired up with the previous entry in the chain, thereby forming a chain of blocks or a blockchain.
The blockchain is stored on this large network of computers, that means no one has control over its history. It checks and certifies everything that has happened in the chain prior, and it means that no one can go back and change anything. It makes the blockchain a public ledger that cannot be easily tampered or hacked.
Blockchain in the Utilities Industry
Blockchain hasn’t yet grabbed too much attention of the heavily regulated Utilities Industry as it braces for distributed energy generation and usage in which both utilities and consumers will produce and sell electricity. But there are few experiments and testing happening around the world on how this would disrupt the conventional Energy and Utilities Industry. Is it too early to say that Blockchain could offer a reliable, low-cost way for financial or operational transactions to be recorded and validated across a distributed network with no central point of authority?
As in the financial services industry, this capability has prompted some people to explore whether blockchain may one day replace a portion of utilities’ businesses by doing away with the need for intermediaries altogether. But that view is too complex and extreme.
If Blockchain offers the viable alternative to the way we operate the Utilities Industry, there are immense benefits, and it could help us solve complex issues of hindering the transformation of the Utilities Industry. For example:
- Neighbours are selling their generation, e.g. solar energy and battery generation to one another using blockchain technology. Ampower is exploring the battery technology already to offer the alternative generation source to our business customers. Think batteries charging when there’s excess wind power, and businesses automatically drawing down power demand when electricity prices are high.
- Many regions around the world especially in India; have limited access to energy. Blockchains, combined with smart financing schemes, mobile applications, and digital sensors, can help distribute energy in small, discrete packets in these regions, allowing a local owner of a solar-generation system to sell power to neighbours very easily and efficiently in a secure manner.
- • Making Energy trading process easy and efficient and the financial transactions are secured, quick and transparent. For example, a business could sell unused power during a downtime to other business that needs the additional power. Trading grid flexibility in this way could provide significant efficiency benefits for grid operators like the National grid. Publishing orders and transactions via blockchain can replace trading via brokers. The companies like ENEL Italy, Germany’s E.ON and Sweden’s Vattenfall, are already investigating whether they can lower transaction costs in the growing competition and energy supplies.
- Ability to authenticate and manage the billing process for electric-vehicle charging stations. Blockchain can offer opportunities to coordinate electric-vehicle (EV) charging. It can help in payments at charging stations, allowing EV drivers to view maps of the charging network that highlight choices based on each user’s preference and real-time pricing data. If blockchain microgrids have been set up in the area, power prices at each station can be established by the grid and residential power suppliers. Drivers can pay securely and instantly using a blockchain payment system.
- The technology to manage supply and demand in real-time; this is done at the moment in the UK by National Grid, however, blockchain makes it even faster.
Enabling customers to switch power suppliers more quickly may be within hours?
There are few companies who are testing the pilots to explore whether blockchain can make the switching process easy as well as other processes like meter registration, meter operations, automated meter readings more efficient and less costly.
ICE apparently launched a cryptocurrency data feed in January, and both it and EEX are discussing applications with customers and technology companies who offer this kind of support.
There could be other benefits for the helping improve the smart grid operations like automatically diagnosing the network emergencies and problems and reconfigure in reaction to them. Blockchain technology can be used to develop a decentralised energy exchange platform that can host applications ranging from validating electricity trades to monitoring grid equipment, this would help in Asset Life Cycle Management and improving the asset performance.
Only time will tell if Blockchain can offer reliable and scalable support to energy and utilities industry, that would provide an answer to a complex new world of distributed supply and generation of electricity for both large and smaller power-generation systems for homes, businesses, and communities. To succeed in maximising the potential of distributed generation and managing less predictable and more volatile renewable power sources, the industry should take positive steps toward the decentralising the whole system.
Research firm IDC predicts global investment in blockchain will more than double in 2018 to $2.1 billion from $945 million last year, most of it for banking, but expects “strong, double-digit growth” in the energy until 2021.
Blockchain technology could provide the infrastructure for sophisticated networks that manage payments, sales, trading, and distribution. Given the potential for efficient transactions and reduce costs, blockchains and smart contracts could help to remove pain points and friction throughout the power value chain. But in my view, the blockchain technologies are still in their early stages, and there are some important concerns about the security, scalability, and governance.