By Jeremy Wagstaff
Energy startups have been using blockchain to power electricity sharing in microgrid trials from Texas to Tasmania for a year or so
But now companies are moving beyond trials to commercial projects, leveraging the distributed ledger technology for payments and trading on a city-wide and even national scale.
“What the internet did for communications, blockchain will do for trusted transactions, and the energy and utilities industry is no exception,” said Stephen Callahan, Vice President, Energy, Environment & Utilities, Global Strategy, at IBM.
The trend illustrates how blockchain is swiftly moving beyond financial services and cryptocurrencies, and offers a glimpse of a growing challenge to the $2 trillion energy market.
Blockchain is a database of transactions distributed among multiple computers. It solves two key problems in the online world: transacting without the need of a trusted intermediary, and making sure those transactions can’t later be altered, removed or reversed.
This appeals to the energy industry in several ways
As the market liberalizes and renewable energy grows, blockchain offers a way to better handle the increasingly complex and decentralized transactions between users, large- and small-scale producers, retailers and even traders and utilities.
Blockchain’s use of tokens also offers a way to reward users for saving energy, and for small-scale transactions between individual users with solar panels who are both producers and consumers – known as “prosumers“.
Being able to add “smart contracts” onto a blockchain would also make it possible for actions to generate automatic transactions down to the smallest level, where meters and computers could autonomously reconcile supply and demand.
“The prospect of being able to track particular electrons via a blockchain as they move onto or off the energy grid has captured the imagination of many companies,” said Daniel Sieck of U.S. law firm Pepper Hamilton.
All of this would save money and could transform the way we produce, store and consume electricity, what DHL Energy president Steve Harley calls the “internet of electricity.”
ROOM TO GROW
The World Energy Council predicts that such decentralized or distributed energy will grow from 5 percent of the market today to 25 percent in 2025.
The past few years have seen proofs of concept and trials, from small microgrids to projects by big players such as Shell <RDSa.L>, BP <BP.L> and IBM <IBM.N>.
Few energy companies, however are making significant investments into blockchain technology, says Shane Randolph, managing director at Opportune LLP, an energy consulting firm based in Houston.
“The ones that are engaging in the conversation are largely doing ‘blockchain tourism‘ without developing applications.”
That leaves opportunities for newcomers.
Power Ledger, an Australian startup which raised A$34 million ($26 million) in an initial coin offering, or ICO, in October, is building platforms to enable commercial operation of microgrids in Thailand and India and two commercial buildings in West Australia.
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