The disruptive Blockchain Technology is transforming the Energy Sector

The disruptive Blockchain Technology is transforming the Energy Sector

For the last few years, Blockchain technology has been one of the most mentioned terms, not only in the world of IT, but also in finance (FinTech) and banking, where it has been most disruptive, as it is what makes it possible for cryptocurrencies such as Bitcoin, Ethereum, and several others to exist and be usable.

And now, you must be wondering: “Ok, and how Blockchain can be related to the Energy Sector?” 

The energy sector is becoming a major concern, as nowadays more electricity than ever is used, not only in the manufacturing and services sectors. Most households nowadays require a considerable amount of electricity to properly live, which creates concerns for the environment and for the economy.

With sustainability and freedom from major electricity corporations in mind, many individuals and companies are shifting towards renewable sources of energy; but our dependency on large energy providers is still undeniable, making it clear that Blockchain can serve as a more transparent and decentralised way for making energy related transactions in the future.

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What is Blockchain Technology?

Many of you are probably already familiar with Blockchain and terms such as decentralised and distributed ledger might ring a bell. However, there are still challenges when it comes to understanding the Blockchain technology that must be overcome first.

Let’s take the example of a CMS platform (like WordPress). There is a database that holds all of the data, including our user accounts, and we can only modify the data in the account we have access to, by knowing something like the email or username, and the password. Basically, the database can only be accessed and modified by the database administrator(s), this means that it is centralised.

The Blockchain is also a database, but what makes it so special is that it is decentralised. It means that there is no central server or governance, but a network composed by every user, called a node (computers), from around the globe! 

The other important aspect of Blockchain, is that it enables secure, transparent peer-to-peer (P2P) transactions. This translates to no need for intermediaries, being it banks, agencies, companies, or anything that we would have needed in the past in order to do a transaction.

Finally, when alteration is done to a record or a transaction is set in the Blockchain, it literally becomes public knowledge. It must be approved by those in the network, which creates a new block that works as a secure register of the transaction, with all of the previous transactions’ records intact.

One more key aspect to take into account, is that these transactions must not be exclusively cryptocurrencies like Bitcoin, as one of the things that makes this technology so powerful, is that we can trade with any asset.

So, how can Blockchain revolutionise the Energy Sector?

1. Encouraging competency & driving the rates of energy by the market

If we think about it for a moment, the energy market hasn’t changed much for years. Of course, there has been a continuous interest in improving the generation of energy, reducing the consumption of it, and adopting renewable sources of energy to reach sustainability.

When it comes to energy as a service, not much has happened. There are a few major electricity and energy providers (or the state in the case of some countries); that get paid, usually monthly at a fixed rate per consumption.

In that sense Blockchain could solve this situation by driving the rates of energy by the market, instead of setting fixed rates.

Counting with a model where energy users can examine the registers of different electricity and energy providers can unlock the possibility of a more varied energy market, and encouraging competency and digitalisation of the utilities.

Another aspect of the energy sector that needs to be aimed is controlling the consumption and performance of energy in both residential and business related markets. Both are actually highly achievable nowadays through integrated Energy Intelligence Software and devices such as smart meters that allow us to collect data.

However, the storage and use of this data can be yet another challenge Blockchain offers a possible solution for, as a decentralised network can allow energy providers to monitor and analyse this data in real time, which would in turn improve efficiency and response from providers.

2. Introducing new payment methods in the Energy Market

Even though it is useful to detach the Blockchain from cryptocurrencies in order to look further and find new, creative applications for this technology; cryptocurrencies are still an important asset of the present and probably the future, which can also be used to pay energy.

At a glance, the relevance of using cryptocurrencies to pay for energy might seem as something of little impact within the overall landscape of the energy sector.

However, it is more than allowing a new payment method for electricity and other forms of energy, such as Bitcoin, Ethereum or other major crypto assets. It is about giving different energy providers a unique token for users to pay for their services.

This is not only a branding convenience, but a way of incrementing the transparency in the sector, as the value of tokens would fluctuate, precisely depending on the price of the market, which can act as an effective solution for high prices.

3. Trading with Energy in the Blockchain

In the energy sector, with the growing adoption and enthusiasm in regards to renewable sources of energy, and more and more individuals generating some or all of their electricity needs on their own, a new term is being coined: Prosumers, that is, consumers, but also providers

Of course, the possibility of generating our own energy, and the interest of many to consume more renewable energy increases the interest for these new prosumers to find appropriate ways of selling their energy in a secure and transparent way.

Blockchain is a clear solution, as it is made with peer-to-peer transactions in mind; which is the kind of transactions that would facilitate these new prosumers to profit from their exceeding generated energy.

Having energy as an asset in the Blockchain is a great step forward to achieve sustainability and higher efficiency in the use of energy, but also, in order to ensure the availability of it as the need for it also increases, making it more important to count with these independent providers.

4. Shared electric vehicles charging

Electric vehicles are one of the most important innovations in both, the car industry and the energy sector. These cars aim to reduce the use of gas and fossil fuels at a great rate, by using electricity as the way to move the vehicles.

But there are still problems with electric cars, especially when it comes to charging, as well as the big amounts of electricity these new vehicles will require, making it fundamental to count with new ways of sharing electricity. Sharge is the perfect example of a business model based on energy sharing activities. 

Shared electric vehicles charging concept is one of the most exciting applications for some of the Blockchain entrepreneurs and enthusiasts, who expect to use this technology, combining the possibility of peer-to-peer trading, with its possibilities for grid management and energy storage. The objective here would be to facilitate the increasing amount of electric car users in the near future to trade or share the charging of vehicles without compromising energy consumption.

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