Blockchain technology is rising in prominence across the industries. While some countries are still skeptical about adopting blockchain, others are making the utmost effort to become the flag bearer of this open distributed ledger technology. The advantage of using blockchain is the removal of the intermediary layer which results in saving time and cost required for transactions. Because the technology uses encrypted protocols, one can rest assured about the safety and security as well.
Blockchain Technology and France
In France, blockchain is a vibrant industry, and the country is doing much more to further enhance its usage among the industries as well as in different departments about both the public sector and the private sector. In fact, the country has chalked out an ambitious plan to become a power-hub for the blockchain technology in the European Union and has taken many steps to realize this dream. According to the country’s minister of finance, Bruno Le Maire, the adoption of blockchain will provide new opportunities for the startups whereby the entrepreneurs will be able to raise funds through initial coin offerings (ICOs). In December last year, two French parliamentarians submitted the report to the country’s parliament recommending that the government should invest €500 million in the country over the period of next three years to develop France as a blockchain nation.
Blockchain Application in Energy Sector
The more specific application of the blockchain that France is witnessing is in the field of the energy sector. Owing to its characteristics like lower transaction cost, high security, and disintermediation, blockchain is witnessing high popularity in the energy sector. Some of the energy startups in the country such as Evolution Energy and Sunchain are building on the blockchain projects to decentralize the current energy distribution system. However, there are several barriers that blockchain has to overcome before it becomes a mainstay technology in the power sector.
In order to know the view of experts about blockchain application in the energy sector, Grenoble Ecole de Management (GEM) conducted Energy Market Barometers in December 2018. The primary question posed to the experts was related to the overall direction that blockchain is headed towards in the French energy sector. Further, when asked about the specific application of blockchain in the power sector, most of the experts agreed that in the next five years, blockchain would be effectively utilized in the charging/sharing of electric vehicles and energy trading system. Many of the blockchain developers today are working on the latter, i.e., projects relating to the peer-to-peer energy trading system. We have already witnessed one such energy sharing project in the country in 2017 which was named DIGISOL. The project was conceptualized with an objective of sharing solar energy between two individuals residing in the same building. The large scale manifestation of the project, however, is yet to take shape.
The blockchain can be effectively utilized in enhancing the supply chain efficiency of the energy sector. With the help of technology, companies can effectively track and monitor energy generation, transmission, and delivery. The organization can also identify the various anomalies in the system and by removing the bottlenecks; it can enhance the overall agility of the operation while decreasing the response time. Along with these benefits, experts also pointed out some of the unique challenges that blockchain has to overcome before it witnesses a wide adoption in the French energy sector.
Challenges for Blockchain
The lack of cryptocurrency regulations and somewhat ambiguous framework is holding back the potential of blockchain solutions for the energy firms. Market analysts believe that clear regulation and controlling framework is required to further prospects of blockchain in power sector. The French government has taken some steps towards regulating the cryptocurrency with the Accounting Standards Authority (ASA) of the country coming up with the various rules and procedures that are applicable to the issue of initial coin offering (ICO). That said, there are still some issues like intellectual property rights, enforceability of contracts, and privacy of the data that need immediate attention from the government.
The huge amount of energy that is required for the blockchain operation is another sticky area for blockchain. According to an estimate, 22 terawatt-hours (TWh) of energy are required to run the Bitcoin software and to operate the blockchain, even more, energy is required. This means that the overall consumption of electricity is comparatively high in the case of blockchain adoption. The way out of this issue is to use hardware with high energy efficiency and generating more electricity through renewable sources. Besides these issues, the adoption of blockchain also faces the technical challenge. Only a person with a substantial level of technical know-how can operate the blockchain. In order to encourage its wider adoption, blockchain technology must come across as a simple, uncomplicated means of doing the transaction.