The adoption of blockchain technology is in full swing. Organizations across industries are opting for blockchain in order to increase their operational efficiency and enhance the trust of their customers in their product or services. Whether it is a supply chain, logistics industry, or financial technology sector, the blockchain movement has done wonders in shoring up revenue of companies. That said, some industry sectors are still mulling on the prospects of blockchain adoption with the energy and power sector figuring prominently among them.
Blockchain and Energy Sector
The scope of blockchain adoption and its potential benefits for the energy sector is tremendous. Especially the feature of open ledger technology which allows everyone to have access over the records of transactions is quite beneficial for the energy and power sector. Its application in renewable energy resources and their distribution is immensely important. The application of blockchain will certainly make the manual contracting process obsolete which, in turn, going to help by enhancing efficiency and reducing the cost and time of the transaction involved between different parties.
Experts believe that the blockchain adoption is particularly beneficial in case of “microgeneration” – a term used to define a small producer of energy. For example, if someone is generating more electricity than what one is required to use then, he/she can easily sell the excess of energy to their neighbors or to other needy persons. In this kind of arrangement, the blockchain technology is going to help by providing digital contracts which are traceable and do not require any physical intervention from any of the trading partners. Opposed to the physical documentation which is required in the conventional contracts, the blockchain will provide an easy and convenient method of documentation and signing contract.
By using the blockchain technology, a person who is willing to buy the electricity can set the price at a particular value. There won’t be any need for manual hectic negotiations that happen in a conventional contract, thereby making the process simple and uncomplicated. If the seller is ready to sell at that price, the transaction will take place; otherwise, the buyer can opt for a conventional grid for the electricity. In the future, this blockchain adoption can drastically change the face of electricity generation and its distribution methods which are currently in use. In sum, we may be heading towards a situation where the whole system of power and energy sector will become a demand-driven system in the future.
Yes, there are additional requirements in terms of a human-machine interface (HMI) to execute this blockchain-based process, and we agree that the concept of HMI is not very popular as of now but once the demand picks up; there won’t be any difficulty for companies to have a well-suited HMI in place. The maximum potential of the blockchain adoption is in the case of renewable energy resources like solar power or wind power as these sources are quite volatile in nature and not as permanent as there conventional counterparts like Power Grid, hydropower, etc.
Many European countries have already started using blockchain in the renewable energy sector. Take the example of Switzerland-based Elblox project which has facilitated the exchange of renewable energy between producers and the local public. Agencies having an excess of the energy can use the platform to sell the electricity at a particular price to the consumers without any kind of physical documentation. The platform using blockchain for creating the contracts which are then implemented in a decentralized manner so that access to all the stakeholders involved in the process can be ensured. If this trend catches in the rest of the world too then, the conventional energy grids could become things of past in the time to come.