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BLOCKCHAIN IN THE ENERGY INDUSTRY Our definitive guide to blockchain in the energy industry

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CONTENTS

THE ROLE OF BLOCKCHAIN IN THE ENERGY INDUSTRY 3WEC/PwC World Energy Insights Brief key points 3

DECENTRALISING THE ENERGY NETWORK AND CHANGING TRADING 4Energy off-the-grid 4Electricity rates 4Peer-to-peer trading platforms 4Increased efficiency 5

ENERGY BUSINESSES MAKING A DIFFERENCE AROUND THE GLOBE 6Blockchain-powered solar energy 6Entire energy grids on the blockchain 6Building on security and trust advantages in the UK 7

CONCLUSION 8

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Blockchain opens up new opportunities in the energy industry – one that is typically highly regulated. It could give consumers greater flexibility with their energy, drive sustainability in homes and businesses, and could even allow end users to monetise on their energy usage.

The UN’s World Energy Council (WEC) undertook a global research program in 2018 involving 39 energy companies. They partnered with professional services firm PricewaterhouseCoopers (PwC) to conduct the interviews.

They produced a report – the World Energy Insights Brief 2018 – and there were some interesting findings. They basically posed the question of whether blockchain in energy was driving revolution or evolution.

THE ROLE OF BLOCKCHAIN IN THE ENERGY INDUSTRY Blockchain is becoming increasingly beneficial to industries around the globe. We are now also starting to see the large potential it has within the energy sector. Even though industry experts believe full-scale adoption may take time, there are a number of applications and startups already looking to transform the energy industry.

WEC/PwC World Energy Insights Brief 2018 key points�� In 2017, an estimated $100–300

million was invested in over 100 energy sector-related blockchain applications.

�� The power sector has seen the growth of global investment in digital infrastructure increase by more than 20% per annum since 2014, reaching $47 billion in 2017.

�� At the time the report was published, there were 122 blockchain start-ups operating in the energy space that had raised over $324 million in 2017 alone.

�� About 45% of the companies interviewed were trialling peer-to-peer (P2P) projects.

�� None of the interviewees felt blockchain or its applications had achieved full commercial implementation.

�� The conclusion was that blockchain has great potential but is still in the development stages, and they would need more time before a full commercial roll out was possible.

So, it’s clear from the research that the industry is taking blockchain seriously and anticipates large-scale adoption, but what kind of energy-related projects are being developed?

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This means there will be reduced transaction costs, improved productivity, and better grid management.

Blockchain technology is decentralised, meaning no singular entity can have control over it. This decentralisation is benefitting the energy sector massively. It takes away power from large energy bodies by allowing energy to be generated off-grid. Businesses and consumers can have more control over how much energy is generated, used, or sold.

Energy off-the-gridBy using this smarter type of energy, house builders and developers will be certain the energy they are using is locally provided, sustainable, and competitive. This is because decentralised energy is the more cost-effective route to achieve carbon footprint targets.

Electricity ratesBlockchain has the power to change the market in the energy sector. Due to its decentralised nature, blockchain is able to take away the rates that are fixed to centralised bodies. Centralised bodies typically offer high energy prices that have led to the phenomenon of fuel poverty.

Once blockchain has infiltrated the market, the electricity tariffs will begin to act like tradeable commodities which will respond to the supply signals in the electricity market. The benefit of this is that consumers will have a bundle of choices when choosing their electricity service provider.

This means that consumers will be able to scan through the blockchain listings to find the best deals to suit them.

DECENTRALISING THE ENERGY NETWORK AND CHANGING TRADINGDecentralisation of energy networks is changing things for businesses and consumers. We take a look at how and why. Blockchain aims to revolutionise almost everything in the energy sector.

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Peer-to-peer trading platformsIf the energy sector fully embraces decentralised blockchain technology, consumers can start to trade in the P2P market. Consumers can benefit massively from this as electricity can be used as a tradeable asset. Blockchain will provide advantages such as network transparency and low transaction costs.

There are blockchain-based companies already working to create solutions that tailor a peer-to-peer electricity trading market. Companies such as Power Ledger and Electron are among the first to start implementing this P2P market.

Microgrids, which are a localised group of electricity sources, are also appearing in cities such as New York and Sydney. These microgrids allow a specific area to trade in electricity. With natural disasters like floods, earthquakes, and hurricanes happening so regularly, backup plans need to be put in place and microgrids offer a great alternative. They are able to sustain a community or city with enough power to function until the main grid is back online.

Increased efficiency As with all industries, blockchain has the capacity to create efficient solutions in the energy sector. Because blockchain is transparent, it can support the integration of data with the cloud. This allows energy data to be collected, examined, and stored in a safe database for reconciliation purposes.

Because of how the technology works, it creates transparency throughout many instances and removes the need for intermediaries. This benefits the energy sector as emission records can be digitised, validated, and securely recorded on the flowing platform of the blockchain. This is particularly useful in countries such as the UK that have a responsibility to help the government meet their emissions reductions targets.This provides the energy sector with the massive benefit of having a smoother, more efficient system. Blockchain also stops the unnecessary need for paper trails within organisations. Because of this, data will never need to be reconciled separately again as it will all be reviewed on the blockchain’s distributed ledger.

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Blockchain-powered solar energyThe Australian city of Fremantle has announced a trial in which 40 residential properties will be able to trade solar energy on a blockchain-enabled platform provided by Power Ledger.

A fixed-use residential tariff and a new billing system has been developed for the trial, allowing households to engage in “discrete, time-based energy transactions”.

The RENeW Nexus project is managed through Curtin University and is supported by the Australian Government through the Smart Cities and Suburbs Programme. It includes the following partners: Curtin University, Murdoch University, City of Fremantle, Landcorp, Synergy, Western Power, Water Corporation, Power Ledger, energyOS, CSIRO/Data 61 and CISCO.

“These households are believed to be the first in the world to be taking part in an active, billed, peer-to-peer trading trial that allows them to effectively buy and sell solar energy generated by their rooftop system across the grid. This trial is another example of how the McGowan Government is embracing renewable energy technologies, and our commitment to put Western Australian consumers at the forefront of the energy technology revolution.” - Energy Minister Ben Wyatt.

Entire energy grids on the blockchain Blockchain startup WePower has notched up a world first by tokenising a year’s worth of Estonian electrical grid data.

WePower said the pilot to put all consumption and production data from

Estonian transmission system operator Elering onto the blockchain was part of “a groundbreaking collaboration” between the two organisations. It further explains that the hourly data from 700,000 households were aggregated by zip code, per hour, to reduce it to a manageable size. In other words, WePower uploaded 26,000 hours and 24 terawatt-hours of aggregated production and consumption data onto the blockchain and turned it into 39 billion smart energy tokens.

Each token is a digital self-settling power purchase contract representing one kilowatt-hour of power. The tokens are tradable and can be sold into the local energy wholesale market by linking the digital contracts with power grid data on the blockchain.

ENERGY BUSINESSES MAKING A DIFFERENCE AROUND THE GLOBEWhile blockchain still hasn’t achieved mainstream adoption, people certainly aren’t afraid to innovate. There are a number of energy start-ups that are making headway with the technology.

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The startup says that the “successful delivery of the landmark nationwide energy tokenisation pilot project”, WePower and Elering have paved “the way for the digital revolution of the energy sector”.

Estonia provided the ideal infrastructure for this type of testing because the country has 100% smart meter coverage and a data sharing platform called Estfeed, which allows consumers to download and share their data with any persons or companies whom they choose.

Building on security and trust advantages in the UKUK-based distributed ledger technology and smart contracts venture, Applied Blockchain, has become an affiliate of non-profit organisation Energy Web Foundation (EWF).

It is joining an ecosystem of global energy companies, utilities, grid operators, blockchain developers and users, and infrastructure providers, collaborating on implementation of large-scale blockchain-powered projects.

“ Our affiliation with the Energy Web Foundation allows us to expand our work in the energy space, following our successful engagement with Shell. We discovered that our technical visions are aligned and that we are in a great position to contribute, making this an easy decision for us. It is a brilliant opportunity for Applied Blockchain to work with key global organisations to unleash blockchain’s true potential for decentralising and democratising solutions in the energy industry,” says Adi Ben-Ari, Founder and CEO of Applied Blockchain.

“The energy sector is a prime example of an industry being proactive and making best use of the security and trust advantages that blockchain technology can offer. Through the EWF initiative, energy businesses have a real opportunity to lead the way in showcasing how to apply blockchain technology to the benefit of their end-users,” he adds.

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With start-up businesses and innovative thinkers leading the way, it might not be long until more businesses and consumers begin to benefit from decentralised energy. To keep up-to-date with the latest developments in the energy industry, be sure to follow Coin Rivet.

CONCLUSIONAlthough mainstream adoption hasn’t been achieved yet, the technology is certainly making waves in energy sectors around the globe.

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