Blockchain technology in energy industry grows more tangible
Blockchain is not only a digital, open and decentralized transaction database technology, but also a buzzword, which has established itself as being inevitable in the business world. The promise is that it is the one key technology reshaping today’s society. Many intermediaries who focus on building trust see their business models under scrutiny because it is the inherent advantage of decentralized database technology, however, without the intermediary. Decentralized ledgers, such as Blockchain, achieve building trust by increased transparency and the immutability of the transaction records.
Use case stories often focus on cryptocurrencies, but many more are out there: Particular intriguing use cases come from the energy industry
Yet, most of us associate Blockchain with Bitcoin, the cryptocurrency, which is the first use case of the technology. Originally invented as payment solution the financial services industry became swiftly a leader in testing blockchain use cases. Although not all test cases evolved as promised, some are almost ready for go life in 2018. Personal insurances, securities settlement and trade financing, just to name a few of them.However, the impact of decentralized ledgers goes far beyond the financial services industry and cryptocurrencies.
Within the energy sector, several Blockchain solutions are developed and tested. We highlight three promising use cases, which do not depend on the energy-inefficient consensus mechanism of the Bitcoin blockchain:
(1) The Brooklyn Microgrid project, started in 2015, developed a community-powered microgrid. This means that the participants can engage in a sustainable, local energy network and choose their preferred energy sources. Today consumers and producers start enjoying the mobile app and a more efficient energy pricing within their community.
(2) The TenneT / Sonnen use case, started in 2017, shows that maintaining the security of energy supply is of utmost importance when the electricity grid is becoming more and more volatile. With the help of residential solar batteries – think of your Tesla or BMWi3 parking in your garage – local energy oversupply can be locally stored for later demand cycles. Due to the geographically dispersed nature of car parking slots, a decentralized database seems the logical solution to reimburse battery storage owners for contributing to the network.
(3) Innogy, a subsidiary from the German electric utility RWE, launched in May 2017 hundreds of charging stations for electric cars across Germany using the Ethereum blockchain as transaction layer. As electric car fleets evolve, these initial plug-in units just provide the start for a decentralized charging network.
Of course, Blockchain technology is just coming out of its infancy and these use cases are at different stages of the product lifecycle. Yet, we strongly recommend becoming familiar with the projects itself and the hurdles they have already taken.
A technology to destroy existing business models and there is more to come
Summing up, blockchain, or other decentralized ledger technologies, are already redefining the business models of many industry leaders. The technology allows the development of new business models or extensions to existing ones. Moreover, by taking a step back, decentralized ledgers are just part of a societal transformation led by the congruence of multiple new technologies. Internet of Things, 5G and Artificial Intelligence by itself provide ample growth opportunities, but taken together will have an unprecedented impact on our lives and how we shape our society. We will further investigate those aspects in upcoming articles by focusing on potential energy operating systems using decentralized ledgers as core infrastructure.
Further authors: Grégory Lukowski, Christian Wilk