Identifying current and future uses of Blockchain technology in the energy sector
The energy sector could use Blockchain technology to renew the trust between end consumers and energy suppliers by allowing consumers to see where their energy comes from. The sector could also benefit from smarter products that provide more accurate data of energy usage and service dates, ultimately providing consumers with a better experience.
What are some of the uses of Blockchain technology in the energy sector?
The complete transparency of the Blockchain is something of a boon for a number of sectors; not least energy providers, who generally lack the public trust as scandal and investigation reveals details of a lack of integrity with some suppliers. With a Blockchain in place this no longer will be a problem; ensuring that the energy companies that do operate in a trustworthy fashion will enjoy greater rewards than those who do not.
The transparency of the Blockchain manifests itself in a number of ways in the energy sector, particularly in reference to the matter price changes and fees which tend to dominate the industry. The matter of tariffs and billing are a source of much confusion for the consumer, and the Blockchain will enable them to make more informed purchasing decisions from energy suppliers. A Blockchain solution identifying where the energy is coming from, at what unit price and any mark-up passed to the consumer will help to regain integrity in an industry blighted by mistrust.
Quite simply, integration of the Blockchain protocol would enable smarter metering systems, and this in turn will enhance the efficiency with which the end user pays for their energy. These are, in many cases, more cost effective to deploy than manual payment systems due to the decree in labour and ‘man hours’ required to calculate payments and monitor usage.
A number of energy suppliers in the UK automatically switch their customers over to a more expensive tariff at the end of their fixed term, and unless the customer in question fails to check their new plan in advance they could find their bills increasing substantially. This, naturally, is rather displeasing for the individual, and leads to decreased client retention rates. But with greater transparency comes fairer pricing and a greater awareness from the buying public; thus eliminating the issue of dissatisfied customers.
COMPANIES USING BLOCKCHAIN
Companies in the energy industry have started to combine Blockchain technology with smart metering systems, creating new products and services to a number of industries that have already started to integrate technology systems into everyday practices.
Bankymoon is a software and consulting firm with expertise in Blockchain technologies. It develops bespoke solutions for companies that require Bitcoin and other crypto-currency integrations. To be able to integrate into private or public Blockchains it is important to understand their capabilities and limitations. Not all problems can be solved using the technology and many opportunities can easily be overlooked.
“You’d think that with all the smartness happening in our grid, that the problems are solved,” said Gamaroff. “But, in fact, this brings us to the most difficult and biggest problem of all, which is payments. Your grid could be as smart as you like but if all customers aren’t paying, it’s worthless and it becomes unsustainable and will collapse.”
Lorien Gamaroff - Bankymoon CEO
Invirohub is an integrated technology that incorporates smart meters telecoms infrastructure and proprietary software. Their aim is to develop smart electricity, water, and gas solutions to empower people with accurate detailed real time information.
“The fact is that bitcoin is now built into the software and if any of their clients choose to pay with bitcoin then they may do so. Also, as the cost benefits become clear to them – negligible costs as compared to the several percent that banks charge – they will warm to the idea.”
Lorien Gamaroff - Invirohub Technical Director
SolarCoin is an alternative digital currency that works like air-miles for Solar electricity generation. SolarCoin is claimed by individuals living in homes with Solar Energy panels on their roof or large solar electricity farms.
"The more that we can scale and work with different governments and regulatory regimes to get this coin out, the better,"
Nick Gogerty - SolarCoin Creator
LO3 Energy build tools and develop projects to support and accelerate proliferation of the distributed energy, utilities and computation sharing economy of the future.
"Bitcoin is largely changing finance. But moving into blockchain energy could be much bigger than Bitcoin,"
Lawrence Orsini - LO3 Energy Founder
ISSUES SOLVED BY THE BLOCKCHAIN
Although the energy industry has been slow to recognise its potential, it is perhaps the sector where Blockchain has the most practical applications for day-to-day living. Offering energy companies a more efficient way to record and process data and customers an easier and more accurate way to manage their bills, the use of Blockchain can significantly streamline global distribution of energy.
The energy market in the UK is an increasingly complex and competitive landscape, with a number of suppliers offering their wares to customers but with little differentiation between them. Accordingly, it is increasingly difficult for the consumer to separate suppliers; and this creates an uncompetitive market economy. But given the transparency that Blockchain can provide, there will be an opportunity to separate the ‘wheat from the chaff’ – and hand power back to the buying public.
ERRORS IN METER READING
Errors in Meter Reading
In the energy industry, Blockchain technology has the ability to remove the need for manual metre reading and the inaccurate estimated bills that come with it. Using a utility metre that fed information about energy consumption digitally into a Blockchain would allow energy companies to verify a customer’s usage with 100% certainty and enable them to send out an accurate bill. In turn, this bill could be paid for on the Blockchain without incurring fees associated with bank transfers.
REDUCE ENERGY WASTAGE
Reduce Energy Wastage
Another potential use of Blockchain in the energy industry is using it as a public ledger of solar energy production. With solar advocates recently launching their own cryptocurrency, SolarCoin, devices are being created that record solar energy production and feed this data directly into a Blockchain, with owners automatically being rewarded for the energy they generate in SolarCoin. This incentivises development of solar technology and promotes the use of renewable energy.
TRANSFER OF ENERGY
Transfer of Energy
Although little Blockchain innovation has taken place in the energy industry, one South African start-up company has prototyped an application that lets users ‘send’ electricity, water or gas to any recipient anywhere in the world. Utility metres powered by the app feed data into a Blockchain, where energy levels can be monitored and metre top-ups can be purchased and sent using Bitcoin. In practice, this would allow grandchildren to top up an elderly relative’s utility metre remotely.
By utilising Blockchain technology the energy industry could evolve into a more globally connected network of energy transfer, whereby everyday consumers would be an active player in energy suppliers via renewable energy initiatives and peer 2 peer networks.
GLOBAL ENERGY TRANSFER
Global Energy Transfer
In the future, blockchain technology could be used to ‘send’ energy such as electricity or gas anywhere in the world via utility apps that are built utilising the blockchain. In practice, this could lead to nations sending foreign aid via energy to developing nations with everything tracked and recorded openly. This could also develop the current state of the remittance market, with workers sending energy back home instead of money.
SMART ENERGY USAGE
Smart Energy Usage
Instead of paying for energy at a set rate, in the future each household could utilise blockchain technology to constantly search for cheaper energy prices and instantly change providers if there’s a better deal. Households might find they’re buying energy from multiple suppliers throughout the day, all of which would be automatically handled by the blockchain based application. A smart plug prototype by Accenture aims to do this with electricity, however in the future all energy used could follow the same pricing model.
In the future consumers could utilise blockchain based applications to join a smart grid, in which participants can publically track their energy usage and production (such as via solar panels) and sell on any energy not used to others on the smart grid. This could lead to more competitive energy pricing for consumers as major energy companies would be competing with entire communities across the world.
A decentralized ledger that records energy generated by consumers and communities (such as via solar panels) could be converted into renewable energy credits issued by Governments. This in turn could be used to purchase commodities as a renewable energy incentive. This new currency would work alongside the Blockchain called a sidechain and can already be seen via the work of companies such as SolarCoin.
"SolarCoin holders will build the currency’s transactional value upon the belief that solar-powered electricity is worth more to the world than its value in traditional energy markets."
Sam Bliss -
Aspiring economist & writer
“Imagine a student abroad who needs to have their meter topped up, they’d phone their parent and ask them to send money... They can just go and top up the meter using bitcoin.”
Lorien Gamaroff -
CEO of Bankymoon
“Accenture’s energy research shows that 93% of consumers are interested in learning more about smart meter functionalities, how their bill could be affected and whether additional costs are involved.”
Nathaniel Williams -
Managing Director at Accenture
SolarCoin: Digital Money Backed by Solar Power
9th April 2014
Bankymoon Introduces Bitcoin Payments to Smart Meters for Power Grids
23rd April 2015
Bitcoin could help cut power bills
19th February 2016
If you know of a practical application of Blockchain technology in the Energy sector that isn’t currently being featured here, please send us your submission. There are many companies and uses of Blockchain technology that we haven’t featured in our initial launch, but we want to build a comprehensive resource outlining the practical applications of Blockchain technology and will be building this resource further in the future.