Promising Blockchain Applications for Energy: Separating the Signal from the Noise
- Aug 16, 2018 10:46 pm GMT
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Advances in digital technologies are unlocking new opportunities for businesses in every industry. Roughly 7.5 million digital devices come online each day, changing the way people and businesses communicate and collaborate around the world. Cloud computing has grown at breakneck speed, resulting in remarkable levels of operational scalability for firms of all sizes. And recent developments in artificial intelligence, enabled by digitalization, are already disrupting how we think about transportation, medicine, energy, and other critical sectors.
Blockchain is part of this revolution – a high-value data management/transaction platform that is made possible by this increasingly digital economy. Its value to energy systems and some key energy applications are the focus of this analysis.
Energy sector stakeholders are managing a range of rapid changes: the need for deep decarbonization, flat or declining demand, integrating variable generation technologies, evolving measures of reliability, increasing customer choice, and the growing national security implications of electricity reliance. These changes are difficult for commodity-based, highly regulated energy systems with complex, extensive supply chains, and long-lived, expensive infrastructures. It is important that a range of breakthrough technology innovations in the energy sector –including blockchain applications –be explored, tested and deployed across the energy value chain. New blockchain applications for energy may assist energy players in managing these and other changes -- at the same time, these applications may signal even greater changes to come, enabling new entrants and functions that could have disruptive potential.
It is important, as energy applications of blockchain are developed and deployed, to separate the “signal from the noise”. This report does this first by identifying the unique features of blockchain relative to current systems – a broad description of features that are inherent in all uses of blockchain. It then analyzes energy applications based on two basic questions: Does the application adequately align the core benefits of blockchain with the emerging issues in the energy sector? And, is the blockchain used to support an ecosystem of business or sector functions rather than a single-use?
While some of the energy applications of blockchain are expected to mature over the next few years,1 others are long-term prospects that may be limited by existing policy, regulations, business models, and systems engineering. The timing of these changes is beyond the scope of this analysis, as is the full range of applications for energy. The analysis instead focuses on five key areas – distributed energy resources, electric vehicles, energy trading platforms, carbon registries, and transactions in emerging markets –where blockchain presents significant opportunities for process improvements, added value, enhancing transparency, and improving trust between actors in the energy system.