The onslaught of blockchain around the globe is yet at its infancy, but its remarkable uses seem mind-boggling. Its effects on human experiences and endeavors like the energy sphere are unfurling.
The blockchain is a distributed ledger technology (DLT) that enables data storage outside the limitations of a central authority. This allows records of financial transactions to be distributed to several other computers (called nodes) that store data locally. Every transaction is noted and linked to the preceding one, resulting in a rising chain of blocks.
From 2009 when Blockchain technology was unveiled by Bitcoin cryptocurrency, amazing applications of this innovation have been discovered. These solutions have transformed the finance, retail and Healthcare industries, as well as others, increasing data security and integrity of financial transactions.
Gradually, the effect of blockchain technology adoption has caught on in the energy industry. These came to the fore despite the initial resistance the industry posed to its acceptance, like several other sectors. There are claims that blockchain is capable of fixing issues with the complexity of data from energy sales and sharing.
The technology can ensure open and well-timed exchange of energy for value, restoring trust between consumers and suppliers. These solutions will, in turn, bring about an increase in competition among service providers and drop service costs drastically.
A survey carried out to check if the blockchain is really making impacts on the power and energy industry shows that only companies who can brace up to experiment and utilize the technology will experience blockchain technology benefits.
APPLICATIONS OF BLOCKCHAIN IN ENERGY
Oil and Gas
Blockchain technology application is in its early years. Energy traders in Europe have done a 12-week test on a blockchain trading platform designed by BTL. This new interest was pushed forward by oil giants, British Petroleum and Eni.
The goal is to run independent blockchain oil and gas trades alongside their live trading platforms. This test identified an error in a trading volume quickly, saving time that would have been spent rectifying the error. It is also believed that blockchain technology can ensure trading systems are secure from hacks and fraudulent trades.
Asset Integrity and Maintenance
A noteworthy upcoming application works on data gathered from sensors placed on equipment and other assets. The idea is to use them to identify defects and prevent losses. The system also helps gather data via blockchain IoT to develop a model that predicts events, enabling anticipatory planning. This ensures the promotion of asset integrity and worker safety.
Alternative Energy Distribution
The world is steadily shifting from dependence on fossil fuels and other harmful sources of energy. Solar energy is at the forefront, followed by other new alternative industries such as wind and hydrogen systems. The blockchain is also being used to design a peer-to-peer energy trading model.
There has been an increase in Distributed Energy Grids (DERs) or independent sources of renewable energy (solar panels) recently. These sources are connected to the grid, transforming energy consumers into producers that sell excess power back to the grid.
The Brooklyn Microgrid project is probably the foremost energy-related one backed up by blockchain technology. Started by LO3 Energy, a New York firm, it helps people power their homes through local renewable energy sources.
People who own solar panels are given the capacity to sell the excess produced electricity to their neighbors. Blockchain creates this first peer-to-peer system for electricity to guarantee an accurate record of transactions. It also optimizes accounting and metering through decentralization; ensuring transparent sharing of information to users of the network.
Energy Payment Systems
Another application of blockchain in the energy industry is the design of cryptocurrencies for service payments. Several companies have launched model projects to facilitate such transactions. The Marubeni Corporation (MARUY) in Japan accepts cryptocurrency payments in some areas.
Some companies have even extended the use case of blockchains beyond just payments. An example is Bankymoon, a blockchain startup based in South Africa. In collaboration with Usizo. The monetary payments via cryptocurrency are possible due to the location of bitcoin-compatible smart meters in remote areas.
An also notable mention is the development of smart contracts that makes it feasible for individuals to seamlessly trade excess energy. With surplus energy sprouting across the globe from biotech ventures, blockchain will unlock the possibilities.
Accounting for distribution and consumption no longer must be a matter of heavy software and expensive machinery. The blockchain is reviewable, open to audit and houses data that are immutable. Here, the blockchain plus cannot be overlooked.
ADVANTAGES OF BLOCKCHAIN APPLICATION IN ENERGY
So far, the utilization of blockchain technology in the energy industry points to lots of benefits. Some companies have mentioned that calculations showed savings of 30–60 percent from structural costs due to the technology. This means that in the long run, companies will make more profit from using blockchain to transform their service delivery.
Individuals will also gain a lot from the incorporation of blockchain into energy distribution. P2P sales of energy have been discovered to be cheaper than buying from the national grid. Customers can thus save more money from electricity bills and have more disposable income.
Blockchain also has the capacity to provide a payment solution for charging EV batteries. It can also enable EVs to transfer stored energy back to the grid to meet up with demand. Energy users can also change suppliers seamlessly to take capitalize on unstable service charges.
Concerning network, it can help to detect and solve supply interferences. Energy commodity transactions on trading platforms will also be made of unquestionable integrity and transparent.
CHALLENGES OF IMPLEMENTATION
One of the major challenges of using blockchain in the energy industry is blockchain trilemma. This trilemma involves the centralization, security, and scalability of the system. A point may come in the utilization of a blockchain-based energy system where a trade-off becomes necessary.
This might hamper the optimum performance of the system and affect service delivery. Thus, the system must be designed such that all three factors are combined in optimum levels without compromising the system.
Another challenge is that some customers might not want their transactions made public. Since blockchain is a public ledger system, this is almost inevitable. This is one of the research areas which is under the radar.
The cost of renewable energy sources is also a concern, as this is the source of energy blockchain focuses on. Many potential customers may be unable to access suitable financing options, thus hampering blockchain adoption and use.
Despite the widespread knowledge available to the public on blockchain technology, ignorance shrouds the good tidings. This has made a large percentage of the population unwelcoming to blockchain technology influencing their power generation and consumption.
This challenge must be overcome by in-depth education of the population on the workings and benefits of the technology.
It is evident that the wave of blockchain technology is a tsunami that will challenge traditional service delivery models. Its effects have already started showing in the energy and power sector and support is building.
It is thus important that enlightenment must be geared towards showcasing its huge potentials. It is also pertinent that painstaking research continues to unlock the unlimited capabilities of the technology to transform power systems.