Blockchain Technology in Energy Sector

Blockchain Technology – Overview

Before discussing footprint of blockchain technology in energy sector, first we need to understand what blockchain technology is. The record keeping technology behind bitcoin is referred as blockchain. In simple terms, block chain is a chain (public database) of blocks (digital information). The blocks are strung together in a manner that each block contains a cryptographic hash of the previous block. Whenever, any new data is stored, a new block is added to the chain.

In this Post We would cover following topics:

Overview of Blockchain Technology

Application of Blockchain Technology in Energy Sector

Trading

Supply Chain and Logistic Optimization

Efficient Data Management

Wholesale Electricity Distribution

Blockchain Revolution

Future Trends of Blockchain Technology

Blockchain is a pioneering technology in energy sector. The technology offers several benefits which leads to rising adoption from large consumer base.

Blockchain Application in Energy Sector

Some of the areas in energy sector where blockchain technology can be used are listed below.

Trading

The blockchain technology offers direct peer-to-peer trading which results in smooth operations of grid system. By using this technology, user can execute and record transaction very efficiently. With blockchain, all the parties use the same platform which enable the user to settle and record all energy transactions instantly without any need of intermediary.

The need for reconciliation is also minimal as all the parties shares the same system and only there is only one entry for the transaction. This makes it a reliable and efficient shared trading platform to be used across the energy commodities.

Supply Chain and Logistic Optimization

The supply chain includes extracting hydrocarbons from the ground, transforming it into a usable format, and delivering it to the end-user. Managing the entire system is a complex task. The supply chain needs support streams for documentation, regulatory, and invoicing requirements.

In logistic chain a key challenge are unsynchronized payments, delivery, and auditing. The blockchain technology enable the end-user to track physical commodities along with supply chain address and provides cost optimization.

Moreover, blockchain solutions also helps in tackling the disadvantages associated with LCs (letter of credits) in case of physical trading between different provinces. Usually, LCs with guarantees and securities from banks are used for these trades.

While using blockchain technology, a smart contract is created which is linked with QR codes tagged with physical goods. After arrival of goods, payment is triggered automatically in seller’s account. This makes the transaction process more optimized and secure.

Efficient Data Management

The technology offers better control and efficiency over their energy sources as the ledgers provide secure and real-time updates of energy usage data including fuel prices, market prices, energy low compliance, and marginal costs.

Moreover, the regional and national government is also taking several initiatives to promote blockchain solution in energy sector. For instance, in 2018 CNE (Chilean National Energy Commission) announced the launch of blockchain project focused on energy. As a part of this project, government will use the Ethereum blockchain to track, store, and record energy data.

Wholesale Electricity Distribution

Blockchain is also beneficial in wholesale electricity distribution by connecting end-users with the grid. The technology combines with devices and enables the users to purchase and trade energy directly from the grid rather than retailers. The consumer’s bills can be decreased by almost 40% with the use of blockchain based technology as compared with retailers.

The private and public entities are adopting different strategies for strengthening their foothold in the global market.

For Instance, In April 2020, BSES Rajdhani Power Limited (BRPL) announced the partnership with Power Ledger, one of the specialists in renewable energy trading based upon blockchain technology. The company announced to install P2P solar trading trial in Delhi, India.

Blockchian Revolution

The blockchian technology is gaining popularity around the globe. However, the adoption ratio of the technology differs in every region. A brief regional analysis for blockchain technology in energy sector is given below.

Europe

Blockchain market in Europe is driven by the partnership and investments in the blockchain market. The European member and the member of European Economic Area created European Blockchain partnership in 2018 to deliver cross border public services with the help pf blockchain technology.

In Feb 2018, EU commission launched European Blockchain Observatory and Forum, contributing towards the growth of the blockchain market

North America

North America is expected to hold the largest market share owing to the high adoption rate of the advanced technologies. Also, the presence of the major market players such as AWS, Oracle, IBM, Blockcypher, Guardtime, etc. are boosting the growth of the blockchain market in North America.

The U.S. is expected to be the major contributor for blockchain development in North America. The U.S. government is rapidly adopting the decentralized ledger technology to promote transparency of government grants, upgrade military warehouses, and validate government contracts.

APAC

APAC is expected to witness strongest growth in forth coming years. The growth can be attributed to large consumer base in Asian region such as China, India, and Japan. The China government is taking several initiatives for the development of blockchain technology.

However, China recently banned cryptocurrencies at some extent, still blockchain cloud remain vital. Moreover, in Singapore engineers and technologists are focused on enhancing their skills in blockchain which will further support the market growth in Singapore.

Middle East & Africa

The MEA region is projected to witness noteworthy growth in coming years. Some of the major oil producing countries have their own economic zones, dedicated to innovations and technological developments.

The regional government are planning to put these zoned to be used by blockchain projects. UAE alone has 45 free economic zones and other provinces are developing their own.

Future Trends for Blockchain Technology

The blockchain technology is anticipated to witness significant growth in near future. Companies are engaged in R&D initiatives for new innovations for bolder and bigger uses of this technology.

Some of the trends which is expected to lead the market growth is as follows:

Adoption of Blockchain As A Service (BAAS)

A number of startups and enterprises are integrating BAAS, a cloud-based services which helps the end-user to develop their own digital products such as decentralized applications, smart contracts, and other products that can work with complete blockchain based infrastructure. Some of the companies adopted BAAS include Amazon and Microsoft.

Federation Blockchain

Federated Blockchain is an upgraded version of basic blockchain model in which pre-selected nodes can be controlled by multiple authorities instead of a single organization. A significant rise is anticipated to register in coming years.

Adoption of Blockchain in Social Media

According to studies, in 2019 there were around 2.77 Bn social media users registered across globe. Implementation of blockchain in social media is expected to overcome several issues related to content relevance, notorious scandals, data control, and privacy violations.

Hence, integration of blockchain solutions in social media is anticipated to emerge significantly.

Please share your views and insights regarding revolution of blockchain technology in energy sector 🙂