As an ex-CIO in the power and utilities sector, I’m always interested in the rise of new technologies – especially when they have the potential to reshape the future. What has my attention now? Blockchain.
This technology – in its simplest form, a public ledger that records transactions – promises to radically speed up transactions and cut costs by facilitating a trusted transfer of value without the involvement of traditional intermediaries. Already widely used in the financial services sector, a growing number of industries are experimenting with the technology.
Unlike in banking, however, the power sector has been slow to recognize blockchain’s potential and awareness across the industry is lacking. Now, a growing number of enthusiasts believe blockchain can significantly revolutionize a sector that is becoming increasingly decentralized and connected.
A component of the energy-sharing economy
Blockchain wouldn’t be the first technology to unhinge the sector. Technological breakthroughs in panel efficiencies have seen solar costs fall by 80% over the last three years and they’re set to fall further. Advances in battery storage technology now mean households can store electricity for back up or load shifting, allowing for greater flexibility to buy and store electricity when rates are low, and consume it as needed.
Alongside the rollout of smart meters and continued development of demand side response measures, new digital peer-to-peer platforms are starting to emerge that cut out the middle man and seamlessly connect green energy producers directly with those wanting it. What we are witnessing is a power shift – the advent of an energy sharing economy. These changes are empowering consumers to take control of their energy usage and reduce energy bills.
It is these changing characteristics that are exciting the blockchain community. They are drawn by the growing complex web of transactions, the need to balance the geographical mismatch between supply and demand, and significant security and trust concerns given the proliferation in IoT connected devices.
A new ecosystem of energy blockchain start-ups is emerging, and venture capital, so far, has raised over US$1b to scale business models of the future. Aside from some early demonstrations, the applicability of an energy blockchain is largely theoretical. The ability to support a globally connected network of energy transfer, where smart devices will be able to securely send and receive data while autonomously reacting to market signals, is a reality some believe is still 5-10 years away. Smart meter rollout programs are in their infancy, huge investment is needed to digitize the grid, and global battery storage totals in the megawatts rather than gigawatts.