While blockchain technology was originally created to support and facilitate cryptocurrencies like Bitcoin, its uses can span much more than just tracking the value of digital currencies between users. As the cyber economy continues mature, blockchain technology will be used to enforce a range of agreements, from stock trading, to managing our healthcare, to acquiring energy to power our homes and businesses. What’s more, this emerging technology has major potential to alter the entire structure of the energy industry, particularly the future of the green energy.
The electricity sector is still mainly run by large, centralized power plants that produce power and send it long distances over transmission lines to residential and commercial customers. However, thanks to innovative technology that has created clean energy sources, the framework of our modern day energy market is slowly but surely taking new shape. The World Energy Council predicted that decentralized or distributed energy would grow from representing 5 percent of the energy market today to 25 percent by 2025. The biggest movement behind this is the spreading implementation of green energy technologies such as solar panels, wind turbines, geothermal, etc., which can be generated and distributed to nearby residents. Think of households living nearby a hydroelectric dam whose lights are powered thanks to this green energy construction, or homeowners who have added solar power to their rooftops and harnessing their own power from the sun. It is constantly becoming easier to choose clean alternative energy to power our world, and blockchain technology is being implemented at every level of the production process.
As distributed energy grows, blockchain-based energy companies are being created to enable peer-to-peer energy transactions. In Brooklyn, New York, a company called LO3 Energy created a neighborhood microgrid of rooftop solar energy that allows neighbors to sell one another excess energy through blockchain technology. This not only saves the neighborhood money in cutting out third-party energy distributors, it also saves substantial energy in the direct transfer of power from home to home, instead traveling miles on transmission lines.
Not only can the application of blockchain technology save the renewable energy resources and money, it can also save time. In an industry saddled with outdated and bureaucratic systems for payments, registrations, certifications, etc., blockchain platforms can transform the sector into a digitized, state-of-the-art business. While it takes an average of two to three months for electricity producers to be paid under the conventional system, the implementation of blockchain technology could have producers getting paid immediately through smart contracts recorded on the chain. This would digitize all sale contracts and also mitigate liquidity issues for power companies.
Blockchain can also enable customers to switch power suppliers more easily. In England, start-up company Electron teamed up with the country’s centralized meter data agency, Data Communications Company, to develop a blockchain platform which allows energy customers to change their power supplier in as little as 24 hours—much faster than the current process which can take weeks. Austria’s biggest utility company, Wien Energie, joined hands with BP to conduct a blockchain trade energy trial, and German company Innogy implemented blockchain technology to manage and bill customers for using their electric car charging stations. The U.S. is also making space for in the implementation of blockchain technology at both a private and public level. More than half a dozen states passed legislation designed to increase the use of blockchain technology in several industries, including renewable energy.
As renewable resources continue to prove their scalability, the implementation of blockchain technology will continue to penetrate the clean energy market. This continuation will require an increase in decentralized and distributed energy, which is an ideal breeding ground for blockchain technology to serve as a management platform for both suppliers and consumers. Not only can we increase efficiency and lower the cost of renewable energy with blockchain technology, we can digitize the growing green energy industry and ensure its long-term success.