Energy (R)evolution?


Blockchain technology, Bitcoin, Ethereum, Coins, Tokens, Cryptocurrencies, the list goes on. They are everywhere in the news these days as Bitcoin surges to new heights, and the world is abuzz with what blockchain technologies can do.

But, what in the world is blockchain? A blockchain is a shared record book containing different additions (transactions). Each record book has multiple exact copies stored in multiple locations all around the world (user computers). Whenever a transaction takes place, the addition appears in all record books on all locations at once. The computers then all agree (or disagree) whether everything contained in that transaction is correct. Think of it as a bunch of witnesses looking on as the transaction takes place and they all agree that something was exchanged and that it was the correct item and amount.

Putting it all in a blockchain is similar to Tetris. All transactions carried out at the same time are put together into a block. However, the transactions will only form a block if they are all verified as correct (like in Tetris, only the right pieces will fit). Once an entire block is formed, it “attaches” to other blocks and forms a chain of blocks, or a blockchain.

There are vast opportunities for the application of such technologies in many fields, even energy. For example, in the energy industry, blockchains can be instrumental in:

  • Decentralised Energy Trading
  • Blockchain Grids
  • Smarter Consumption Trends

There are many white papers and pilot projects publicly available for review to cover the above, but here are some potential implications of each.

Decentralised Energy Trading

Energy trading will be open to all consumers around the world. With blockchain, payments can be made through cryptocurrencies, digital or virtual currency using cryptography as security. Contracts would be digital only. All transactions would be verified by possibly thousands of “witnesses”, and potential no-fee structures would be introduced if public blockchains are used. The beauty of such a radical approach would be that each transaction would be recorded in a tamper-proof manner (remember the Tetris analogy).

Trading energy on a blockchain would allow “instant” approval of trades due to the number of users verifying the transaction looking through the data as opposed to a central system with its limitations. There is a possibility of no-fees to trades as they would be executed between consumers and producers (or even prosumers, those who produce and consume ) directly. Currently, you need traders to execute the trades, banks to confirm there are available funds for payments, and a central authority (stock exchange) to oversee all transactions. With a blockchain approach, all of these transactional steps and fees go away, and each user has direct access to trade.

Blockchain Grids

The way the current grids operate is that there is a multitude of players involved: producers, transmission operators, distribution operators, and suppliers. They are all interlinked in one way or another, and this multi-tier is heavily laden with different transactional fees. By the time your bill arrives, you are paying for way more than just your energy.

With a blockchain grid, you would directly link producers, prosumers, and consumers. There are smart contracts (a computer protocol intended to facilitate, verify, or enforce the negotiation of or performance of a contract)  in place to balance it all. Essentially, each consumer has a demand that is made available through his/her smart meter, and the producers make the supply available to them. This is all transmitted over the grid, and payments are made instantly through cryptocurrencies for how much is consumed.

You would know exactly where your energy is coming from, if it is 100% green, if it is “dirty” energy, and, if so, exactly how “dirty” it is. Every unit of energy would be verified in the same way as everything else, which means there would be tamper-proof and transparent ways of dealing with certificates for renewable power and carbon allowances.

Losses would not be estimates as each party knows what was sent and what was received as each block was confirmed in the chain. Each asset would be registered to a user, and there would be no doubt of who owns which meter, network, or generation facility.

Smarter Consumption Trends

With all of the above absorbed, we can see how this can impact consumption trends. Each transaction logged equals each unit billed. Now let us go one step further and introduce “the internet of things”. A wonderful concept that is essentially a network of physical devices (cars, home appliances, meters, etc.) that are connected to a network to exchange data.

We already know that the blockchain grid has linked the producers, prosumers, and consumers directly. Now add to the picture each appliance (yes, down to a lightbulb as they’re getting smarter, too!) within a building. Due to the decentralised system and the multitude of users within a chain, there is now enough processing power to know the exact usage of each bulb, toaster, compressor, etc. in the building. What are the implications of this? You know exactly where you are consuming your energy, meaning you know exactly what to target to lower your consumption.

Food for Thought

All of this is mostly theoretical at this point. There are pilot projects and certain implementations done around the world. But,   imagine a world where this is all possible, exact usages, instant transactions, no transactional fees, and all of it happening through interlinked chains of producers, prosumers, and consumers. There would be no need for balancing authorities, no distribution network operators, no transmission operators. It is a self-regulated grid/market. Could it lead to a better service and lower costs all around? Only time will tell.

Samer Muratovic

Samer (Sam) was the Bureau Services Manager at Alfa Energy. He is an MBA graduate who has been working in the energy industry for the past five years. He has worked in Sales, various supporting roles, and finally Operations before taking on a role in Bureau Services specialising in Energy Data Management, Optimisation, and new product development. He is currently in charge of teams covering North America, SEE, the EU, and the UK market which service all post-sales deliverables to clients across all market segments.