One of the first unbiased, major comprehensive reviews of blockchain has concluded that the technology is “actually delivering on its promises in a number of areas directly related to energy”.
Scientists from Heriot-Watt University in Scotland found that blockchain could “further facilitate smart grid applications and decarbonisation of the energy sector”.
Writing in the journal Renewable and Sustainable Energy Reviews, they review results from over 140 projects, start-ups and initiatives, covering all areas of blockchains in energy, from transactive community energy models to balancing and trading emission certificates.
The paper states that despite blockchain being used for some time to underpin cryptocurrencies like Bitcoin and Ethereum, the interest in blockchain energy systems has taken some in the energy sector by surprise. Yet the scientists conclude that blockchain offers significant potential for developing the way electricity is traded and dispatched.
It cites a survey of the German Energy Agency which revealed that nearly 20 per cent of energy decision-makers believe that blockchain is a game-changer for energy suppliers. [Native Advertisement]
Dr Valentin Robu, associate professor at Heriot-Watt University, explains: “Blockchains are often described as holding the promise of enabling a more decentralised, transactive energy system. If we can enable energy generation and use them at a local level, this could allow system operators to reduce expensive network reinforcements, as well as make local communities more energy self-sufficient and resilient to outside shocks in power supply.
“In energy applications, blockchains are often deployed in combination with artificial intelligence techniques such as multi-agent systems and machine learning, which enable smart micro-contracts and local energy exchanges. This can potentially enable building systems and energy service providers to identify consumer energy patterns and develop energy products tailored to the needs of individual consumers.”
He added that “this rapidly evolving technology is actually delivering on its promises in a number of areas directly related to energy”.
The paper states that potential gains in transparency and competition could benefit other key policy targets related to energy affordability and fuel poverty. It cites a commercial report by Deloitte which states that blockchain-enabled transactional digital platforms could offer operational cost reductions, increased efficiency, fast and automated processes, transparency and the possibility of reducing capital requirements for energy firms.
And it adds that the cost saving potential is not restricted to utilities: it is “relevant to energy consumers and prosumers who are facing increasing energy prices and removal of renewables incentives, respectively. Solutions promised by blockchains, such as peer-to-peer trading in local or consumer-centric marketplaces could potentially lead to cost savings for energy consumers”.
However, the researchers caution that blockchain technologies need to address several issues before achieving larger adoption including legal and regulatory challenges, security and scalability of computation, as well privacy concerns. Other emerging issues in transactive energy models refer to the need of accounting the costs for managing the physical infrastructure and guaranteeing system stability, and the role that system operators will play in a more decentralised energy world.
Heriot-Watt research associate Merlinda Andoni said: “Energy systems are on the brink of entering the digitalisation era as more and more homes install smart meters and smart devices, and system operators increasingly adopt information and communication technologies. Blockchain could potentially be used for automated and secure communication of such smart devices that would further facilitate smart grid applications and decarbonisation of the energy sector.”
To read the report in full click here.
Click here to read more in-depth blockchain content.
Read and watch interview with JoJo Hubbard of blockchain company Electron