From generation to retail distributed ledger is revolutionizing the energy value chain. Across the energy value chain DLTs are expected to drive near-term incremental value—and in the long term, potentially enable the much-hyped disruption.
DLTs could represent a key enabling technology for many applications, such as EV charging payment interoperability, peer-to-peer trading, machine-to-machine energy transactions and beyond.
Blockchain with its relatively low transaction costs can help small energy producers to sell their locally produced renewable energy to individual households. Smart contracts, on the other hand, can help in real-time coordination of production data from solar panels and other installations.
Blockchain can help renewable energy developers to sell future energy production from planned renewable generation to raise capital. Digitally enabled power purchase agreement (PPA) can help renewable energy developers to secure easier financing by selling part of their energy production capacity directly to the corporate energy buyers.
At present solar energy, producers are issued with Renewable energy certificates (RECs) based on generation estimates and forecasts rather than on actual generation. Sensors paired up with smart contracts can record actual data to a blockchain ledger, issue or trade of RECs will be done only on the basis of actual energy produced. Blockchain can significantly reduce administration costs of RECs for public agencies, by streamlining trade verification and data indexing. When compared to the traditional information architectures, here are some of the advantages of deploying blockchain in the energy sector.
While a traditional ledger for utilities tends to be slow, error-prone and vulnerable to security issues, on the other hand, a distributed ledger can enable decentralized, replicated, shared and cryptographically-secured operations.
Blockchain records are permanent and cannot be edited or deleted.
Energy markets are struggling to maintain the balance between supply and demand. There is a demand for flexibility services, that can either adjust demand to better match supply or can provide supply at short notice to meet increasing demand. By deploying blockchain in the supply, charging sessions of customers with electric cars can be temporarily interrupted, and can also smartly manage household batteries, thereby avoiding congestion on the high-voltage grid, and maintaining its balance.
Blockchain has got the potential to keep third party and mediator systems, away from fetching and transferring data, thereby helping in achieving cost-effectiveness in the healthcare system.
Deploying Smart contracts can help in devices and computers to enact trades, make purchases or perform other actions themselves based on predetermined rules, avoiding the intervention for the third party. DLT architecture, on the other hand, ensures transactions are both trackable and irreversible. Embedding smart contracts can also ensure additional benefits, as they make it increasingly possible to facilitate machine-to-machine, automated interaction.
Trust between participants is higher, due to multiple points of verification.
Ownership or control of assets is public and transparent.
