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Blockchain For Energy & Utility

The energy industry is changing

This is something we often occult on our path to energy transition, the number of energy- related products is exponentially rising: vehicles, computers, air conditioners, smartphones, servers, household appliances etc…We increasingly use our resources to create energy, but mainly because there are more and more products that need to be empowered.

To understand what role blockchain plays in our future, we have to look at the big picture. The P&U industry is hurtling toward three critical tipping points which will herald a new and very different era for energy:

  • Off-grid energy will reach cost and performance parity with grid-delivered energy — from 2021.
  • Electric vehicles will reach cost and performance parity with combustion engine vehicles — from 2025.
  • The cost of distributing energy will exceed the cost of generating and storing it locally — from 2039.

Despite more and more people installing solar, the price hasn’t dropped. In fact, to some extent it goes the other way and becomes more expensive. This is quite a counterintuitive state of affairs and it reflects the complexity of the electricity market.

The networked infrastructure of the energy industry makes it particularly suited for blockchain technology applications. And with the rise of IoT, the entire energy industry may soon find its operations transformed into a vast global network of connected devices all feeding digital data into blockchain-enabled platforms that can capture and share information in real time. Here’s a closer look at four specific use cases that illustrate blockchain’s potential in energy and resources.

Use Case’s

Energy transacting

One of the most obvious and powerful uses for a digital ledger technology like blockchain is to provide a reliable and efficient platform for executing and recording transactions (and for tracking ownership as assets change hands multiple times before settlement). With blockchain, transactions can be recorded and settled almost instantly, with no need for an intermediary and with little or no need for reconciliation since all parties are using the same platform. In fact, there is essentially nothing to reconcile since there is only one system and one entry for the transaction, which is shared by all parties. What’s more, a blockchain entry can include executable computer code that reflects the terms of the contract—creating a “smart contract” that automatically validates transactions without the need for human intervention. Blockchain’s suitability as an efficient and reliable shared trading platform could be applied to both physical and financial trading across the full spectrum of energy commodities. In the power sector specifically, as distributed energy resources continue to penetrate the grid, blockchain has the potential to enable peer-to-peer transacting between end users. These localized trading networks could alleviate systemic inefficiencies such as transmission line losses, congestion, and volatile price formation.

Regulatory reporting and compliance

Regulators are increasingly requiring energy and resources companies to provide vast amounts of data that can be analyzed to detect non-compliance and other regulatory issues. With current technologies and methods, gathering and cleaning up the required data is a huge burden. There’s also significant risk that the data could fall into the wrong hands and be misused, exposing sensitive corporate information and putting a company at a competitive disadvantage. Blockchain could potentially eliminate most of these issues, enabling transparency by allowing regulators to securely access clean, tamper-proof data at the source, while at the same time allowing companies to retain strict control over what information is available and who is allowed to access it. An important benefit of using a blockchain-based platform to share information with regulators is that it would create a standard data format for key areas of industry, which is something that is simply unavailable at the moment.

Global supply network

The end-to-end process of getting hydrocarbons out of the ground, converting it into a usable form, and then delivering it to customers involves numerous steps and many different players, from major energy companies to government inspectors to individual service providers, and everything in between. At the moment, the systems and information to support all of these steps are often highly disjointed and siloed, making it nearly impossible to get a comprehensive view of what’s happening and preventing companies from enhancing the process. Deloitte has prototyped a platform that could be used to support the entire end-to-end process. Such a platform creates much more value with a digital ledger technology such as blockchain, which provides the real-time speed and efficiency, tamper-proof reliability, traceability, and transparency to allow companies to share information on a common platform without fear of having their sensitive, business-critical information compromised. Such a platform could become even more important as connected devices are increasingly used to capture real-time data and artificial intelligence predicts and reacts to demand— all without the need for human interaction.

Asset optimization across sectors

In both the oil and gas, and power and utilities sectors, one of the principal challenges is making asset optimization decisions in a highly siloed environment where separate entities each have a competitive incentive to hold their cards close to the vest. In today’s extended enterprise environment, the interaction with thousands of suppliers, vendors, and counterparties drives up complexity and cost. Blockchain can help companies monitor compliance from their suppliers and ultimately reduce costs. By enabling transparency that allows each entity to reveal only the information that is necessary for collaboration, while masking critical proprietary information that is a source of competitive advantage, a digital ledger technology such as blockchain makes it possible for the industry to reduce costs while improving reliability and distribution efficiency. Blockchain may also supplant the role of major transmission intermediaries by facilitating the coordination and delivery of power across broad geographies on a low-cost and automated basis.

Smart Metering

Integrating IOT devices with conventional smart meters will allow for the collection of energy consumption and production data. The data may then be broadcast to the blockchain network for verification and secure storage. All parties have access to this data; producers and prosumers may use it to track their energy generation for billing while consumers can benefit from a better understanding of their consumption patterns.

A distributed ledger will make it possible to facilitate machine-to-machine, smart- contract-based interactions. Devices could understand each other and be able to automatically cooperate and transact.

For—example, smart home appliances—such as a smart plug or smart meter connected to an energy trading platform could continuously look for the best offer and automatically alternate to a new energy provider through a smart contract. This would become an effortless experience for the customer, yet allow them to interact via their home directly to energy spot markets. A number of start-up platforms have emerged to solve basic problems related to bill settlement and prepaid recharge of smart meters using cryptocurrencies.

Renewable Energy Certificates

Keeping track of renewable-energy certificates is one of dozens of potential applications of blockchain technology that could solve data management challenges in the electricity sector without disrupting business as usual

Currently, When a renewable-power plant generates a unit of electricity today, a meter spits out data that gets logged in a spreadsheet. The spreadsheet is then sent to a registry provider, where the data gets entered into a new system and a certificate is created. A second set of intermediaries brokers deals between buyers and sellers of these certificates, and yet another party verifies the certificates after they are purchased.

Inaccuracies could be reduced using sensors paired with smart contracts that record data to a blockchain ledger and issue or trade RECs based on actual energy produced. There is no need for a central agency to verify generation data or work through costly and inaccurate estimates because accurate data is instantly viewable and actionable on the secure ledger. Blockchain can reduce costs for public agencies administering RECs by streamlining trade verification and data indexing.

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