Daily Management Review

Blockchain will turn the energy market upside down. But how?


Energy companies are wary of solar panels and batteries, and blockchain should terrify them.

The blockchain technology will not only allow a lot of people to install solar panels on their roofs (which will lead to a reduction in electricity consumption and will hit the profits of its suppliers). It can also be used to trade electricity without involvement of the supply company. Imagine that your neighbor directly sells you cheap solar energy, and you use it at your discretion.

Some energy companies are ready for this future, and are trying to use blockchain in their own interests. The rest may soon begin to lose market share, yielding to its local small electricity suppliers, which will have a powerful tool for cheap and quick management of the whole process. 

It is expected that the blockchain will be the main topic of the Bloomberg New Energy Finance summit, which will be held in New York this week. Hundreds of specialists will gather there to discuss the future of energy. 

According to estimates by BNEF, more than $ 9 trillion will be spent on clean electricity generation by 2040. According to Jan Vrins, the head of the energy department of Navigant Consulting, the blockchain technology will contribute to these investments.

Here are a few possible areas of application of the new technology and its impact on the energy market.

Power system management

This year, Burlington, Vermont, may be the first city to use blockchain to manage power generation capacity in the grid. According to Killian Tobin, general director of Omega Grid, the technology will manage demand and supply in real time. The company is developing blockchain-based solutions and helping Burlington with implementation of the system. The new system will allow automatically charging batteries in the presence of excessive power and reduce consumption at peak times (and high prices). 
Projects like this can leave engineers without work and reduce the need for equipment modernization, which is the main source of revenue for electric companies.

No more wires?

The German company Tennet TSO together with the manufacturer of accumulators Sonnen GmbH and IBM Corporation is working to create virtual electric networks. The system will use blockchain to store surplus electricity from wind farms in thousands of domestic storage facilities scattered throughout the northern part of the country and transfer the energy to consumers in the south. The project will eliminate the need for the construction of new transmission lines, which is one of the sources of income of supply companies.

Trading with a neighbor

Trade is the basis of many pilot blockchain projects. Lawrence Orsini, CEO of LO3 Energy, is credited with the first peer-to-peer deal with solar electricity conducted in 2016 in a micro-network in Brooklyn, New York.

A similar platform is planned to be deployed in Houston, where a group of companies will use its own resources to protect against fluctuations in electricity prices, rather than relying on the supplying organization in this matter.

Blockchain is quite capable to help the power companies. Tokyo Electric Power is seeking to return customers, whose number has fallen by 15% since the government opened the industry for retailers. To do this, Japan's largest electricity supplier created a unit called Trende. Its goal will be to attract customers with offers that include solar panels and energy storage systems. In the future, it will be possible to sell surplus electricity to consumers.

Even Orsini admits that blockchain-based projects in the energy sector are still in an embryonic state and the final application of technology may differ from early experiments. He says: "This is not a revolution or the destruction of foundations. This is evolution. "

soruce: bloomberg.com