Blockchain will release the energy industry's potential
17 Jul 2019
The energy industry is understandably cautious about blockchain technology, but we should heed the greater flexibility and potential profits, says Jürgen Resch of COPA-DATA.
Change in the energy sector often requires considered and cautious decisions. This isn’t necessarily a negative trait, as it ensures all new technologies are understood with a clear plan on how to integrate them into existing processes.
Yet, as we look ahead to the potential future of blockchain, the sector has already taken great strides in accepting this decentralised exchange.
Blockchain is useful in situations where two parties exchange, whereby frequent trades are governed by a contract. Manually writing and signing contracts for each transaction would be very time consuming, so the contracts must be digitalised in a traceable and secure way, without a single point of ownership – one main benefit of using blockchain technology.
In the energy industry, this can be particularly beneficial for microgeneration. For instance, an owner of a small solar farm may be selling excess energy to their neighbours. Inevitably, both parties want a fast and straightforward system.
Using blockchain, the two can set a price point they are willing to buy the energy for, without the need to embark on complex negotiations or create manual contracts. If the solar farm owner cannot meet this price point, their neighbour can simply take power from their utility provider.
In order to give the solar farm owner an overview of the current situation, or reports about how he profited from the negotiations, it will require a SCADA system or at least an HMI. Today these systems do not ‘speak’ blockchain, but as soon as the demand rises, they will adapt rapidly.
Blockchain has been developed to be secure and uses sophisticated math that is extremely difficult for attackers to manipulate
This flexibility is particularly advantageous in renewable applications where energy is volatile, such as solar farms because blockchain technology is dynamic and can handle such variability.
There are several European projects setting good examples of using blockchain effectively.
In Switzerland, Elblox is a peer-to-peer platform that allows producers and producer/consumer ‘prosumers’ to exchange renewable energy with their public. Those with energy to spare can trade in the local market, allowing consumers to buy this electricity in just a few clicks.
Blockchain is revolutionising how energy is generated, stored, bought, sold and used at the local level. As traders do not pay transaction fees to a central trader and the prosumers can react faster to new price situations, profits in the microgrid can be optimised using this method.
There are suggestions that the technology will prove just as valuable to the utility as it is to prosumers. Energy generation setpoints are currently decided by the grid governor. In the future, governors may also gather information from microgrid blockchain requests and consider this data when defining setpoints.
There’s also uncertainty around the cybersecurity implications of blockchain. Yet, blockchain has been developed to be secure and uses sophisticated math that is extremely difficult for attackers to manipulate. There is no one weak point to attack, which is a huge benefit of decentralisation.
With the technology safe from manipulation, an arguably bigger threat is at the user’s site. Authentication mechanisms, rather like the ones used for internet banking, may be required for the initial setup of a peer account.
Blockchain is bringing big changes and it is no surprise the energy industry is lagging behind others in adoption. However, we are already witnessing successful examples of its adoption.
Jürgen Resch is energy industry manager at COPA-DATA