Blockchain technology makes it easier to secure and track the transfer of resources. With bitcoin, the technology is used to track the transfer of currency. However, blockchain protocols can also be used to disrupt other industries where certification of exchange is important. More specifically, the energy sector is looking to implement blockchain energy grids that could reshape how we use and pay for electricity.
Is the Current Model Outdated?
Mike Orcutt of MIT Technology Review says that the current model for electricity delivery is becoming slow, outdated, and cumbersome. Energy companies don’t update utility bills in real time. Every month, it can be confusing to decipher the bill consumers receive. Additionally, there are not often breakdowns of how much energy used per day. There is little transparency between consumers and energy companies, and blockchain technology with its transparent and immutable ledger could address this problem. The current model becomes even more difficult to navigate if consumers want to compare prices from different energy providers, according to the Energy Web Foundation. Many consumers only have one option for where they buy their electricity. If a consumer wanted to purchase energy that’s generated from renewable sources, finding and certifying the source of electricity can be a challenge. A blockchain energy grid could address many of these challenges.
What Does this Mean for Consumers?
According to LO3 Energy, a tech firm based in Brooklyn, the first step in a blockchain energy system would be tracking energy production and consumption. Energy data would be entered into a public ledger, so that the source and destination of all energy transactions are more transparent. For example, a power plant could update the blockchain with an entry for how much electricity they’ve produced. That amount of energy could then be divisible among consumers. Additionally, consumers could bid on energy, creating dynamic pricing for electricity. If the power plant is overproducing at night, for example, a blockchain energy grid would allow anyone to see how much electricity is going unused on the grid. Consequently, the marketplace price of energy at night could be lower than during the day.
RTinsights reports that adding blockchain technology to the power grid makes it possible to exchange energy certificates directly over a computer network. Smart IoT devices could be used to ensure that all transactions are recorded instantly and automatically. Residential and business customers, as well as government regulators, would all have immediate access to the shared information. Those with solar panel arrays or wind turbine farms producing excess power could immediately sell their energy certificates to competing public buyers instead of to the local utility company as under the current system.
The goal of blockchain energy grids would be to make energy supplies decentralized and peer to peer. The electricity sector is, for the most part, still based on centralized power plants that generate power sent long distances over transmission and distribution lines. Blockchain technology enables real trust in peer-to-peer transactions. This could revolutionize the real-time needs of power grids and make the power supply more transparent for consumers.