Blockchain technology is one that has many potentials for the energy market. This is because of the many opportunities it opens up the market to. Blockchain technology is a distributed ledger technology; this simply implies that it is a list of records albeit a secure and rapidly expanding list.
This technology has no central authority and is instead managed and distributed by peers. This takes the power off the hands of a centralized authority and puts it in the hands of the various users of the technology. The fabric of this technology is such that it can’t be manipulated which encourages its use as a transparent means of transaction. Blockchain technology offers a chance for users to communicate without the intervention or mediation of a central authority. This technology is such that peers can connect with each other in real time safely and securely without being in doubt as to whether their privacy is compromised. This security as well as the integrity of data and the privacy assurance are guaranteed through the use of cryptography.
This technology, as already mentioned, has great potentials for the energy industry. One of its many applications in the energy industry is in the operation of power grids such that there is more and better penetration of variable distributed electricity generation as well as less rigid demand-side resources. All of these to the effect that things are done in a better, automated and more efficient way. It will also result in cheaper costs of transactions.
This technology also allows the optimization of grid operation by system operators. This is possible through the management of every connected device via automated smart contracts. This will help system operators provide pricing of energy usage in real time as well as afford them a chance to be flexible.
Yet another opportunity that the use of blockchain technology provides the energy industry is the ability for hitherto energy consumers to become suppliers and earn in the process. This is done via them selling the excess energy left over from that they generated through avenues such as rooftop photovoltaic cells. The use of blockchain technology allows the secure monitoring and recording of data as well as automatic sending and reception of money via smart contracts on such platforms like Ethereum.
Blockchain technology, in conjunction with Artificial Intelligence can also help provide better security for networks and grids which has become a necessity with the increase in interconnection and digitalization.
There are still some ways to go, however, before blockchain is widely adopted in the energy industry. A lot of kinks as to how it will be used still has to be worked out. Some of these includes the creation of a clear and certain regulatory framework that will govern all transactions in this space. There is also the need for the development of a means by which quick and trustworthy collective decisions can be made.
Once all these are worked out and blockchain is implemented industry wide, we can expect to see a more efficient and better way of energy creation and distribution as well as transactions in said industry.