The disintermediative properties of blockchain are well-documented. Perhaps this singular quality of blockchain is responsible for industry leaders feeling they have much to lose if their sector fails to adopt the technology. Indeed, should utility companies fail to integrate blockchain into their existing systems and business models, they could find it increasingly difficult to both compete with nimbler and smaller energy companies selling directly to consumers and to control costs, and retain paying customers, as average consumers flock to cheaper and more direct alternatives.
Yet, this supposes an over-simplistic view of the energy industry—nothing ever changes overnight. Empowering consumers globally to sell each other energy is the logical, yet far-off end of blockchain technology. Scaled down to the local level, however, blockchain-based energy commerce is much more tractable and realistic. Nowhere has this concept been tested and proven more than in New York City, where the blockchain economy is booming, and consultancy is changing the game.
I have written extensively on blockchain technology’s developing progress in revolutionizing industries. When last I touched on the energy industry, I wrote briefly about a first-of-its-kind partnership between Consensys and LO3 Energy to allow consumers to buy and sell energy from each other on the public blockchain.
Consensys—an Ethereum venture foundry—uses the Ethereum blockchain to power use cases of blockchain technology across industries, and LO3 Energy is an energy tech company that works with energy and utility retail entities to deploy high-tech energy products and services.
Together, they created TransActive Grid, a solar energy platform on the Ethereum blockchain using peer-to-peer transactive and distributed energy resource control technology, in conjunction with solar panels, to disintermediate and decentralize local energy trading in favor of consumer-based commerce.
Using Consensys’ extensive Ethereum ecosystem to empower consumers—in Brooklyn currently and soon in the other 4 boroughs—TransActive Grid’s blockchain node computing platform automatically facilitates and records all energy transactions between consumers, cutting out utility companies altogether.
Fresh off of that project’s success, LO3 recently launched the Brooklyn Microgrid, which is exactly what it sounds like: a Brooklyn based, hyper-local energy grid managed by solar energy consumers for solar energy consumers based on the blockchain, allowing Brooklyn’s solar energy consumers to trade energy between each other in order to make local solar energy consumption not only more equitable, but sustainable and scalable. Using the blockchain, the microgrid cuts out the middleman, essentially allowing an endlessly growable application of the technology with the potential to undercut suppliers over a much wider geographic area.
I later interviewed Consensys and learned that since blockchain is a cooperation-based technology, and that since Ethereum is a distributed computing software platform, the use of Consensys’ Ethereum ecosystem to power TransActive Grid means that TransActive Grid is not the only blockchain-based energy commerce platform.
Indeed, the use case is being used all over the world. In July, for example, Canadian, Italian, and Austrian energy giants BP, Eni, and Wien Energie began to definitively run energy trades between each other using developer BTL Group’s Interbit blockchain platform, after running extensive tests on the platform over the last three months to streamline back office processes, extensively cut costs, and improve transactive security.
Other use cases follow the same pattern of using blockchain to empower different aspects of the energy value chain. British startup Electron is developing a blockchain platform, allowing customers in that country to switch energy providers in just a day.
Australian startup Grid Singularity uses blockchain technology to host decentralized energy exchange applications focused on a wide range of purposes, such as validating electricity trades, monitoring grid equipment, and diagnosing and reconfiguring grids in response to network emergencies.
In addition to energy transparency, voting security is a real concern for many, and you can find out how blockchain will solve those problems here.
Given these developments, it’s easy to see that the technology can and will continue to lend power to aspects of the energy market up and down the value chain. The technology shows particular promise to factories, which have lots to gain from distributing their energy consumption between each other in a decentralized way. Entire factories on the blockchain could sell each other several minutes to several hours of unused power during downtime between themselves. Applied globally, this could greatly enhance the efficiency of operating energy grids, distributing energy over users equitably in real time.
Incredibly, contradictory to the technology’s nature, it can also be used to lend power to utilities, allowing consumers to choose and utilize energy by different utility companies in minutes, giving consumers efficiency and utilities greatly enhanced transaction speed and balanced customer flow. Used in conjunction with factories and energy companies on the blockchain, the technology has the potential to dramatically cut costs, increase grid efficiency and scalability, balance out energy consumption generally, and empower local grids to connect with one another over time to that end.
Blockchain has the ability to revolutionize many industries across the world, but perhaps none so much as energy, which will continue to be a central focus of technology for decades to come.
This is part 5 of my 8-part series on blockchain innovation. You can read part 4 here, where I analyzed blockchain’s future impact on the tax industry.