Imagine a world where energy is available to all, distributed through a robust system of transmission lines, with a meter system so accurate that it charges consumers for the power they need, but also allows them to sell excess energy to other consumers.
It is becoming more technically complex for energy companies to supply energy to their growing base of customers. To confirm the purchase of power a number of broker companies are involved to verify that the purchases have been made.
If governments want the whole world to be connected to some sort of energy grid a novel approach to its supply must be found.
Enter: The Blockchain. A blockchain is a collection of digital transaction blocks that create a digital ledger of unique, encrypted information that cannot be changed or altered.
The blockchain, in a currency sense, confirms cryptocurrency transactions in a ledger. It facilitates safe online transactions in a more efficient and transparent way than previously achieved.
This video contains an interesting way of explaining the blockchain; it uses the mining of diamonds and their distribution to do so:
The energy industry has become very interested in the speedy way the blockchain confirms transactions and is keen to enhance it. According to MIT Technology Review, it takes 60 to 80 days for an electricity producer to obtain the money from consumers.
The alternative is for energy generators and distributors to establish a network that delivers an amount of energy to a customer based on how much a consumer has paid - in real time. The auditing firm Deloitte’s Corporate Venturing and Blockchain Lead, Alexander Shelkovnikov, has recently published a report named, ‘Blockchain applications in energy trading’. An excerpt of the introduction to the report reads:
“Picture a trade floor five years in the future. The robotic trader managing one of the gas desks is about to execute a physical natural gas trade with an industrial customer. One of the robot’s trading algorithms scans available market interests and optimizes its search for the best deal to meet the customer’s volume and tenor requirements for a given period.”
The blockchain system’s transparency will prevent errors, discrepancies and fraud.
The implementation of an automated ledger system could, however, result in some job losses and the transactions may face security risks.
Renewable Energy Opportunities
However, the positive could outweigh the negatives in a renewable energy future. The blockchain technology could allow renewable energy to be sold between individuals who generate it; a peer-to-peer network of energy trading. Australian start-up Power Ledger is trying to capitalize on creating an infrastructure that will facilitate these transactions.
To see how this would work, take a look at this video:
Thus, local traders whose solar panels generate the energy that the grid could benefit from, could trade with individual households in need and with the utilities. It is definitely a disrupting technology, whilst also being a technology that could revolutionize energy trading on a localized and industrial level.
What remains clear, though, is that blockchain needs a level of governmental regulation. But how long will it take before that regulation suffers the same conflicts of interest that caused the first blockchain to be invented? Shelkovnikov asserts, however, that if regulation is imposed and the blockchain implemented in marketplaces, the benefits will outweigh the many negatives.
Energy trading may not be the only area revolutionized by blockchain; it could impact many other engineering industries too. At this stage, however, it seems that the energy industry is the one ready for decentralization, and with blockchain, much like Bitcoin, it might be here sooner than we think.
EIT Programs are specifically designed by an international body of industry experts, ensuring that you graduate with cutting-edge skills that are valued by employers around the world
Our lecturers include highly experienced engineers, with real-world knowledge, NOT just academics.
EIT programs are fully accredited in Australia and recognized by many authorizing bodies around the world.
Our innovative online delivery model ensures that you have access to the best lecturers and resources 24 hours a day. You can participate from anywhere in the world, as long as you have an Internet connection.
You will be supported by a dedicated Learning Support Officer for the duration of your studies, giving you a greater chance of success!
EIT’s current students join from over 140 countries, with expert lecturers and tutors based around the globe, providing you with a truly international perspective.
EIT is one of the only private colleges in the world specializing in engineering.