The blockchain technology challenging the energy world
As companies queue up to lend their financial support, the rise of this new innovation is unstoppable
Ten utility companies have come together to support the Energy Web Foundation (EWF) in an effort to extend the use of blockchain technology across the sector.
Centrica, Elia, Engie, Sempra, Shell, SP Group, Statoil, Stedin, Tokyo Electric Power, and TWL have been brought together by the US's Rocky Mountain Institute in a move that secures $2.5m in funding for the Foundation.
EWF is a partnership between Rocky Mountain Institute and blockchain technology developer Grid Singularity that aims to identify and assess promising energy-use cases for the technology and launch an energy-focused platform to provide the necessary functionalities at scale.
Blockchain technology reduces transaction costs by keeping a single logical copy of transaction records—avoiding the need for reconciliation and settlement. Because of its unique attributes, blockchain technology has the potential to play a significant and potentially game-changing role in the energy sector.
The technology can be used to reduce the cost of utility bills or the need for working capital in wholesale gas market or electricity transactions. More significantly, however, blockchain technology can allow millions of energy devices (heating, ventilation and air conditioning systems, water heaters, electric vehicles, batteries, solar PV installations) to transact with each other at the distribution edge while providing support to utilities and grid operators to integrate more utility-scale variable renewable energy capacity at much lower cost.
Cutting out the middleman
Blockchain is seen by many as heralding a significant shift in the industry. Speaking at a recent workshop hosted by the World Energy Council, Axel Von Perfall, Head of Innovation and Technology, PwC, Germany, commented on its potential to accelerate the growth of distributed generation.
He said: "There has been a lot of talk about cutting out the middle-man, which in the energy sector is the utility. Blockchain technology can really change the energy business. At its core, it's a technology that allows direct communication and direct trading between different counter-parties. It will take care of the settlement of the transaction, billing and payment. It will be a radically simplified vision of the energy world."
Ewald Hesse,Vice President of EWF Austria, pointed out, however, that challenges remain.
"The big problem we have in the energy market is that there are over 300 communication protocols. A big task of the EWF will be to open-source all those protocols. We are looking at it like Google; translation is free and it should be the same here. We have to bring together all the stakeholders and ask them their requirements and expectations of the core technology and then fund these core technology developments."
Having secured first round funding from the 10 energy company affiliates, EWF plans to start Round 2 funding in August this year.
This article appears in the latest issue of World Energy Focus, the magazine of the World Energy Council, with content produced by Petroleum Economist. For more information and to register, visit the site worldenergyfocus.org.