As an industry continually catalysed by innovations from solar panels to smart meters, the energy sector is constantly being disrupted. Often rife with inefficiencies, blockchain is becoming an increasingly important tool here thanks to its ability to remove intermediaries, provide transparent immutable records, offer heightened security, and automate settlements. More and more blockchain use cases in energy and utilities are emerging. From peer-to-peer energy trading markets to tracing and verifying the origin of energy, blockchain in energy and utilities is gaining traction fast.
According to Deloitte, blockchain is a “true disruptor for the energy industry” thanks to its decentralized nature that allows for improved visibility, increased operating efficiencies, and the streamlining of regulatory compliance. All this makes blockchain the ideal solution for a competitive industry facing many challenges from the advancement of distributed energy resources such as microgrids to increased regulation.
The use of blockchain in energy and utilities is also allowing companies to improve their internal processes and enable a more customer-centric approach. Through disintermediation and automatic settlement, it’s generating significant cost savings for providers, while increasing oversight and governance. So let’s take a look at some of these innovations and how blockchain is even opening up new business models in the industry.
Top 5 Blockchain Use Cases in Energy and Utilities
1. Peer-to-Peer Energy Trading
Peer-to-peer energy (P2P) trading allows consumers to buy and sell excess energy amongst themselves. And thanks to distributed ledger technology, blockchain is enabling this by removing intermediaries, allowing for a truly peer-to-peer exchange. This cuts down the cost of excess solar energy being escorted back to the grid and gives consumers more control to purchase energy from their neighbours at a cheaper price than their provider.
To highlight the inroads blockchain is making in enabling this new business model, a report by Wood Makenzie found that 59% of blockchain energy projects are focused on building peer-to-peer energy markets. This means that energy transportation costs can be reduced as it no longer has to be administered from centrally located power plants.
According to findings by Aurora Energy, 41.1% of consumers’ electricity costs are spent on maintaining the infrastructure that delivers power from generators to customers’ homes. Peer-to-peer trading removes the need for maintenance of these costly wires and cables which reduces cost for both providers and consumers. Moreover, as all transactions are public and transparent, consumers can purchase their energy from a known source and support specific local communities if they choose.
2. Renewable Energy Certificates (RECs)
Another compelling use case can be found for blockchain in energy and sustainability, particularly when it comes to Renewable Energy Certificates (RECs). Through the use of a cryptographically secure immutable digital ledger, providers can mitigate fraud and trace and validate REC transactions instantly and automatically.
This means that they can avoid any double-selling of energy credits as duplicate transactions are flagged up as invalid. Moreover, as the records in the ledger offer cryptographic protection making them tamper-proof, providers can be sure of the origin of the energy, allowing them to prove that it is sustainable.
3. Automatic Settlement of Trades
Automatic settlement of trades is perhaps one of the most ubiquitous ways that all types of energy and utilities providers can benefit from blockchain technology. Thanks to its ability to remove the middlemen, providers can automatically record and settle transactions. Trades can even be done on a peer-to-peer basis thanks to smart contracts and carried out between providers without the need for a clearing house or broker, making for a more streamlined and cost-effective approach.
Since smart contracts can automatically trigger transactions and settlements not just for financial trades but physical trades too, blockchain use cases in oil and gas, renewable energy, and sustainable energy are all on the rise as well. And, according to research from EY, the average company using blockchain in energy and utilities for the settlement of trades estimated a savings in the range of 30–60%.
Blockchain investment in the energy sector is expected to reach more than $5.8 billion by 2025 with microgrids playing a leading role reducing transmission losses and deferring expensive network upgrades. The nature of microgrid’s distributed generation offers efficient energy management, continuity of supply, as well as a reliable back-up power to safeguard against outages.
Blockchain technology provides an effective way of handling the increasingly complex and decentralized transactions between users, who vary from large-scale producers to small-scale retailers, utilities, and traders. This means that households and businesses can trade directly and bypass any central authorities, resulting in increased efficiency and lower cost.
5. Smart Meters
Blockchain utilities use cases are also on the rise with a key example being smart meters. Smart meters allow for a more accurate recording of the energy that consumers’ use since power usage is determined at regular intervals throughout the day. This information is then sent back to the utility sector, traditionally via several intermediaries.
Thanks to blockchain allowing for disintermediation, the information can be stored on a distributed ledger and automatically accessed by the utility company. This saves on costs and streamlines efficiencies by removing the need for many changes of hands. It also allows businesses to provide a more customer-centric approach through direct interaction with their clients.
The Right Solution for Your Company
With so many blockchain use cases in energy and utilities, it’s not surprising that more companies are turning to experienced blockchain solution providers to help them implement custom solutions. Solutions and innovations that drive operational excellence, efficiencies, cost savings, and a more customer-centric approach.
Bringing blockchain use cases to life can be a challenge without the right partner. There’s no shortage of overly complex solutions that don’t fit the needs of your firm. At Protokol, we work with our customers at every step of the way, starting by helping them look inward to identify the right blockchain solution for them that can be easily implemented with their existing systems.
Through our blockchain professional services, including blockchain consulting, development and support, our customers in the energy and utilities sector are unlocking a multitude of benefits of this revolutionary technology — allowing them to stay ahead of their competitors while benefiting from reduced costs and improved processes. Discover your blockchain use case today. Book a free video consultation with our blockchain experts to explore the real value of blockchain for your firm.