In this blog, techUK member, Helen Disney, CEO of Unblocked, looks at some of the blockchain innovations which are transforming the way the energy sector operates.
Energy markets are currently undergoing a series of profound shifts. The EU’s goal of cutting emissions by up to 95% by 2050 and decarbonizing the economy is just one huge challenge, which will require investment and innovative approaches from both companies and policymakers. Policymakers will need to help create the right conditions to foster both innovation in new technologies, including smart grids, and the more active role in the economy likely to be played by 'prosumers' - people who produce as well as consuming goods and services.
Thanks to their ability to securely keep track of (and execute) transactions as well as to monitor complex supply chains in real-time, blockchain and distributed ledger technologies are well-placed to help make that transition a reality. In fact, blockchain is already changing the energy market in profound ways, whether by facilitating peer-to-peer energy trading or by ‘tokenising’ of the hardware: a new wave of blockchain energy start ups is attempting to lead the way to a more sustainable, lower carbon economy.
Blockchain Energy Start-ups are Changing the Landscape
There is enormous variety in the sorts of innovative use cases and applications already in the market or coming to the market. They include companies like Electron (supporting the transition to smart grids), Solar Coin (a digital currency that rewards solar electricity generators), Swytch (which tracks and rewards the production of renewable energy in real-time), Bit Lumens (which brings solar power and water to rural communities using blockchain and the Internet of Things) and Flying Carpet (a decentralised, charging and docking station for air space which uses blockchain and renewable energy).
Even the traditional oil and gas sector, which, until recently, had been slow to catch up with the potential strategic impact of blockchain and distributed ledger technologies, is now getting in on the act. BP and Shell have recently announced plans to use blockchain technology to transform how energy is bought and sold. BP began experimenting with an oil trading pilot project last year and also joined an industry consortium to explore the technology further and Royal Dutch Shell has invested directly in a stake in one of the leading blockchain start ups, Applied Blockchain.
The combination of new technologies working together is perhaps even more powerful. Digital transformation in the sector will be powered not just by blockchain but also by advances in artificial intelligence and the rise of autonomous vehicles, drones and the Internet of Things. Jamie Burke of Outlier Ventures, which invests in many of these new technologies, has spoken of this phenomenon of ‘convergence’ and the profound impact it will have on the business models of the future. As he puts it, “We believe blockchain technologies, including distributed ledgers and smart contracts, are the mega-trend that allow all other macro-trends to scale securely, converge and combine. They represent the next phase of the Web, Web 3.0 or ‘The Trust Web / Internet of Ownership’, and will transform how technologies interact with one another and the world around them”.
Blockchain is becoming a phenomenon that companies in the energy sector can't afford to ignore. While implementation challenges remain - including resistance from vested interests; the lack of qualified developers; and the potential impact of regulations like GDPR and a closer focus on the financial regulation of cryptocurrencies – in all likelihood blockchain will remain a major component, if not the fundamental building block, of our energy future.
Helen Disney is CEO and Founder of Unblocked and a member of techUK’s DLT working group.