What Is Blockchain?
In order to be able to understand the impact that blockchain can have on the energy. It is important to know what blockchain actually is.
In short. Blockchain is a type of database that collects information together in what could be considered groups. More commonly referred to as blocks. These blocks are used to contain little bits of information, and once a single block has filled its storage capacity it will be linked to the previous block. Which as you can imagine would visually look like some sort of chain. Hence the term “blockchain”.
The blockchain is different to a traditional database. Because it stores information in blocks instead of having to be stored on servers which can be compiled of hundreds of powerful computers.
An Energy Community is a new concept that has appeared across Europe in recent years. In short, an Energy Community is
“an association, a cooperative, a partnership, a non-profit organisation or other legal entity that is controlled by local shareholders or members. Rather than being profit-driven, involved in decentralized generation and the activities of a distribution system operator, supplier or aggregator at the local level, including beyond its borders.”
What is brilliant about these communities is that it can create a local market. Which benefits people at a local level. Simply because of the optimisation of the supply as well as the demand. These groups are referred to as “prosumers” (consumer & producer).
Blockchain And Peer To Peer Energy Transactions
Deloitte has published a fascinating report detailing the uses of blockchain within the energy sector.
The report details how the system which is currently dominated by energy suppliers. But now thanks to blockchain technologies, we could start to see a shift in power and could now see consumers producing energy themselves.
The report also details how prosumers could use peer to peer trading on the blockchain, and due to the blockchain being decentralised and transparent. This removes the worry of manipulation that can occur on different kinds of databases.
Solar panels and home wind turbines are becoming evermore popular across the globe. As is cryptocurrency trading. Therefore with the increase in use of both of these assets, we could soon be seeing a sharp rise in customers who actually produce their own energy, much like a small scale power station as users will be able to sell and buy excess energy from their peers on the blockchain.
Blockchain And Utility Providers
Although it is not just consumers catching onto blockchain technologies. Many energy companies are in fact trying to improve their services by using blockchain technologies.
A serious benefit of using blockchain within the energy industry is that a lot of energy companies are far more willing to share information with each other. Especially regarding technologies which could be mutually beneficial. Because unlike banks and other industries, energy companies don’t tend to compete with each other in the same way.
Energy companies could use blockchains to create an easier system in regards of transferring data. The easier this process is, the easier the distribution process will be.
New Ways To Pay For Your Energy
Blockchain technology enables the existence of cryptocurrencies. Which is why if the energy sector is being revolutionised with blockchain technology, why can’t how we pay for our energy be revolutionised too? There are already some places in the world allowing their citizens to purchase their energy through monetary payments using cryptocurrencies. Such as Bitcoin. Marubeni Corporation in Japan is a company who allows these kinds of payments in certain regions of the country. However, we can soon expect the rest of the country, and the world. To follow suit.
Another fantastic example of blockchain technology being implemented for energy payments across the world is a company called Bankymoon, partnered with Usizo, who are providing bitcoin smart meters in rural areas. Paying for energy in South Africa, especially rural areas. Is paid for upfront. Therefore if your energy runs out, there is no electronic or easy way for you to get energy for your home. Which is where these bitcoin smart meters come in to play. Allowing foreign donors to send money directly to the smart meters using blockchain technology, which is a fantastic solution to the previously mentioned problem.
Should You Trust Blockchain Technology?
Any form of new technology can make people untrustworthy, therefore it is completely understandable as to why people might be sceptical of blockchain technology and cryptocurrencies in general. Due to the nature of blockchains, parties do not have to rely on each other to uphold the honesty of a transaction. This is because these computer protocols are designed to automatically execute the terms of a contract between two parties without outside human interaction. Therefore these transactions could be considered much safer than how a lot of business transactions are conducted today.
The transparency of the blockchain is also a massive benefit, as any transaction and or block. Is freely accessible and readable to anyone. Which in turn allows anyone to confirm the legitimacy of said transactions.
The Benefits Of Blockchain Within The Energy Sector
To conclude. Blockchain technology is a fantastic tool that can help improve many different sectors across the globe. Although due to the nature of the energy industry, these technological advancements are much more exciting within this space. as well as this. It can help less fortunate people in ways that haven’t been possible before. As well as helping to create more self reliant communities like we are starting to see across Europe. These technologies can help improve the legitimacy of transactions by making everything on the blockchain available for anyone to read. Which then helps the auditing of transactions. It is safe to say that this is some of the most exciting and helpful technology that we will see in our lifetime