Most have heard of Bitcoin – the cryptocurrency currently rising in popularity and stock, and a hot topic of conversation.
Bitcoin was created in 2008 as the world’s first decentralized digital currency by Satoshi Nakamoto. Bitcoin is the poster child for blockchain technology, but its rise to stardom raises questions regarding its role in various industries outside of banking and investments. In this two-part series we will dive into its role in the Energy & Utilities industry to find where use cases lie and how consumers and utilities must prepare for the rise of this technology.
Identifying Clear Use Cases
As the power industry and grid transition away from traditional methods of producing and selling energy, blockchain could offer more economically and operationally reliable methods to record and validate transactions across the distributed electric system towards which are shifting. There proves to be clear implementations in the blockchain utilities convergence plan:
- Distributed Energy Resources: As the industry shifts its focus to an increasingly decentralized and resilient system with distributed generation, solar power has experienced a drastic increase. In the wake of climate change, consumers are looking to invest in anything that allows them to become personally resilient. Vendors like LO3 Energy in Brooklyn, NY are offering solutions like peer-to-peer trading of electricity to consumers. As part of the Brooklyn Microgrid project in 2016, a resident sold excess power from his rooftop solar installation to a close-by neighbor. The transaction was completed and recorded through the blockchain, requiring each resident wishing to sell power to neighbors to invest in a computer with a blockchain node.
- Fueling the Rise in Electric Vehicles: Utilities must look to diagnose the impact of an influx in electric vehicles by potentially redesigning their rates to account for charging services and sustaining owned electric vehicles on the grid. International power companies have begun to create “blockchain eWallets” for electric vehicle charging services, allowing drivers to pay on-the-go both at stations and charging areas attached to a home or residence. Such a technology requires the use of blockchain smart contracts, designed to support the exchange of money, property, among others, using cryptocurrency (i.e. Bitcoins). The contract between a power company or user and the driver would authenticate and validate the user and the transaction and thus keep record of such.
- Going digital and the Internet of Things (IoT): This area requires a deeper dive as we assess how the industry will take on strategies for digital transformation. We know the digital revolution is coming, and the inclusion of IoT and data analytics is critical in this transformation. Cryptography and blockchain brings a security aspect to the implementation of IoT that could be beneficial to sustaining the network. For instance, if one of the several devices connected within a home were hacked or compromised, it could completely disrupt the network and leave the information and data exposed. The potential blockchain-IoT framework would introduce layers of access, activation, and security measures (by device makers, users, or third parties) to authorize the selling of data coming from a device. But the security framework for a Bitcoin transaction is much simpler than multiple layers of device and user authentication.
As utilities look to expand their business models, blockchain technology may prove to be attractive and effective in attempt to provide more grid flexibility to their consumers. In part two of this series, we will examine how consumers can harmonize with blockchain and the implications that the above implementations can have for utilities.