Hey guys, so continuing from my last post about the Introduction of blockchain technology in the energy sector, this is part 2 of the post, here's a link to this first part
Blockchain technology has a wide range of uses:
• Decentralized storage of transaction data, which increases security and ensures greater independence from a central authority.
• Blockchain can help to make payments via cryptocurrencies, to verify transactions and also to execute trades.
• New decentralized business model, no longer require a third party intermediaries.
• The technology will succeed by the technical capabilities of the system, applicable regulations and legal framework, the technology’s scalability and resilience, as well as the economic viability of investment.
• Blockchain offers an efficient way of delivering price signals and information on energy costs to consumers.
• Blockchain can enable local energy and consumers oriented market places that aim to support local power generation and consumption.
• It will also securely record ownership and origins of the energy consumed and the one supplied.
• To build a simple, blockchain based billing model, which in turn removes the barrier preventing energy consumers from adopting electric mobility on a large scale.
• To integrate blockchain technology in the area if smart devices, and also create a comprehensive archive of all electricity billing data.
• With the advent of the blockchain, consumers will be able to select a service provider that offers a better deal, using the transparency of the blockchain in reading their meter data.
Due to the advantages offered, it’s safe to say that blockchain will potentially provide solutions to the trilemma facing the energy sector. As it would help reduce costs by optimising energy processes, improve energy security, in terms of cyber security, it would also act as a supporting technology that would improve security of supply and also promote sustainability… more
But there are likely obstacles to encounter, when energy is supplied directly by the producer to the consumer, without the interference of a third party. Some of which are:
• Who performs the meter reading operations?
As the blockchain is a platform that doesn’t involve a third party, getting the meter readings will have to be the job of the energy consumers, or a pre-paid meter has to be put in place.
• Who’s responsible for submitting schedules and forecast to the transmission system operator (TOS)?
The transmission system operators need to produce forecasts for the entire market for each day, which they prepare on the preceding day at the latest, on the basis of so-called schedules (which are submitted to them by the balancing group managers). So the issue also arises of who is to submit these schedules to the TSOs.
• Who is the registered electricity supplier?
The party supplying the energy to the energy consumer will, through this act, become an electricity supplier. For this role, they require a licence as well as IT interfaces so as to be able to provide the necessary data. Blockchains are not yet reflected in the current market rules and market communication processes and should explicitly be taken into account. But in any case, the energy supplier would have to apply for a licence, which generates significant costs (if they have not already obtained one; this will not be the case for most prosumers).
• Who performs the balancing group manager role?
All energy consumers must be assigned to a balancing group, a blockchain model would require the setting up of an individual balancing group for each energy consumer. Balancing groups can generally be implemented down to customer level, but managing a balancing group can present a significant financial and organisational challenge. So one major obstacle hindering the adoption of blockchain-based transaction models is that they would have to meet the current regulatory requirements. Some of the benefits that can be delivered by a decentralised system of peer-to-peer relationships would thus be lost. There is a chance that small or local businesses would encounter fewer or reduced barriers to market entry, which would make it harder for other market players to prevent them from participating in the market. Yet, conversely, a blockchain rollout might also reinforce anticompetitive trends in the energy market. One sure way to combat this possible development is that established energy companies develop private blockchains, which would permit them to lock small suppliers out by not allowing them into the transaction model and thus the market.
• Another obstacle to the implementation of blockchain applications is the current uncertainty regarding their legal recognition, owing to the fact that blockchain systems no longer require a central authority, at least when they operate strictly in accordance with blockchain principles. The corrective element in such systems is provided by “swarm intelligence”. Today’s legal systems, in contrast, are based on a clear allocation of organisational and legal responsibility read more
Thanks for reading.
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@daniel-otaniel, reminding you that when God thought of greatness, He created you to show for it.
