The electricity internet is created

There is a view that blockchain for the world of transactions and settlements can be what the Internet has become for global communication. Will it, like the network protocols, lead to the transformation of the energy industry?

One can point out similarities with a different trend, essential for the development of modern digital culture. I mean peer-to-peer programs that shook the music market at the beginning of our century. From music to energy, the road seems to be far away, but it is worth remembering that the crypto-banker Satoshi Nakamoto, in the entry from 2009, reported that the new electronic payment system he is working on will be based on the peer - to - peer idea. Several years ago, new software made it easier to create music at home and share it with other users. It also violated the basics of the system, at the top of which was a record label deciding on the rates, costs, prices and distribution of music.

Green revolution

Today, instead of mp3 files, we can produce electrons in our homes, and we may no longer need intermediaries for their transmission and sharing with others. Is the contemporary energy consumer, still dependent on large distribution networks - slowly becoming a prosumer? Who has unlimited resources and co-creates the rules of the energy market?

I think so. And even if not today, it will happen in a few years. At the same time, our environmental consciousness develops with the blockchain, and blockchain and green energy harmonize with each other. We are at the beginning of change - the energy market will continue to decentralize, because we become independent from fossil fuels that require heavy equipment and equally heavy money. In comparison to oil and coal extraction, the processing of solar and wind energy is - after the necessary initial investments - almost a game of technological gadgets. The new way of distribution and production - at home - will personalize it even more.

Solar and wind energy are just beginning to be an alternative to energy obtained in traditional ways. We do not use massively from home charging stations supplying cars. But solar panels placed on the roofs become part of the landscape of suburban housing estates around the world. We're heating our apartments in a new way.

Microgrids and smart grids

More and more micro-networks - entities responsible for the acquisition and distribution of green energy - can be called new generation power plants. They are separate units of the nature of a virtual power plant, and their shares are powers of several megawegatów. Available technologies allow for connecting a number of energy sources, both renewable and conventional, to the microgrids. In such microsystems, all electrical, pressure and gravity technologies can be used. As sustainable sources of energy, they work well in hot climates, in Australia or Africa, but also respond to the energy needs of places like Alaska.

Supporters of independent energy networks are increasing both in countries with a high degree of development and in less developed areas. It is worth mentioning the developing phenomenon of smart grids, i.e. power grids characterized by advanced technological intelligence. In this case, we deal with a system of energy meters that ensure communication between all participants of the energy market. The idea here is to connect manufacturers, distributors and recipients into one network and equip it with intelligent measurement systems. Smart grids are an example of how modern technology can lead to economic efficiency experienced by the average user in his own pocket.

Microgrids mean high efficiency, because they are usually installed in the immediate vicinity of facilities that use the energy produced. Such maximum optimization of production and demand means, at the same time, a large variation in production and storage. Blockchain-based applications could be ideal for optimizing highly volatile phenomena.

Sharing good energy

The modern energy system thus gains competitors - independent producers, supported by a new type of customer - expecting a full adaptation of services to its expectations. Besides, he will become a micro-producer in the whole process of change. The energy produced in home conditions will be able to share with others.

Shared economy is a new approach to business, where exchange is the value and foundation of action. The energy market can also have its own Airbnb or own Blablacar. The owner of the car's charging point will share it with other drivers, setting the conditions in advance, including, of course, prices. This will allow him to cover the costs associated with the purchase of the device.

Blockchain eliminates intermediaries

As a transactional technology, blockchain can be successfully used for payments and trade operations related to the energy market. What's the point here is the fact that transactions could be made without financial intermediaries. Therefore, the entire distribution and payment process would be simplified, by directly connecting producers with consumers. These roles would over time strive for unification - such a decentralized model naturally has a large potential to generate savings for the individual customer.

Blockchain would provide members of a given energy community with automatic access to information in real time. Thanks to this, the commune that produced the excess energy could make it available to the municipality, which is struggling with its shortage. Even an individual user who owns a link on the roof could provide excess energy produced to a nearby block. Such intelligent contracts help in this case to keep the balance between supply and demand.

In real time, the user would decide how much energy he wants to buy or share or create himself.

Currently, the distribution of electricity is centralized and multi-node, and the process involves many intermediaries: energy producers, transmission network operators, sellers. You can not forget about banks that are responsible for handling payments. It all naturally affects the price of electricity. New solutions could make an individual customer simply a "hub" of a network that does not require middlemen to produce or distribute or sell. In any case, nothing prevents the users from having different status from entering the network: they can be retailers, producers or utilities.

A new energy business

According to the estimates of the World Energy Council in 2025, decentralized energy, based on renewable sources, will have 25 percent. market share. So far, we are beginning to observe new initiatives that see the future of energy in decentralization. In 2016, in New York, the first attempt was made to trade energy using a blockchain system between neighboring households. So we see with what a fresh phenomenon we have to deal with.

Technology companies - especially those that belong to the startups' environment - believe in change. And they convince representatives of corporations that co-create the traditional market. The Energy Web Foundation treats blockchain as open-source for the electricity market. Large international energy concerns have already invested about 2.5 million dollars in its development. Many of them run their own blockchain to conduct energy settlements (where current billing systems have too little bandwidth), and eg the tested Kovan network in EWF enables carrying out up to a thousand transactions per second (there are up to a million transactions in capacity).

On the other hand, the Australian Power Ledger platform managed to raise funds worth about 28 million dollars. The company is working on solutions that make buildings, thanks to solar panel assemblies, become microelectrodes. In Australia there are already more than 1.5 million energy producers coming from domestic photovoltaic installations. Power Ledger rewards energy producers in cryptovalta and acquires funds for the development of their business by selling a cryptocurrency under the so-called Initial Coin Offering (ICO).

Enerchain, on the other hand, is a peer-to-peer system for wholesale energy trading developed by Ponton. It obtained financing from large energy concerns. The platform will synchronize processes between transmission system operators and distributors. Blockchain here enables the "marking" of each produced and consumed unit of energy, automatic saving of transactions and its settlement in a virtual portfolio. Assisted by the energy group Nuon (belonging to the Vattenfall group), the startup Powerpeers allows direct trading of electricity between any registered users. The application and its owner took over virtually all operations such as settlements and signing contracts.

Regulatory difficulties

Energy experts are convinced that blockchain technology has the potential to deeply transform energy networks. Modern technology is developed enough to make it happen. In the near future, there will be no problem with installing software at home, thanks to which sales and purchase of energy will be automated, prices will be based on the agreement of users of a given network, and energy demand will be measured in real time. While each of us could feel the obvious benefits of new solutions, legal and economic systems will certainly be resistant. How fast will you manage to overcome the labyrinth of bureaucracy? And how much energy do we need to convince us to change traditional operators?

Decentralization, sharing economy and several problems

Integration of individual systems and devices is a technological, organizational and regulatory challenge. Smart energy networks are not only a new way of settling and distribution. It is also necessary to implement new safety standards and energy measurements. Experts say that the standardization of systems, integration of interfaces and devices in intelligent buildings is still difficult. Does the simplicity of distribution and billing provided by blockchain also mean the simplicity and reliability of measurements?

Another issue is money. The microchonds could perfectly absorb the payment system based on cryptocurrencies, because these are natural connections from blockchain, but as we know, there is still a discussion about their future. Their status - as a means of payment - is still unclear or, at best, unregulated in many countries. This is also a factor that affects when the energy system starts to change and that will be - I am deeply convinced of that.

It is significant that producers who currently monopolize the energy market are beginning to see the potential in the new phenomenon. As you can see: savings, decentralization plus sharing are ideas that are increasingly appealing to the imagination of both individual users and modern business. Do not forget about one more benefit - I mean clean air, which microbets based on blockchain will certainly not be harmful.

Norbert Biedrzycki  

For many years I have been in contact with technologies, leading technology companies and experts in this area every day. I work with my clients advising them on how to change their business, how to implement modern technologies to meet their and their clients' needs.

I am lucky that my work is also a passion for me. Working every day at the interface between business, technology and IT, I have contact with wise and interesting people - we often discuss, argue and inspire each other.  

I believe that the next wave of development will be driven by technologies and trends like Virtual and Augmented Reality, Internet of Things, Robotization and Automation, Artificial Intelligence, and Blockchain.  

You can read more about this on my blog norbertbiedrzycki.pl .

Quoted works:

  • PV Magazine, John Weaver, Residential solar power grows 11% in Q1 2018, link , 2018.
  • Interview conducted by Stanford University professors Huggy Rao and Robert Sutton and the editor in chief, Allen Webb, Staying one step ahead at Pixar: An interview with Ed Catmull, link , 2018.
  • World Energy Council, Changing Dynamics - Using Distributed Energy Resources to Meet the Trilemma Challenge, link , 2018.  
  • Jesse Morris, Rocky Mountain Institute, Blockchain in Energy: Powered by EWF, link , 2018.  


The electricity internet is created

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