Please rotate your device.

Our website uses cookies to ensure you get the best experience while you’re here.


Use Cases for Blockchain in the Energy Sector

By: David Baugh

Block chain network concept, distributed register technology, background made of line, circles and particles

If implemented properly, blockchain technology has the potential to revolutionize nearly every aspect of the energy sector.

As the energy sector becomes increasingly decentralized, blockchain technology is ideally positioned to become a major disruptive force. In fact, companies all over the world are already developing blockchain applications that create direct connections between producers and consumers of energy.

A blockchain is a virtual public ledger that records transactions in a secure and transparent manner — all without needing a third party like a bank, public authority, or power supplier to act as an intermediary. But how, exactly, can blockchains be used to improve operations in this space? Let’s explore some of the most electrifying applications of this exciting technology in the energy sector.

Facilitating Peer-to-Peer Energy Trading

The conventional energy delivery model relies on large, centralized power plants that deliver electricity across millions of miles of transmission and distribution lines — known colloquially as “the grid.” The less-discussed “microgrids” are localized grids that are able to operate autonomously by connecting and disconnecting from the conventional grid as necessary. Microgrids use amalgams of local energy sources such as wind and solar to power local loads.

Microgrids enable consumers to both produce and consume energy, giving them the opportunity to become “prosumers.” As prosumers, they are able to sell any surplus energy they may have to peers connected to the same microgrid on a pay-per-use basis. Blockchain technology facilitates this peer-to-peer energy trading by providing members of a microgrid with a secure and transparent distributed ledger. This makes for an extremely reliable and cost-effective approach to creating, validating, recording, and reconciling peer-to-peer energy transactions in real-time

Keeping Electric Vehicles Moving

According to BloombergNEF, global sales of electric vehicles topped 2 million units in 2018 — a marked increase over the several thousand units that were sold during the first year of the decade. What’s more, BloombergNEF expects this figure to rise to 10 million by 2025, and a remarkable 56 million by 2040.

As more and more electric vehicles end up on the road, private charging stations are likely to become valuable assets, and an efficient system will be needed for orchestrating energy trading between drivers. Blockchain technology can be used to create a system capable of monitoring electricity prices, making pricing decisions in specific markets, and enabling owners of charging stations to conduct secure transactions.

Streamlining the Regulatory Process

Energy companies are required to submit massive volumes of data to regulators to prove their compliance with various regulations. Gathering and cleaning all this data using current technologies is not only incredibly tedious but can create serious issues related to improper data access. The more data that is being worked with, the more hands that need to be brought on board — and the more likely that sensitive corporate information will accidentally be exposed.

Because blockchain ledgers are both immutable and entirely transparent, their introduction into energy companies’ operations would give regulators the utmost confidence that the data they receive is clean and unedited. Their introduction would also give energy companies unparalleled control over what information is shared with whom, all but eliminating the possibility of sensitive data falling into the wrong hands. To boot, blockchain technology introduces the ability to standardize the format in which data is collected and transmitted.

Expanding Access to Energy

Many communities around the world are not connected to the grid. These communities often source their energy from local solar panel projects, many of which do not receive sufficient financing.

Crowdfunding can help close this financing gap. The idea here is for individuals or other small investors to pool their resources to underwrite enough photovoltaic cells to build the requisite number of solar panels for a particular unelectrified community. These micro-investors retain partial ownership of the solar panels and earn revenue as the community pays marginal monthly sums for the electricity generated by the panels.

Introducing blockchain technology into this process will mitigate many of the issues that plague traditional crowdfunding. For one, blockchain-based crowdfunding will enable anyone with an internet connection to contribute to a campaign, which is simply not the case with traditional crowdfunding platforms. Further, just as it does with peer-to-peer energy trading within microgrids, blockchain technology can lower the overall cost of the monthly transactions between the owners of solar panels and the communities the panels power. Finally, because they are completely secure and transparent, blockchains dramatically reduce the odds of crowdfunding fraud, which, unfortunately, has been difficult to root out on traditional crowdfunding platforms.

Blockchain’s Bright Future in the Energy Sector

As these examples illustrate, blockchain applications have the potential to revolutionize the way we consume, trade, regulate, and finance energy. Once key stakeholders in the energy sector get on board, blockchain may well become central to how millions of people around the world keep the lights on.

David Baugh


More posts from this author