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Blockchain in Energy: 7 Possible Use Cases

  • 26 October 2018
  • Sam Mire

With the global economy projected to grow four-fold by 2050, projections predict a 70% increase in the demand for oil to fuel the growth. However, the direct relationship between oil consumption and carbon emissions means that CO2 output will rise approximately 130% during that time unless significant changes to how we harvest and consume our energy are made. All parties agree that energy sources that are more sustainable and less detrimental to the environment are favored; the issue simply lies in the lack of usable energy if the world were to switch completely to non-fossil fuel energy sources.

The paradox of energy consumption is confounding: “The consumption of energy services for everyday mobility and domestic life is a fundamental precondition for participating in many contemporary societies, but it can also impact upon current and future generations in ways that raise questions of equity and fairness.” The simultaneously essential yet in other ways damaging reality of energy consumption requires that we assess and test all options for expanding energy accessibility responsibly while continuing to explore novel, sustainable means of energy production and distribution.

While the blockchain is no cure-all for the enigmatic question of how to proceed into the future of energy, it has several use cases that, at least on the surface, appear able to help facilitate a responsible, productive mission for the production and consumption of energy going forward.

Blockchain in energy markets - Practical use cases


Tokenizing Energy

Blockchain use cases in the energy industry - Tokenizing EnergyThe United States is among the most wasteful nations in the world when it comes to unused energy. 71% of energy expended in transportation is lost as waste, 66% of electricity is wasted, and 20% of energy used in manufacturing is considered non-useful. As a nation and a world, we have a long way to go when it comes to utilizing more efficient ways of producing and consuming energy. These alternate solutions include but aren’t limited to renewables and demand-response utility programs, which direct energy along a grid based on households’ unique needs and use times. As of now, with electricity constantly flowing to all recipients at all times, the U.S. is wasting 61% to 81% of the energy flowing through its grids. That waste ultimately totals $130 billion in energy that is being billed for and expended but is not being used. Creating more usage-determined, efficient ways of consuming energy is also in the interest of individuals, as household spending on utilities has climbed by as much as 119% since 2001. One way to establish smarter systems of consumption is through the tokenization and trade of energy.

Tokenizing energy so that it can be more easily exchanged between supplier and customer as well as through a customer-to-customer network would likely be incentive for renewable energy source adoption, too. Because renewable energy must be stored but experience diminishing returns, the ability for producers and consumers to trade amongst themselves based on varying supplies and demand would enhance the viability of non-traditional energy sources. Further, even non-sustainable energy could be plausibly tokenized and traded as a quantifiable asset, and the starting point of these possibilities is the tokenization of energy itself so that it can become a tradeable commodity with defined per-unit value.

Companies Trying to Solve This Problem

  • Grid+ – Tokenization project from the team at ConsenSys
  • MyBit Crowdfunding solar panels on the blockchain
  • WePower – Tokenized green energy trading platform

Microgrids

Blockchain use cases in the energy industry - MicrogridsTraditional, centralized power grids were once the crown jewel of engineering, but now they’re known more for inefficiency and massive energy losses. Well-researched estimates put energy losses due to resistance at 6–8%. These resistance-related losses can total as much as $19.5 billion annually. Additional losses can bump the total losses as high as 15% of net generation, with this figure accounting for more than $70 billion in losses every year.

Microgrids are aimed at remedying these losses, which result largely from the long distances electricity must travel. By localizing electric grids, more direct, concise systems could cut down on power loss and also take advantage of renewable energy sources’ self-sustaining properties. The distributed ledger technology that the blockchain utilizes could serve as the logical digital building block for users of these microgrids to monitor consumption and execute energy transactions.

Companies Trying to Solve This Problem

  • Drift Helping source power locally and creating more efficient grids.
  • LO3 Energy – Field tested microgrids

P2P Energy Trading

Blockchain use cases in the energy industry - P2P Energy TradingImprovements in energy storage and battery technology expand the opportunities for individuals to buy and sell their energy on a peer-to-peer level. By 2030, a projected $103 billion will have been invested in energy storage innovation. Between 2016 and 2030, the energy storage market is expected to double six times, with this exponential growth having been likened to the massive investments in solar technology between 2000 and 2015. These investments are expected to be manifested as savings, with some figures stating that relatively modest gains in energy storage capacity could produce total savings in the $25 million–$50 million range for residential, commercial, and industrial consumers.

Much of these savings is projected to come from users having more autonomy over energy trading — namely, the ability to pay for energy as they need it, and sell any excess energy, all thanks to improved storage methods, including batteries. A digital, blockchain-based platform for tracking energy stores and facilitating transactions has been proposed, as its distributed ledger offers a reliable, cost-effective platform by which energy-trading peers can connect.

Companies Trying to Solve This Problem


Rewarding Renewable Adoption

Blockchain use cases in the energy industry - Rewarding Renewable AdoptionU.S. renewable energy consumption increased 67% from 2000 to 2016. However, while renewable energy adoption is on an upward trend, the momentum in the United States has not been moving at a world-beating pace of late. In 2013, 9.349 quadrillion Btus of renewable energy were consumed, compared with 9.970 Btus in 2016. When compared with the fact that renewables accounted for 50% of the growth in global power generation in 2017, it’s clear that Americans as a whole are waiting on something to jump on the renewables bandwagon, and a little financial incentive never hurt any industry’s cause. Several startups are relying on blockchain technology to create a stronger financial reward, often in the form of tokens, for those who are willing to dip their feet further into the waters of renewable energies.

Companies Trying to Solve This Problem

  • Greeneum– Decentralized platform that incentivizes green energy investment
  • SwytchRewarding solar users with tokens

Accelerating Adoption of Electric Cars

Blockchain use cases in the energy industry - Accelerating Adoption of Electric CarsElectric vehicle adoption is set to increase steadily at an increasing pace as the years pass, with the 199,826 EVs sold in 2017 outpacing the previous high-water mark, which was established in 2016. This number contributed to the 1.1 million electric vehicles in circulation last year — a figure that Bloomberg expects to rise to 11 million by 2025 and 30 million by 2030. Manufacturers and regulators are acting in accordance with this trend, with Volvo announcing their intent to be the first all-electric major manufacturer, and the UK and France are set to ban all gas and diesel vehicles by 2040.

More electric vehicles on the road will call for a suitable system for trading energy between drivers, allowing private charging stations to become assets that could be shared, whether at a price or in exchange for good karma. Using blockchain technology, systems for monitoring peak energy prices could be maintained affordably and practically — and these systems could help charging station owners conduct transactions, make informed decisions about when and where to charge, and decide how much they can ask of those using their charging station.

Companies Trying to Solve This Problem

  • SolarCoin – While not automotive, a compelling use case for how electric vehicle providers could incentivize adoption

Reducing and Tracking Carbon Emissions

Blockchain use cases in the energy industry - Reducing and Tracking Carbon EmissionsCarbon dioxide is responsible for an estimated 76% of greenhouse gas emissions, making it far and away the top adversary for environmentalists. Energy consumed in the domestic setting accounts for a substantial portion of carbon emissions, constituting 10.3% of the total U.S. carbon emissions in 2016. Carbon emissions currently total 35 billion square metric tons, and that figure is only increasing, projected to hit 40 billion metric tons around 2030.

The primary way to lessen the rate of increase is to track our personal and communal emissions, and use that data to modify our behaviors for the better. The ability to tokenize energy credits using blockchain technology presents the opportunity for carbon offset credits to be more easily issued. These credits can be purchased by companies and individuals, or used as a punitive measure to, shall we say, encourage adherence to emissions standards. This revenue is typically reinvested to reduce emissions in other ways, so fitting an interoperable, cost-effective system to further the mission of reducing carbon pollutants can only increase the amount available to reinvest in new environmental projects and technologies.

Companies Trying to Solve This Problem


Decentralizing Clean Energy Investment

Blockchain use cases in the energy industry - Decentralizing Clean Energy InvestmentThe United States remains the second-largest growth market for renewables, and nations like India see as much as 90% of their energy growth capacity from renewables. Tracking that renewable energy as it moves along the supply chain remains a challenge, however. Renewable energy credits have emerged as a tool to distinguish electrons produced from renewable sources from those created by fossil fuels. But REC tracking systems are expensive and fragmented. Prices vary by service, with some carrying one-time subscription costs, others relying on usage-tied fees, and many services instituting some combination. The common thread is that none of these services effectively counteract the persistent problem of double counting, which occurs when two parties claim the same renewable energy asset. Because RECs require third-party authentication, the blockchain has been proposed as an alleviant for the cost and inefficiencies currently plaguing REC issuance and verification processes.

About Sam Mire

Data journalist and market research analyst focused on emerging technology, trends, and ideas.

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