How can Blockchain Benefit Energy Sector?

How can Blockchain Benefit Energy Sector?

1: Intersection process of the blockchain and energy industries?

The energy sector includes the functionality of multiple sources, suppliers, distributors and middlemen which made the system highly complex and transactional. Blockchain and energy involves those resources required to mine proof-of-work blockchains. In China, many Butcoin’s mining is done using cheap, coal-powered electricity. But there are also yet some challenges for the proof-of-work crypto community. Rising of crypto startups to this sector will remove middlemen retailers and enhance the opportunity of peer-to-peer energy trading and commodity trading.

2: Operation of Energy Sectors?

In the energy sector, the production of raw material is done by the upstream generators and then is processed and transported. Throughout these ways the material is handed over to midstream delivery network and then downstream distributors and thus it reaches end-user.

But high number of generators and different sources of energy are making it more complex. On the other hand, financial complexity rises when supply chain system comes to the space. So, in this situation blockchain technology can be a reliable solution because it brings increased transparency and improved data management. 

3: Impact of Blockchain on this industry?

Blockchain can improve the energy industry by typically doing data management and transactions. A recent study categorized blockchaiun initiatives within the energy industry in eight categories including metering/billing and security; cryptocurrencies, token and investment; decentralized energy trading; green certificates and carbon trading; grid management; IoT, smart devices, automation and asset management; electric e-mobility; and general purpose initiatives and consortia.

4: Blockchain improving transactions in the energy industry through:

Peer-to-peer transactions

Blockchain systems allow users to trade energy directly which is hopeful for renewable sources of energy. This system would essentially allow prosumers to enter into the energy market as a supplier.

Cutting off middlemen  

Cost is lower here because of the absence of middlemen. Retailers sell users energy from the utility providers delivering the energy. On the other hand, a more transparent blockchain-based system may allow for users to buy directly from the utility providers.

Commodity and offset trading  

Through this mean, blockchain can play a large role on the transactional ecosystem within the energy industry is in commodity trading. Blockchain technology could be used to ensure security because millions are spent by companies to build and access proprietary commodity trading platforms that track and execute transactions. With blockchain you have the opportunity in the creation and trading of green certificates and carbon offsets.

5: How blockchain can improve data management in energy?

Asset and inventory management

Blockchain technology has the capability of unifying many stakeholders with high stakes, sources of asset and inventory management data of the process that are obscure while also protecting the privacy and proprietary information of the parties involved.

Metering and Billing

Blockchain is a unified ledger allowing traceability of energy delivery, the origins and delivery of energy became clearer for consumers and easier to automate for businesses.

Security and Transparency

In this space consumer come with private data and corporations come with proprietary data so to both security is an important issue. So, when it comes to shared data, blockchain can play the role of double-edged sword. Blockchain ensures much transparency in the case of above solutions.

6: Challenges and risks

Among many projects of energy and blockchain, general blockchain technology regulatory clarity is the prime obstacle. In spaces like P2P energy trading, there are lacking of guidance for how this plays out in reality for blockchain projects.

Huge development costs for blockchain solutions and uncertainty of success may deter efforts are playing the role of an obstacle to private blockchain initiatives.

7: More advancement and opportunities of Blockchain

Considering the potentiality of Blockchain in the energy industry, it can be said that there is a great use of blockchain in the energy sector. The blockchain’s potentiality can be measured through seeing VeChain’s recent success with Shanghai Gas, which was the largest energy industry in China, as a template.

VeChain has now the intension to make its blockchain more attractive to enterprise operations by utilizing a fee delegation feature with their VeChain ToolChain. So, a lot of opportunities are yet to be created by blockchain solutions.

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