Despite the fact that we use utility services every day, the industry is one of the most underappreciated service sectors. It is difficult to survive without them; energy and electrical services have become so intertwined into our daily lives.
While the sectors are under the government's control, blockchain integration has sparked a revolution in the industry.
The utility industry has emerged as a strong sector, with over $6 trillion in investments. Technologies like IoT, AI, blockchain, and energy are expected to together scale the utility industry year after year.
A 2023 Deloitte report states that advancements in five areas in the utility sector will scale the industry as a whole. The mentioned classes are advanced metering infrastructure (AMI), ESG reporting, battery storage deployments, decarbonized fuels, and electric vehicles.
Consequently, this progress will also increase the utilization of blockchain in the energy utility market, and it is expected to reach a $1.5 billion market by 2026.
Central energy management systems cannot handle data complexity with paper-based and manual systems due to the increasing demand for energy and the revolutionary changes in how energy is consumed and procured.
However, blockchain for utilities brings in a viable infrastructure managed on a distributed ledger to enhance and eliminate complexities. Some of the benefits that the industry attains via Blockchain are as follows:
Centralized meter reporting does have a reliable infrastructure with smart meters that act as a two-way communicator between the meter DC and meter data management systems (MDMS) and is helpful for organizations initiating ESG reporting. However, it is also prone to data modifications.
When the communications from the smart meters are incorporated through the blockchain, the data, once entered, cannot be modified, and it shall always be verified via nodes before entering the timestamped blocks.
DER refers to a distributed energy source, where the micro energy resources scattered along a grid infrastructure are collected together, forming a large energy pool. Since there is a large input and the need to maintain scattered data, blockchain-based DERs are managed more efficiently.
Here, the asset owners register and link their energy-procuring assets to the blockchain. Once registration is completed, the energy produced from the particular asset is automatically collected and transmitted, and the payments are completed via blockchains.
In most countries, energy resource management is under the control of the government, where the system has pre-set rules and no flexibility. Blockchain aids this energy trading in a commercial market through distributed ledgers that do not exploit people by eliminating intermediaries.
This peer-to-peer energy trading model becomes a cost-efficient entity thanks to distributed ledgers and smart contracts that automate all the input and automation processes.
The ledgers collect the energy from various resources to store according to their capacity and distribute the same into the consumers' demanded areas.
With improved visibility, the system operators will be able to monitor the movements of power and oversee the life cycle of the energy. These decentralized models also enable the market participants to save around 30% to 60% of the costs compared to the central systems.
As the world is moving more towards sustainable development, the usage of renewable energy sources is celebrated across the world.
If the energy is procured in a renewable way, Renewable Energy Certificates (RECs) are issued to the asset owner or the operator. This helps to get recognized by the trading participants. Furthermore, the authenticity of the energy certificates is also verified via cryptographic technology.
The growth of electronic vehicles has skyrocketed in recent years, creating a significant need for powering electric vehicle charging. Thus, blockchain presents a marketplace for vehicle owners and energy providers to get to an agreement or bid to acquire the energy at a certain price.
These auctions and bids are also made on the transparent chain, which shall reduce any biases, while the power transmission and payment process are automated with smart contracts.
SAP is one of the largest industry leaders who have worked across all industries. The enterprise deployed a blockchain-based protocol with a green energy tracing and distribution system based on the SAP Cloud Platform Blockchain.
This initiation encourages market participants and energy consumers to increase the utilization of renewable energies via blockchain. The new business model aims to bring in more micro-energy traders and make them visible to the market demand to be traded at real-time pricing.
More enterprises like Acciona, WePower, and Greeneum have also integrated blockchain use cases to enhance the utility industry and bring in more advanced and custom solutions.
Though blockchain and utility integrations might experience a few challenges in the transition period, the potential future of Blockchain in the power sector is evident.
