The energy industry is high on the list of sectors that could be disrupted by blockchain technology. This is a result of industry leaders worldwide being nudged into derivatives of the blockchain and smart contract ecosystems. Recently, both LO3 and Power Ledger disrupted the domestic energy markets by allowing for Peer-to-Peer (P2P) buying, selling, and trading of energy on blockchain enabled smart grids. P2P systems disrupt the energy sector by challenging energy providers and encouraging autonomy on a local level. In order to compete, similar providers must integrate their own commercial services with blockchain solutions.
Electron, a London-based technology startup founded in 2015, has deployed the first demo of a decentralized “top down” Ethereum energy platform. According to Joanna Hubbard, COO of Electron, the company chose Ethereum because:
Currently, there is very little direct overlap between Ethereum and the energy market, however, it’s notable that the majority of the blockchain companies are using the Ethereum blockchain rather than others, as noted in the Indogo Advisory Group report, earlier this year: http://www.theenergycollective.com/indigoadvisorygroup/2384353/blockchain-in-the-energy-and-utilities-industry-infographic
Blockchain technology holds out the promise of replacing the shared virtual infrastructure of the energy market with platforms that are more cost effective, transparent, extensible and flexible.
Electron’s top down strategy gives a company the ability to disseminate network resources, transparency oversight, and software protocols over a decentralized network. This tactic benefits the energy providers – an opposite approach to LO3 Energy and Power Ledger’s P2P localized solution. When asked about their methodology, Hubbard, explained to ETHNews:
We want to bring about an industry-wide transformation that will change how energy and information is shared and traded across a grid. Peer to peer energy trading is one of the several areas that stand to benefit from blockchain platforms. However, it’s also one of the more complex use cases and will require changes to the general fabric of energy systems- that will only happen with full industry and regulator buy in. Therefore, our initial approach is to develop systems that work alongside existing infrastructure that will be capable of adapting to the future innovations & requirements of the industry.
Electron’s demo will run tests on dummy representations of simulated UK energy market data (53 million metering points and 60 energy suppliers). Using this model, the firm seeks to demonstrate that their platform can reduce supplier switching time down from 17 days to only minutes. However, in order to facilitate this, regulation plays a major role in adoption.
Regulation will play a key role in the platform. A supportive and on-going dialogue with Ofgem, the UK regulator, will be very important. Ofgem has recently launched an innovation, Link, to support new businesses with innovative propositions that will ultimately benefit consumers. But buy-in and engagement from other stakeholders in the energy industry will also be key in proving that this technology will deliver a more cost-efficient system.
According to Electron, UK energy experts remain optimistic about the future of the blockchain and Ethereum in the energy sector. And regarding any push-back from regulators, Hubbard notes that Electron is experiencing:
No push back. On the contrary, we are seeing some very forward-thinking energy companies beginning to embrace the opportunities offered by blockchain technology. Of course, without buy-in from regulators and other key stakeholders, this technology is not going anywhere, and we have to remember that this is still a relatively new technology. So, the first step is fostering a greater understanding of the blockchain and its benefits to the sector. People also have questions regarding scalability and data protection. The Ethereum community has already and is continuing to develop solutions to these issues. We are also doing a lot of work on this.
Since the UK is looking into viable solutions to their energy crunch. Electron’s platform appears to be practical and cost-effective. A commercialized blockchain approach cuts transition costs by restricting the alteration of current systems, and is less threatening to providers. If approved by regulators, Electron could have a domestic platform deployed within the next two years. With mainstream adoption, this could potentially launch a new trend of commercialized platforms and be the catalyst for worldwide Ethereum adoption.
For more information on Electron, read the full press release below:
Blockchain sparks new opportunity in the energy sector
London based technology company, Electron, has announced the development of a registration platform for electricity and gas meters. This platform is built on a blockchain and capable of supporting the reduction of supplier switching time from 17 days to mere minutes. The company sees this platform as a first step in harnessing blockchain technology to transform the virtual infrastructure of the energy industry.
Blockchain technology enables reliable coordination between multiple parties without the need for a central coordinating entity. The result is a transparent and cost effective platform, secured by cryptography, on which all interactions and exchanges between stakeholders can be verified.
Most news and investment in blockchain to date has been focussed on the financial sector, however Electron believes that some of the most significant multi-party use cases will be seen in the energy sector. “Advances in renewable generation and storage technologies have complicated energy transmission and distribution systems” explains Joanna Hubbard, Electron’s COO. “The one way flow of power from coal plant to consumer is no more and the physical infrastructure of the grid has to adapt to increasingly distributed energy production. Blockchain technology will allow the virtual infrastructure of the grid to follow suit and transition to a decentralised model capable of local optimisation and significant cost and carbon efficiencies.”
Electron’s blockchain platform was originally conceived in response to Ofgem’s call to provide customers with a next day service for switching energy suppliers. Backed by an Innovate UK grant, the platform has been built on the Ethereum blockchain and populated with simulated data from 53 million metering points and 60 energy suppliers, to represent the UK situation. Scale out tests have shown it to be capable of executing switches over 20x faster than could be required by the current switching rate, providing ample scope for growth.
Moreover, Hubbard believes that a blockchain solution will not only unlock functionality well beyond that of a typical database solution, but will also lay the foundations for households to participate in peer to peer energy and flexibility₁ trading. The company is currently in talks with several big energy players to take this platform to the next stage of development. "This technology has the potential to deliver huge advantages and cost savings across the value chain of the industry" Hubbard continues, "but to maximise its potential it should be a collaborative initiative."