Benefits of blockchain technology for the energy business
Smart solutions for the Power & Utilities market
One of the most exciting new technology innovations is the blockchain. Businesses across the globe have begun to educate themselves and are now exploring how blockchain technology could be used to bring new services to the market and to enhance existing business and operational capabilities. This includes the Power & Utilities market.
What is blockchain technology?
At its heart, a blockchain is a digital, distributed transaction ledger, with identical copies maintained on the network’s members’ computers. All members can record new entries and review previous ones. Transactions are grouped in blocks that are then recorded one after the other in a chain of blocks – the ‘blockchain’. The link between blocks and their content are protected by cryptography and cannot be forged. Once entered into a blockchain, information cannot be erased. Thus, a blockchain contains an accurate, time-stamped and verifiable record of every transaction ever made and the network does not need a central authority.
Benefits for power & utilities
The blockchain is a particularly interesting technology for decentralized processes that require large networks and trust relationships between all parties. Therefore, it offers great benefits to the power & utilities market, with its large networks of power and utilities companies, (maintenance) subtractors, (local) suppliers and end users.
One of the areas in which blockchain could disrupt the industry, is smart grids. For instance, in the last few years, more and more people have switched to electric cars. Yet supply and demand for charging facilities have not kept pace. If all inhabitants of a block of streets came home at 6 PM and were to immediately plug in their cars, the current electricity networks would go down. This can be mitigated by making the grid smart, allowing everyone to take turns ‘plugging in’. One user would say: ‘I want cheap energy, so I’ll wait’, another could say: ‘I don’t care about the price, I need my car charged as soon as possible’, and a third person could provide access to energy from the solar panels on his roof.
In order to use smart grids, a marketplace for supply and demand of power is required on the local level. Rather than create a centralized marketplace, smart contracts on the blockchain can be used to balance demand and supply and enable peer-to-peer trade. Each user can register his preferences without a middleman in the decentralized ledger (the blockchain).
However, there are still a few hurdles to be taken. First of all, devices need to be able to communicate with each other through the internet. Second, user-friendliness is a big issue. It will take a lot of small scale experiments to come up with intuitive user interfaces for clients to establish their preferences in the smart contracts. Finally, the blockchains in most active use today, Bitcoin and Ethereum, are not yet capable of scaling up to the large amounts of transactions it would take to roll out smart grids for large numbers of users. It will be a while before this type of application is common.
Still, there are other applications that are ready for use in the near future. Smart meters for instance have already entered many homes. Up until now, sharing data through smart meters was a threat to the privacy of the owner of the meter. Again, the blockchain offers a potential solution. It can provide the accurate data to the supplier without requiring a direct link to the meter of specific users. When needed, the owner of the smart meter can prove to the supplier that the data are his, using his private key, and the cryptographic security of the blockchain proves that the information is accurate and hasn’t been tampered with. This puts the owner in control of his own data.
Ownership of gas stations, pipes and other utilities can alter over the years. New owners should be aware of the maintenance records, but maintenance is often sourced out to smaller contractors and registration can be an issue. The blockchain could be used as a permanent record of maintenance by all contractors, offering a clear overview of the current state of affairs of a specific object or piece of infrastructure, as well as recording the ownership of the object at any given time. In the case of any breakdowns this information is available in real time to the relevant authorities, as it is being recorded on the shared blockchain.
Deloitte and blockchain technology
In theory, blockchain holds potential for any process where the recording of information or transactions needs streamlining and where data is shared between a large number of parties. At Deloitte we believe that blockchain is disrupting many industries for the better when it comes to transparency, efficiency and digitizing trust. This is why we’re developing proof of concepts for many of our clients and why we invest so much in blockchain technology ourselves.
Within Europe we have set up a blockchain lab in Dublin, and we are developing a blockchain master course in association with the Milan Politecnico. In the Netherlands, our center of excellence in Amsterdam builds solutions for our clients using many new technologies, including the blockchain.
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