This entire site is dedicated to discussing the role of blockchain in the energy sector. But why is that even a thing? What’s the value? From my research, I’ve found 3 main areas where companies are using blockchain to create value and solve problems in the energy sector.
Currently, all deregulated utility markets buy and sell power from a relatively small set of large power plants on the transmission system. This system worked great before the proliferation of large amounts of distributed energy resources (DERs). However, with large amounts of DERs (specifically rooftop solar), there is a push to allow market access to resources on the distribution system. The current wholesale market topology works with only a few large power plants, and markets use a central authority to oversee and process transactions. Blockchain may enable the processing of large amounts of transactions on distribution networks without a central authority.
Peer-to-peer energy transactions are very closely related to wholesale distribution markets in that they both have to do with changing the way distributed energy resources buy and sell power. One could make the case that peer-to-peer energy transactions could either replace wholesale markets or provide the underlying topology to create a new type of retail market.
Power Purchase Agreements (Smart Contracts)
For utilities and consumers that don’t produce their own power, they can either purchase power through a wholesale market (see above) or through a bilateral contract called a power purchase agreement (PPA). PPAs are becoming more and more common with the growing demand for renewable energy. Companies and local governments are interested in purchasing clean energy directly from the source in order to incentivize power that isn’t competitive in the market and to meet emission reduction goals or targets.
Power purchase agreements are essentially just a contract that represents the financial sale and purchase of energy. Because of the physical properties of electricity, PPAs do not represent the direct physical transfer of energy from seller to buyer. Therefore, some companies are working to use blockchain to simplify and streamline these contracts. WePower (WPR) is one example of a company using blockchain to create a renewable energy PPA platform.
It seems to me that there is a lot of overlap in the proposed use-cases for blockchain in the energy sector. Most companies are working to leverage blockchain to improve the way power is bought and sold. That might mean creating new marketplaces, allowing more dynamic pricing of energy, or streamlining power contracts.
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