Denise Marsdon of Harborough Energy explains this exciting new development:
Well, I suspect most of us have not actually heard of Blockchain but it’s something that has the potential to change the way energy is transacted. It offers opportunities for consumers and prosumers (households that not only consume but also produce energy) to operate independently of third-party traditional energy providers.
In purely technical terms Blockchain is a technology for peer-to-peer transaction platforms that uses decentralised storage to record all transaction data (got it? no me neither!!)
Put rather more simply Blockchain strengthens the market role for us as individual consumers and producers to the extent that in a Blockchain future we may not be paying energy providers for our kWh but trading amongst ourselves. Our homes will, in theory, automatically generate, store and trade electricity between themselves based on which neighbours need extra electricity and which have excess stored in their batteries. Yes, storage is key in energy becoming a real application for Blockchain. And what about all those smart devices we are acquiring in our homes and businesses? With devices communicating with each other a communication medium will be needed that can transmit and store all the related information and transactions – enter Blockchains.
Blockchain has the potential to radically change energy as we know it, ultimately transforming the entire energy market.
If some of this is not sounding quite so unfamiliar and is less science fiction than you first thought, then you probably have Bitcoin to thank. Bitcoin was the first blockchain application and is the most widely used cryptocurrency. Since 2009 Bitcoin transfers between the digital currency users have been possible without a third-party intermediary.
Because there is no third-party intermediary the technology has the potential to cut costs and speed up transaction processes. The energy sector is rather different from the financial sector where Bitcoin resides. This is because the physical product – i.e. electricity – also needs to be considered in the model. But the technology certainly appears capable of facilitating a decentralised energy supply system.
In the future, we may see micro-grids operated by community co-operatives such as Harborough Energy, with residents as shareholders. The future of energy – sign me up! Well it’s too early in the Blockchain game-plan for that. The technology is in its infancy but if you want to find out about pilot projects from around the world check out this PwC report on blockchain.