While the push for renewable energy is gaining traction, consumers are still tied to large power grids and the even larger cartels who control them. But things might be changing.
In 2016, the first ever blockchain managed energy transaction occurred in Brooklyn, NY. Still in its preliminary stages, the project only has a small number of participants. This microgrid allows users to trade energy through a virtual, peer-to-peer system built on blockchain technology. In the land of craft beer and $19 avocado toast, this groundbreaking advancement may be paving the way for a new approach to electricity distribution.
A similar push is happening in Australia. The Decentralized Energy Exchange – or deX – was launched in February. Like in Brooklyn, the project utilizes residents’ solar panels to generate electricity. The electricity is then bought and sold between other participants of the grid using smart contracts, reflecting a shift from large-scale power plants to small-scale residential solar rooftops. This is the same way ICOs took investment out of the hands of the “accredited” 1% and into the hands of the everyday layman (at least before the SEC rolled in).
The implications of this technology are far reaching. These innovations provide energy independence, reduced costs, and a more stable grid which may have prevented the state-wide blackout in South Australia in 2016. Additionally, it drives greater investment into renewable energy and gives way to a new wave of energy startups, weakening the stranglehold that current energy providers have on markets.
How is it being used in the energy sector?
In the previously mentioned Brooklyn Microgrid platform, LO3 Energy and Siemens created the TransActive Grid, combining a meter and a computer. Their grid measures both production and consumption of active participants and shares the information on a decentralized app platform. Using the blockchain, transactions are recorded and distributed, otherwise reducing or completely removing the middleman. The transactions are then stored visibly on blocks which are time stamped, linked, and ordered chronologically. The combination of these technologies provides an automated, visual and secure system for both consumers and producers alike, while removing the middleman altogether. This adds a more democratic element to what is otherwise a system which would likely cost more and largely favors energy producers.
The growing relationship between blockchain tech, the Internet of Things, and renewable energy is giving way to a new energy market. Not to mention, a new way to pay into this emerging market.
Big Energy’s existential crisis
As Big Oil scrambles to go green and large-scale power grids struggle to justify high costs and inefficiency, it is no wonder why this new technology poses a threat to traditional systems. The race for major providers to adapt has only just begun, but the consequences for not being able to keep up are going to be dire.
Power is literally moving back into the hands of the people, but that does not mean the people are on their own just yet. Energy startups must be careful in challenging the giants. While everyone loves a good David vs. Goliath story, “startups have to be very smart about where they play and how they position themselves in the market. The advantage they have is speed and agility,” according to Emlyn Keane, co-founder and CEO of Australia’s Evergen. Going head to head with the majors will require more than just a good idea.
The energy revolution has started, there’s no doubt about that. How it will play out, though, depends on how smaller grids, customers, and technology work together. Future grids could provide locally sourced, green energy to neighborhoods, paid entirely in cryptocurrencies and governed democratically, escaping the vice-grip of the giants. Alternatively, Big Energy could “artisanal-ize” their product, as many industries have done in the past, joining the trend while still maintaining their influence on the marketplace. Regardless of how this dance plays out, the future is here.
Featured image from Wikimedia commons