How Blockchain will Transform the Energy Sector?

Are you aware of the fact that 80% of the utilized global energy comes from fossil fuels? These include coal, oil, natural gas and nuclear energy. Now you may ask why? The main reason is the intricate and legacy power generation and supply system, loaded with legislation and dominated by large players.

However, there are several young companies that are trying to bring about a change in the centralized energy sector structure. Fast forward to the 2010s, a decentralized approach, like blockchain technology will prove to be a game-changer.

Understanding How Blockchain Can be Used in the Energy Sector

Most experts predict that blockchain will be the technology that will deliver the smart energy grid, more than bitcoins. When the first cryptocurrencies came up, people were able to transfer money to others without a bank. So, the question lies why can’t this process be applicable to the kilowatt hours?

Comprehending the Premise of Using Blockchain

A smart grid is developing where small buyers and sellers of electricity can make an entry into the market that has been long dominated by central power plants and large utilities. But how will the disparate group of buyers, sellers, and generators be able to move ahead in the new transmission path? This is where blockchain technology comes into the picture.

A Closer Look at the Blockchain Technology in the Energy Sector

  • The blockchain is a decentralized accounting ledger. It will basically have the potential to manage, track, and verify thousands of transactions related to energy per second.
  • Blockchain will also be used to handle charging stations for electric vehicles. The customers will also get proof of authority wanting to use renewable energy.
  • You will be surprised to know that over $1 billion of venture capital has been tapped by startups to build the market and boost capacity. They intend to put the individual and the environment at the forefront. And they wish to address sector coupling and coordinating distributed energy resources.
  • Many are of the opinion that blockchain can provide cutting-edge trading systems. Here, the prosumers and consumers could exchange their excess energy or flexible demand on a peer-to-peer basis.
  • The proof of authority differs from the standard energy-intensive blockchain for cracking complex algorithms. The plus point is that the open-source version uses less energy to track ownership and record provenance.
  • Are you aware of the fact that immutable and transparent smart contracts can be used to safeguard and record active customer engagement? Blockchain can be used to reduce transmission losses and postpone costly network improvements.

What are the Major Benefits of Applying Blockchain to Energy Sectors?

The various benefits of blockchain in the energy sector are highlighted below.

Decentralization of Trading Platforms and Microgrids

  • By doing away with middlemen, blockchain technology makes it possible to trade energy accurately and transparently at reduced rates. The use of distributed trading platforms for microgrid energy use enables safe supply and effective energy management.
  • The more compact grid systems are connected to various locally available energy sources. They serve as the main distribution network that is self-sufficient.
  • The use of blockchain technology gives grid members a greater understanding and level of control over the resources they manage. This refers to enhanced visibility and flexibility as far as the transactions are concerned.
  • Blockchain technology will also result in the simplification of the market process. With the technology in place, it is possible to enforce clean energy, keep a tab on the energy exported, and reduce carbon footprint.

P2P Trading

  • Peer-to-peer (P2P) trade is one of the most recognized blockchain applications in the energy sector. In order to establish a P2P network where users can exchange energy with one another, conventional power networks have to be disrupted.
  • Through the use of smart contracts, a scalable business model built on the blockchain enables safe and open energy trading between customers. When particular criteria are satisfied, these self-executing contracts encoded into the distributed ledger may cause the transactions.
  • P2P trading enables easy tracking of power exchange via the microgrid. This leads to the proper balance of demand and supply.
  • Another significant application of blockchain in the energy sector is energy finance. P2P lending platforms can be used by startups with a primary emphasis on blockchain-based energy projects to raise money. Companies may interact with a variety of investors globally thanks to blockchain networks.

Charging of Electric Vehicles

  • The automobile industry is gearing towards a zero-emission policy, ensuring silent and clean commutation. The charging infrastructure is gaining prevalence to meet the increasing EV market requirements.
  • With blockchain, a peer-to-peer network creation becomes easier where EV drivers can exchange the use of their charging stations. Blockchain microgrids can help both residential and business power suppliers.
  • With the help of this decentralized concept, individual EV owners may rent out their charging stations and get paid for the privilege. A seamless user experience would be made possible through the introduction of smart contracts and smart meters.

Democratization of the Market as a Result of Blockchain Implementation

From the end customer perspective, people are usually oblivious to the entire process. The usual case is that one decides on themselves the specific energy company. However, where this energy is sourced remains an unanswered question. However, things are taking a turn for the better. People are starting to question where the energy is coming from.

Democratization of the energy market is a level playing field where the individual will have sufficient information, and not harbor asymmetric information. They will also have access to easy-to-use tools to participate in the market and choose their source of energy.

In the case of a P2P trading model designed by the Lition Energy platform, it works like a marketplace or auction. In this regard, sellers put in the supply options or the sell orders. On the other hand, the buyers or the consumers accept the sell orders, with buy orders, and then the market does a matching.

This creates an efficient system where the consumer can opt for the power they want to have. In this way, more power is given to people. They become the prosumer and they also choose what they intend to do with the energy.

How Does the Blockchain Impact the Electricity Distribution?

Connecting end customers with the grid is a key priority for businesses trying to use blockchain technology in wholesale power distribution. Instead of buying energy from merchants, people can trade and buy it straight from the grid thanks to blockchain technology and IoT gadgets.

A blockchain energy firm, Grid+, specializes in distributing energy at wholesale prices. The company has determined that the primary cause of inefficiencies in the consumer power market is retailers. Very little of the grid infrastructure is owned by retailers. As an alternative, they exclusively handle the services that blockchain technology can take over, such as invoicing and metering.

How Blockchain Will Influence Electricity Data Management?

Consumers may benefit from increased efficiency and power over their energy sources thanks to blockchain. An immutable ledger also offers safe and immediate updates of energy use data. Market pricing, marginal costs, adherence to energy laws, and fuel prices are only a few examples of the various sorts of energy statistics.

Data is frequently withheld and/or reported incorrectly, either on purpose or accidentally. Both corporations and governments may suffer financial losses as a result of deliberate corruption and unintentional clerical mistakes.

Now, suppose transaction and pricing data, accessible to the general public, is made transparent. The likelihood of financial or data exploitation is significantly diminished by public blockchains’ openness.

How Will Blockchain Impact the Oil and Gas Industry?

The use of blockchain technology in the oil and gas industry can reduce the expenses involved in maintaining numerous trading platforms. The expenses of data visibility, labor, data administration, settlement delays, and inter-system communication can also be decreased using blockchain.

An enterprise blockchain project with ENI, BP, and Wein Energie was just finished by BTL Group. The pilot showed that the overall expenses might be cut by thirty to forty percent by using blockchain technology to conduct and track gas transfers.

In addition to gas, the platform will also be tested with other resources by the firm. By reprogramming the initial smart contract, Enterprise Ethereum enables quick integration of additional commodities without having to build out an infrastructure for each one.

How Will Blockchain Affect the Utility Providers?

Electric power producers are vast, intricate businesses that produce electricity from solar farms, power plants, and other sources. In comparison to financial services or the banking sector, utility suppliers do not compete with one another. These businesses are more eager to exchange data and information, which creates a special potential for the shared ledger of the blockchain.

Greentech Media, a top clean energy market analysis firm, had an interesting report. They found out that utility companies can profit from distributed ledger technology in three different ways.

Before securing the data onto the blockchain, Enterprise Ethereum can analyze and validate data from several devices at the grid edge. Second, energy suppliers can use blockchain technology to develop a system for data transactions that are essential to distribution. Lastly, a system for transferring energy among a variety of parties may be created using distributed ledger technology.

Notable Startup Companies Using Blockchain Technology in the Energy Sector

  • In Norway, the utility Vattenfall is conducting experiments with a private blockchain to record energy transactions. Here residential or commercial customers can sell the power from batteries or solar power.
  • In the US, the Brooklyn Microgrid Project in 2019 became the first successful P2P blockchain system, operating through smart meters. Around 500 people in Brooklyn are buying and selling power generated locally through a mobile app. The application sets a predetermined bid price for purchasing power for those who want it with those who sell it.
  • In the UK, VAKT has initiated an enterprise-grade blockchain platform to record and maintain physical energy transactions. It eliminates the paper-based process and ensures proper final settlement.
  • The energy-focused cryptocurrency business Power Ledger conducted testing in the Bangkok neighborhood and the Australian seaside city of Fremantle. They checked blockchain-based, peer-to-peer renewable energy trading network
  • Share&Charge is the first worldwide P2P marketplace for EV charging enabled by blockchain. It was built by Innovation Hub using Ethereum technology and introduced in Germany and the US.


As you can realize, blockchain technology is still at its grassroots level. And with further development, it will have more applications in the energy sector. Meanwhile, what the startups have to address is the sluggishness of the blockchain. If this is fixed, then it will help prosumers achieve true freedom in choosing the energy resource at their convenience. And they can decide the consumption limit accordingly.

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