BLOCK CHAIN TECHNOLOGY – USE & APPLICATIONS IN THE ENERGY MARKET

In simple words, a specific number of consecutive transactions are collected together to form each block. This forms a distributed, digital transaction technology known as block chain technology. These blocks are interlocked with each other in a chain by using their hash values. It enables the secure execution of smart contracts over peer-to-peer networks independently from a central authority such as an energy utilities or company. This is not possible by an individual participant not even by a collective effort.So, how does the block chain work? Let’s recall a few key features before we get into its applications:

• Block chain keeps a record of all data exchanges: This record is referred to as a “ledger” in the cryptocurrency world. Each data exchange is a “transaction”.
• It utilizes a distributed system to verify each transaction — a peer-to-peer network of nodes.
• Once signed and verified, the new transaction is added to the block chain and cannot be altered.

Block chain - For Trading Renewable Energy

Block chain technology works as a tool for managing continuous growth of complex electric power systems, even as more renewable energy flows into the grid. To provide a solution for it, diverse entities have been recently launched ventures to harness block chain in different ways, including both for-profit and nonprofit undertakings. Almost half of them use a public block chain and the other half use private or consortium block chains.Let us check the whole process of block chain in power transactions.

• When prosumers have powers beyond their needs, they generate power and feed into grids with the help of block chain technologies.
• Electricity flow into the block chain.
• Matching Algorithms for buyers and sellers in real time based on preferences.
• Once electricity is delivered or power exchange is done, payments are made in real time.
• Other nodes in the network verify the transaction.

Block chain – Use & Applications In According To Its Capabilities Levels

Foundational Technology:

As a foundational technology, block chain disrupts the existing utilities industry ecosystem. Its core capability is transactional security and reliability, in the form of immutable record. Thus, block chain technology network can help readily adopted for relevant utility processes.Block chain applications relevant for utilities include:

• Bill pay
• Authentication of the certification of solar power
• Smart Metering
• Block Charge-EV Charging & Billing Solution
• Microsystems

Sustaining Business:

Block chain (including permissioned, private ledgers) serves as a solution for utilities that overcomes the investment and systems integration challenges that comes while implementing the technology as a business-critical service. At this level, the traditional utility technologies must coexist with block chain and drive customer/internal business units to sustain the investments made in the technology.

• Micro grids
• Independent power producer (IPP) settlements
• Grid settlements and wholesale market trading

Robust and Scalable

Block chain add business value to the structure and market models of emerging utility markets such as local energy markets, virtual power plants (VPP) and energy communities. Here, a traditional utility or supplier plays the role of business facilitator.

• Local energy market/P2P energy networks
• Decentralized exchange
• Retail trading and settlement

Block chain Technology in the Energy Market

Almost every startup is trying to incorporate block chain technology into the energy market across different sectors of the industry. Although the approaches are different, the overall goal is to same, creating a functioning global energy sharing ecosystem that balances its demand and supply across the globe. After implementing, you can consider electricity to be an asset that you can trade, depending on the preference of the consumer. The following are some of the ways in which block chain technology can disrupt the energy market:

Variable Electricity Rates

Presently, the centralized authorities fixes electricity rates. Block chain technology decentralizes the market. Thus the centralized bodies would no longer fix the rates, the market do it. Electricity tariffs will be treated as tradable commodities that respond to demand and supply signals in a fully functioning electricity market. Hence consumers will have a number of choices for selecting electricity service providers. Consumers will be able to scan through block chain listings to find the best deals for themselves.

Energy Payments

Cryptocurrencies are the native currencies of the block chain environment. They helps in making energy payments once block chains are incorporated into the energy ecosystem. By “tokenizing” the grid, cryptocurrencies facilitate different types of energy market transactions. There are quite a number of sub-applications to this model. One is the tokenization of electricity by energy producers. Energy producers would be able to sell electricity in the form of  cryptocurrencies after tokenizing.

Peer-to-Peer Energy Trading Platforms

With the electricity market decentralized and electrical energy. Thus it becomes an asset on a block chain, consumers can begin to trade electricity within a peer-to-peer market. Thus results in the establishment of a greater economic potential. This is for both energy companies and consumers. By making electricity a trad-able asset on a block chain, there would be a lot of benefits for consumers on the block chain commerce such as low transaction costs and network transparency among others.

Solar renewable energy certificates:

Block chain helps in authenticating and trading renewable energy credit certificates.

Electric vehicle charging:

BlockCharge is a company that works on block chain-based charging, authentication and billing for electric vehicles. Similarly, Innogy enables digital payments for charging electric vehicles over Ethereum block chains.

Customer switching:

UK-based Electron has built a block chain-based platform to facilitate faster switching of suppliers.

Conclusion

According to a research, there are hundreds of use-cases of block chain technology in the energy market. Obviously there will be a lot of potential benefits on tokenizing the energy market. But still one have to follow a number of steps to complete a successful large-scale implementation of a block chain energy ecosystem. There should be a solution of issues such as scalability of a large block chain network before you can apply block chain successfully to the energy market.But in the near future, electricity grids will be a two directional systems with number of consumers and prosumers interacting with each other. Micro grids will be soon coming into the market more which will interconnect with the help of new energy software.