Blockchain in Energy: Evolution or Revolution?
Transformative disruption within the energy system from energy blockchain is only achievable if there are new regulatory frameworks and a willingness for consumers to engage, finds a new paper presented at World Energy Week in Milan today.
Through a series of 39 interviews with key global leaders across the energy sector, regulators and think tanks actively engaged in the blockchain space, the 2018 World Energy Blockchain Insights Brief, developed in partnership with PwC, posed two key questions: How far along is blockchain technology and is regulation an impediment to its progress?
Interviewees agreed that while blockchain has spurred great efforts in the innovation space from a wide number of organisations in the energy sector, much has yet to be done to ascertain the effectiveness of the technology and its full economic and technological potential.
The brief shows there appears to be a broad consensus that however successful blockchain applications will be in the future, Innovative technology such as blockchain is accelerating the transition from energy as a commodity to a service and is fuelling a re-evaluation of the energy value chain.
Angela Wilkinson, Senior Director, Scenarios and Business Insights, commented: “Energy blockchain is hailed by many as a game changer that will entirely transform the energy value chain, support new business models and stimulate a shift from consumers to prosumers. The open question we find is: can it revolutionise the way residential consumers receive and consume energy without a restructuring of today’s regulatory framework and without large scale consumer engagement?”
From the interviews conducted, two challenges appear prominent in inhibiting full adoption of blockchain within the energy sector: regulation and customer engagement. The majority of interviewees agreed that market participants need to design a new energy blockchain- enabled market before regulators could intervene.
Additional key findings and recommendations include:
- A fully scaled P2P market is dependent on residential customers becoming prosumers
- 85% of the interviewees agreed that blockchain has not yet attained commercial impact
- Blockchain technology is not an essential requisite for decentralisation and democratisation of energy
- Regulators must clearly state their philosophy and long-term vision
- Regulators need to define policies that do not constrain new business models enabling transactive energy systems
- Regulators need to define how DSOs and TSOs will collaborate in the future
Jeroen van Hoof, PwC Global Power & Utilities Leader points: ” The further role of regulation with regards to blockchain applications in energy sector remains unclear. Certain degree of regulation, particularly in P2P, is warranted and should provide balance between innovation and customer protection. The big question remains open – at what point regulation should be updated to allow the full potential of blockchain technology to transform the electricity grid. Regulators, for their part, are by-and-large of a mind that regulation should wait until blockchain technology reaches maturity.”
In the near term without addressing the two obstacles of customer engagement and regulatory reform, a full transformation may not be feasible.
Further discussions on blockchain as an enabler for a successful energy transition will take place at an exclusive Innovation Forum hosted by Shell on 27 November, London. The Forum will enable leaders interviewed for the ‘Blockchain Innovations Insights brief: Anthology of Interviews’ to connect directly and explore the viability and challenges of Blockchain with each other.
You can download a copy of the report here: https://www.worldenergy.org/publication/blockchain-insights-brief/
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World Energy Council The World Energy Council is the principal impartial network of energy leaders and practitioners promoting an affordable, stable and environmentally sensitive energy system for the greatest benefit of all. Formed in 1923, the Council is the UN-accredited global energy body, representing the entire energy spectrum, with over 3,000 member organisations in over 90 countries, drawn from governments, private and state corporations, academia, NGOs and energy stakeholders. We inform global, regional and national energy strategies by hosting high-level events including the World Energy Congress and publishing authoritative studies, and work through our extensive member network to facilitate the world’s energy policy dialogue.
World Energy Insights Blockchain Brief
The insights brief has been produced by the Council in partnership with PwC and additional support provided by the Council’s Future Energy Leaders’ group. It follows on from a previous joint publication by the Council and PwC, ‘The Developing Role of Blockchain’ . The insights conveyed hereafter are underpinned by the valuable learnings from a series of 39 interviews conducted with key leaders across the energy sector hailing from around the globe. The interviewees include well-stablished energy incumbent players in the electricity and oil & gas industries, as well as technology providers, start-ups, regulators and think-tanks, all actively engaged within the blockchain space. The broad participation from different areas of the energy market was purposely pursued to ensure this publication could provide a reliable and relevant snapshot in time of the current state of progress of various blockchain activities within the sector.