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Nearly two years ago, we published an article on blockchain, and its potential impact on clean energy projects in years to come.
A lot has happened since March 2018, where only a small number of experimental projects had been attempted. Make no mistake, there is still a long way to go before the technology is implemented and starts to have a tangible impact on our lives as everyday consumers. However it is increasingly clear that the big players have woken up and are starting to make forays into the world of blockchain.
International recognition has grown substantially over the past 18 months, with many countries now establishing official governmental roles, or entering into partnerships with other countries, with the purposes of specifically focusing on blockchain.
Indeed, countries, possibly after seeing the impact of the Fintech revolution mostly being led in the US and UK, have been jostling to get in position early for the blockchain revolution, with smaller countries, such as Malta, rebranding themselves as a centre for blockchain.
In April 2018 the European Blockchain Partnership was created, which joins all EU Member States and certain EEA states in the aim of building a European Blockchain Services Infrastructure by 2020. As of 25 June 2019, the EU estimated that around €200m had been invested by it into blockchain related projects.
Within this increasing global recognition, new investments and collaborations are playing out as the wider industry starts to test how it may best incorporate blockchain into its current systems.
Notably, within the UK, National Grid ESO announced on 17 June 2019 that it had partnered with the DNOs UKPN and SPEN alongside the technology firm Electron. The purpose of this partnership, called RecorDER, is to create a register of distributed generation and storage assets, which sit on the DNOs' networks.
Blockchain will be key to achieving these aims, as it enables the information to be shared and updated without the need for a large centralised hosting system. In doing so, asset level information will be more readily available with a greater level of co-ordination between parties and data. The fact that National Grid is looking at how best to implement blockchain into its network is promising, as this will be key over the coming years as we aim to achieve carbon neutrality by 2050.
Meanwhile, over in Graz in Austria, blockchain energy trading start-up Power Ledger has entered into a partnership with a subsidiary of Austrian utility company Energie Steiermark, pursuant to which resident with solar panels installed can trade excess energy with their neighbours.
Down in Cornwall, Centrica's Local Energy Market remains in full swing, with solar PV, battery storage, CHP and efficiency monitoring systems all being combined alongside blockchain managed peer-to-peer trading. The idea is to make the whole system as effortless for consumers as possible, who rely on the technology and ultimately just see the reduction in their bills at the end. It was previously thought that, to manage the high-uptake of renewable energy in Cornwall, significant investment would be needed in the grid and associated infrastructure. However, by utilising aggregation and blockchain technology, the peaks and troughs which put strain on the grid can be smoothed out, with excess being reallocated to areas of higher demand, and a clear and reliability record of energy transfer and asset performance.
Back in May, TLT released a very insightful piece called "Banks and Fintechs – a match made in heaven?" describing how established financial institutions were investing in or acquiring disruptor Fintech companies as a way to "get-ahead". With such a rapidly evolving industry, it is not possible for established financial institutions to constantly be launching the "next big thing". Instead, it is often prudent to wait until a start-up company has done that, and then simply buy it.
I mention this because I see a lot of similarities between Fintechs and banks, and blockchain energy companies (and indeed other types of disruptor energy-tech companies) and established energy companies.
Whilst certainly not as developed as the Fintech sector, the past couple of years have certainly seen emerging, challenging technology energy companies being snapped up by the larger energy giants.
An example of this is Shell, who has been particularly active in re-branding their image to appeal to the eco-conscious consumer. No doubt Shell sees this as a way of capturing a future client base as the switch to electric vehicles accelerates and car re-charging becomes available in a wider variety of places than currently offered by petrol stations (at home, at the office etc). With this in mind they have gone on a bit of a spending spree, cumulating in their recent investment into blockchain based community energy network provider LO3 Energy, joining Centrica who invested back in 2017. LO3 Energy is being utilised in Centrica's Local Energy Market being run in Cornwall, described above.
Interestingly, established giants are even collaborating with each other alongside up-and-coming technology companies in an attempt to develop a wider energy network that utilises blockchain technology.
The Energy Web Foundation is a global non-profit, supported by over 100 affiliates, which include giants such as Total, Shell and Centrica, to smaller blockchain developers such as Brainbot. Together, the aim is to create an open-source, scalable blockchain platform, which meets the regulatory and operational needs of the energy sector. Whilst still in its early days, it is promising to see a willingness to share ideas across a wide cross-section of the industry.
There is no doubt that the energy world is changing in ways, and with a speed, never seen before. This is certainly not a bad thing – the decarbonisation targets set by the government, the increasing popularity of electric cars, and falling prices of clean energy sources, all mean that what worked previously, will not work in the future, and de-centralised, automated, intelligent systems, such as blockchain, are going to be vital to managing the future of our energy network.
20 February 2020
by Nick Rains