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.

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 percent 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.