500 billion reasons blockchain can be a power play in energy
Opportunity for President Trump and his new administration. It will most definitely come in many shapes, sizes and yes, even industries. To that end, while there was enormous focus in 2016 regarding how blockchain, the digital ledger of transactions, is rapidly disrupting the banking industry, opportunities for this technology do also exist within auto, insurance and energy, a focus near and dear to my heart at Blue Phoenix. This is especially true with the Internet of Things (IoT) blossoming and connected devices usage expected to top 500 billion by 2030 alone according to Cisco Systems.
First, what is blockchain? In a nutshell, it’s a series of visible transactions, grouped together into a “block” and chain-linked chronologically on a permissioned network with other verified blocks of transactions. Blockchain is a shared ledger that can’t be changed or removed in any way unless every single transaction was tampered with, a nearly impossible task. This should be of great importance for lawmakers in the age of increased cyberterrorism threats amid ever-growing reliance on Big Data and information infrastructure. Therefore, we must acknowledge there’s a great transformative opportunity to retool the power grid, especially since today’s centralized grid only has a unidirectional flow of power, is dated, is poorly maintained and is very vulnerable to hacking and blackouts.
That said, the digitalization taking place in the energy sector is simply begging for more reliability, efficiency, security and timeliness. This has me excited about ways blockchain technology can be integrated into a more decentralized power grid fueled by renewables and information. So, if there’s truly a commitment to revamp public infrastructure by Team Trump, the elephant in the room needs to be addressed — namely that 500 billion connected devices can’t realistically be expected to operate on a grid that was never meant for the 21st Century. This opens the door for new digital microgrid solutions such as blockchain-backed peer-to-peer energy transactions which can help power all these new gizmos expected to hit the market.
Furthermore, in an ever increasing world of Big Data, artificial intelligence, digital twins, connected homes, autonomous vehicles, virtual reality, demand response and smart cities, blockchain can play a very critical new role — one that makes its digital cryptography platform very attractive to “reliably” promote and power clean, intelligent microgrids in ways never before imagined thanks to a more scalable, flexible and communicative power grid supported by IP-based decentralized peer-to-peer energy.
As you may already know, energy has historically been powered predominantly by fossil fuels. Yet, thanks to innovation, that leadership role is diminishing since the availability of renewable energy sources such as solar and wind are literally growing by leaps and bounds. That means new innovative solutions like using blockchain to stabilize the power grid need to take place, especially since advances in technology have allowed the cost of electricity from renewables to not only drop considerably, but in some instances be cheaper than fossil fuels, something I fully expect to continue.
Additionally, from better data management, predictive markets, cloud storage, and overall supply chain efficiencies, the potential for smart contracts built on a blockchain to be used in the energy sector can help tailor the necessary energy to meet specific power demand needs in ways that ultimately create a more efficient transfer of local energy, reduced unplanned power outages by rerouting power when necessary, and improvements in the performance of both real and virtual power plants (VPPs).
So as President Trump goes to work on issues such as U.S. energy independence, I can’t help but imagine a more progressively digitalized world that beckons for a next generation power grid. This makes blockchain technology, an intriguing digital energy asset that can play a big role in the smart grid of the future by helping to create energy independence and make local energy more efficient right from the power source — something that should further lower reliance on fossil fuels.
At the end of the day, blockchain may be the key to influencing a major fundamental change in an increasingly digital energy market, one being pushed forward by the likes of LO3 Energy, Siemens, GE and IBM. This will help consumers sell excess power back to the power company or through an emerging peer-to-peer market which ushers in an era of “transactive” energy — energy that’s even more sustainable because it’s localized, more transparent and more reliable than any other time in human history.
As the Trump administration strategizes whether or not the U.S. should support a strong dollar policy or not, I’d be remiss not to mention that other ways blockchain can be “utilized” in the energy sector is through authentication of electric vehicle (EV) charging station payment transactions and allowing consumers to use bitcoin, a digital currency in which blockchain is built upon, to pay utility energy bills, something presently being tested in Germany and Japan. Also, in the not too distant future we may very well see heat from computers used to power heating and air-conditioning. These generational opportunities can become a reality thanks to a secure grid, one that’s personal and yes, transactive.
Collectively this all bodes very well for the increased use of blockchain as we look to create a a secure next generation power grid that can reliably keep up with those 500 billion connected devices and whatever else needs a charge through 2030. One thing is for sure — these are indeed fascinating times and they require fascinating solutions to personalize services and safeguard key local energy infrastructure. That alone makes blockchain a software power play in the energy sector that could truly help make America Great Again.