How can the Energy Web Token ($EWT) tap into a US$3 trillion market by 2030?
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The European Commission’s thematic report on blockchain applications in the energy sector lays out the use cases for applying the technology in the decentralisation and stability of the energy grid. The report discusses the role of Industry 4.0 technologies, including blockchain technology, as enablers of a new industrial landscape. Blockchain technology can help the public and private sectors align with the five principles of the new energy paradigm — deregulation, decarbonisation, decentralisation, digitisation and democratisation. With this in mind, let’s discuss a project at the forefront of helping the energy sector achieve these goals using blockchain technology.
Energy Web Foundation (EWF)
The EWF is a non-profit founded in 2017, leveraging its blockchain infrastructure to drive the low-carbon and renewable energy transition. The foundation launched its blockchain — the Energy Web Chain (EWC) — and its token in 2019, an enterprise-grade and open-source blockchain tailored to the energy sector’s regulatory, operational, and market needs. It also seeks to facilitate grid decentralisation by leveraging the decentralisation capabilities blockchain technologies offer.
Energy Web Chain and the Energy Web Token
The EWC ecosystem comprises more than 100 utilities, grid operators, renewable energy developers, and corporate energy buyers, with some acting as network validators.
The EWC ecosystem partners include prominent energy and infrastructure firms such as Centrica, Duke Energy, EDF, Engie, Equinor, General Electric, Hitachi, Iberdrola, Shell, Total, and many more.
At the core of the EWC technology stack is the Energy Web Decentralised Operating System (EW-DOS). It’s a series of software development toolkits (SDKs) for building applications relevant to the energy sector. Applications range from energy marketplaces to asset management applications. The EW-DOS comprises the Application, Infrastructure and Trust Layers.
The application layer enables grid operators and energy producers to deploy applications for distributed energy resource (DER) management, electric vehicle infrastructure management, energy origination and certification, and decentralised Finance (DeFi). The DeFi aspect covers pay-as-you-go solutions and crowdfunding for energy projects.
The infrastructure layer comprises the Identity Solutions and the Utility layers. The Identity Solutions layer enables the identity and access management (IAM) interface for the Energy Web ecosystem. The Identity Solutions layer also includes a decentralised identifier (DID). The DID is a digital, verifiable identity that’s user-generated and not coupled to any centralised institution and identifies Distributed Energy Resources (such as solar panels, batteries, electric vehicles, and smart appliances), a person, or an organisation. Users, assets and organisations on the EWC can integrate the Identity Solutions layer into their application’s backend codebase.
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The Utility Layer has many functions, including, but not limited to:
Decentralised Cache API — a production-grade API interface for fast data retrieval from decentralised storage (e.g., IPFS) and decentralised ledgers.
Enterprise Key Connect — a utility enabling enterprise employees to use established identity providers, like Azure AD, to access the key storage provided by key management systems, such as Azure Key Vault, within web3 applications.
Watchtower Ecosystem — an ecosystem of decentralised agents that observes and measures the level and quality of services that Energy Web software-as-a-service providers and managers offer.
Finally, the Trust Layer comprises the Energy Web Token (EWT), Validator Nodes, Block Explorer, and the Energy Web Chain.
EWT is the native utility token of the Energy Web Chain used to pay for services on EW-DOS. Validator Nodes validate on-chain transactions and take turns creating new blocks. The Block Explorer provides on-chain information about blocks, transactions, accounts, and tokens on the Energy Web Chain. Overall, the Energy Web Chain provides the trust mechanism for EW-DOS and the DID registry through smart contracts and its Proof-of-Authority consensus mechanism.
Institutions are paying attention to sustainable and green digital assets
Technology and sustainability are at a crossroads. At least the big financial institutions like BNY Mellon and Morgan Stanley think so. A focus on ESG investing and the financial impact of deviating from the narrative has kept some big investors from foraying into cryptocurrencies and blockchain technology. Big institutions like KPMG, Goldman Sachs, JP Morgan, BlackRock and many others can no longer ignore the digital asset class and are feeling intense FOMO. Ethereum’s move from proof-of-work (PoW) to proof-of-stake (PoS) will allegedly cause a 99% reduction in the network’s energy consumption. This move has financial institutions salivating and can cause a scramble for the asset, as it will now be ESG-friendly. Aside from all the DeFi, NFT, Metaverse and GameFi projects dominating the crypto narrative, there are a few projects that can make a tangible impact on physical infrastructure. The EWC is one project that can incentivise and facilitate renewable power generation, distribution and consumption.
According to a report by the Royal Society of London, which provides scientific advice for policy, education and public engagement and fosters international and global cooperation, there are four key areas to help secure a digital-led low-carbon transition. These areas include building a trusted data infrastructure for net-zero, optimising digital carbon footprint capabilities, establishing a data-enabled net-zero economy, and setting research and innovation challenges to digitalise the net zero transition. The EWC and its Foundation seek to establish this trusted data infrastructure, albeit trustlessly, via blockchain technology and smart contracts.
The journey towards efficient energy consumption includes digital assets
According to the International Energy Agency, early-stage investments in companies developing technologies relevant to energy efficiency increased by 7% to about US$ 1.9 billion, a new high for the last ten years.
This number is small compared to the numbers within the crypto industry, but this market segment is growing and will see further exponential growth in the coming years.
Catalysts for this growth are (but are not limited to):
- The Russia-Ukraine crisis has highlighted a need for energy independence, which will come from nuclear, renewables and energy efficiency technologies — further renewable energy proliferation/growth.
- Homes are getting more intelligent, and homeowners are increasingly using energy management software and infrastructure to monitor their consumption.
- Domestic distributed solar power and energy storage technologies continue growing significantly in developed economies and will require digital infrastructure.
- Africa is ripe for decentralised energy generation, storage, and distribution using smart energy management platforms.
- The growing use of e-mobility technology and infrastructure requires robust recordkeeping and automation, which smart contracts and blockchains offer.
The global journey towards decarbonisation will give rise to a range of financial instruments and products, ranging from tradable carbon certificates to potentially tradable power purchase agreements (PPAs) in the future. The EWC has positioned itself as a platform to facilitate trading these financial instruments and products and potentially onboard them into the DeFi ecosystem of several blockchain economies. For instance, its Energy Web Consortia Relay Chain, in partnership with Parity Technologies in Switzerland, will enable Polkadot parachains-as-a-service via Parity’s Substrate Blockchain Framework.
An Energy Web multichain ecosystem can tap into the value locked in DeFi and other applications from other blockchain ecosystems and also onboard energy and carbon financial products to these ecosystems. The EWC may even become an avenue for making proof of work (PoW) assets like Bitcoin more environmentally friendly, either by bringing the asset into the EWC ecosystem or leveraging its suite of applications to source renewable energy for running Bitcoin nodes.
The renewable energy market could be worth US$1.9 trillion, the global carbon market could be worth US$50 billion, and the global energy efficiency device market could reach US$1.7 trillion by 2030. The EWC and its ecosystem are in a position to tap into such markets.