Energy Blockchain: Tunneling Through—and Breaking—the Hype Cycle
By Peter Bronski
Since 1995, research and advisory firm Gartner’s annually updated Hype Cycle for Emerging Technologieshas been a staple of market commentary about the adoption of various digital technologies. Cryptocurrencies first made the chart in 2014. By 2016, blockchain technology was separately added. And by 2018, Gartner broke out analysis specifically focused on various blockchain technologies and its application across various industries.
Yet in the energy sector, there’s good evidence to suggest that blockchain is tunneling through the phases of the Hype Cycle to reach the long-term end game sooner-and is possibly even breaking the Hype Cycle altogether.
About the Hype Cycle
Gartner’s famous Hype Cycle for mapping and tracking the adoption of new technologies includes five phases:
-Innovation Trigger: a potential technology breakthrough and early proof-of-concept stories generates interest and significant media attention
-Peak of Inflated Expectations: early publicity highlights success stories among early adopters; the sky is the limit for possibilities of the technology
-Trough of Disillusionment: interest wanes as some demonstrations fail to deliver; some technology developers fail; investment slows
-Slope of Enlightenment: enterprise benefits of the technology become clearer and more widely understood; successful developers unveil next-generation versions of the tech; conservative companies remain cautious
-Plateau of Productivity: mainstream adoption begins to really take off; criteria for vetting trusted providers becomes clear; the technology’s broad market applicability is crystalized and paying dividends
Tunneling through the Hype Cycle’s phases
Others have well-mapped cryptocurrency’s specific journey through the Hype Cycle phases. By August 2018, many argued that blockchain technology more broadly had just nudged over the peak and was entering the beginnings of the trough of disillusionment. For “blockchain in utilities” in particular, as of summer 2018 Gartner mapped the technology even earlier, in the later portion of the innovation trigger phase and not yet even into the peak of inflated expectations.
In reality, blockchain in the energy sector may be even further along than any of these.
Whether energy blockchain is a) approaching the peak or b) is over the peak and entering the trough, in theory rough waters lay ahead: waning industry interest and conservative companies still reluctant to adopt.
But observation of actual industry action suggests a very different state of affairs.
For one, energy-sector interest-especially among major utilities and grid operators-is accelerating rather than slowing. The number of EWF Affiliates, for example, has grown rapidly from 37 in February 2018 to more than 100 just over one year later. The ranks of the most-recent cohort of Affiliates includes German utility EnBW, French multinational Total, and State Grid EV Service Co., a subsidiary of the State Grid Corporation of China, the world’s largest utility.
For another, stereotypically conservative energy-sector incumbents are coming to the table and expanding blockchain initiatives, rather than stall at proof-of-concept stages. Consider just two notable, recent examples of many from throughout the EWF Affiliate ecosystem:
Breaking the Hype Cycle
In September 2018, Spanish utility Acciona announced it had used blockchain to certify that the electricity delivered from two large-scale storage projects (associated with a pair of utility-scale wind and solar farms) was 100% renewable. Following on that, Acciona teamed up with Spanish startup FlexiDAO on a larger commercial demonstration, using blockchain to show how renewable generation from five wind and hydro plants in Spain supplied four corporate clients in Portugal. Then in December, Acciona announced it was expanding the Greenchain initiative to all its renewable generation globally.
In November 2018, Singapore’s SP Group launched a blockchain-powered marketplace for renewable energy certificates (RECs). SP Group saw blockchain as a way to get an advantage over competitors in the space, noted Ledger Insights. This was “more than just a gimmick,” noted CNBC. Blockchain is being leveraged for offering real value in a region of the world where the REC market is in high demand and picking up significant steam.
These and other examples like them amount to far more than mere “corporate dabbling.” We’re seeing persistent patterns of initial investments in experiments and demonstrations, followed by expansions and even full commercial rollouts. These are qualities usually reserved for the final stages of the Hype Cycle, rather than emerging technology struggling to gain its foothold of market acceptance and adoption.
Granted, these examples focus on the early adopters in the energy sector, and don’t yet represent wide-scale industry adoption of fully commercial blockchain-based solutions. In a sense, they represent the more progressive and innovative subset of a notoriously conservative class of companies. They are the first movers of the slow movers. But the fact that energy-sector incumbents like utilities and grid operators are seriously evaluating-and in a growing but still small number of cases-fully adopting the technology should be seen as a bellwether.
From hype to reality
Moreover, examples like Acciona’s and SP Group’s assume that blockchain even follows Gartner’s Hype Cycle in the first place, yet there’s also evidence that it does not. Blockchain may break the cycle entirely.
The Hype Cycle for Emerging Technologies clearly has some relevance for blockchain, but the Hype Cycle also assumes certain things about how the market receives, perceives, and ultimately adopts a given technology. However, from time to time a technology comes along that breaks the Cycle entirely, and blockchain is likely one of them.
Why? Because blockchain falls into that hallowed category of technological innovation that ushers in an entirely new platform whose previously inconceivable uses and solutions only become realized once the technology starts getting adopted. Once that realization dawns, it begets an amplifying chain reaction in the market that upends previous assumptions.
Take, for example, the advent of the smartphone. The companies that pioneered the smartphone made grandiose, bold claims about the technology’s promise. In the moment, those claims may have seemed like braggadocio. With the benefit of hindsight, we can see that those claims were laughably conservative. Once smartphones gained early market adoption, they revealed myriad uses that have since fundamentally transformed how we leverage mobile technology and data. And Gartner now tracks myriad mobile technologies on a dedicated Hype Cycle chart, rather than continue to plot smartphones themselves somewhere deep into the plateau of enlightment.
Electric mobility offers another poignant-if younger and less mature-example. Superficially, electric vehicles are the “emerging technology” disrupting traditional automotive markets. But they also represent a fundamentally new challenge and opportunity for grid operators, while EVs’ battery energy storage and the prospect of smart charging and vehicle-to-grid services unlock possibilities that simply weren’t and aren’t possible with internal combustion engine autos. Meanwhile, market adoption of EVs has consistently outpaced forecasts. Each year, the big analyst firms have had to upwardly revise their EV adoption forecasts, precisely because EVs don’t conveniently adhere to conventions like Gartner’s Hype Cycle.
Could EVs find a place somewhere on the Hype Cycle for Emerging Technologies? Sure. But they’re probably better suited to becoming a class of Hype Cycle tracking unto themselves, just as for mobile device technologies and blockchain technology. We need to start tracking all the component technologies and software and use cases for EVs and their batteries, rather than tracking superficial market adoption of the vehicle itself.
As one Gartner analyst wrote in a blog post last year, “The hype over blockchain was not misguided. As with most catalyzing technologies, the hype resulted from a glimpse of a promising future reality that is not fully baked yet.” In a separate article, another Gartner analyst noted, “Blockchain is poised to create one of the most transformative and dramatic impacts in the next five to 10 years, but multiple business cases are yet to be proved.”
The Hype Cycle is ultimately a convenient way to characterize the growing pains of a given emerging technology as it fights for its place in the world. Blockchain has had-and will continue to have-its growing pains, too. I’m not at all suggesting that we’ll wake up tomorrow and suddenly find that enterprise-grade blockchain solutions have been broadly adopted en masse by the world’s grid operators. But I am cautioning against relegating blockchain to some indeterminate future date when it will become worth the industry’s attention. That day is now.
Throughout the global energy sector, blockchain’s future possibilities are becoming a reality today, as the first movers see the benefits and adopt blockchain to seize those benefits sooner than later. Those companies that wait to see where blockchain maps on Gartner’s Hype Cycle for 2019, 2020, and beyond will awaken to the fact that the Hype Cycle was ill-suited to blockchain’s path to market, while their competitors and peers have already tapped into its potential while they waited.
Peter Bronski is director of marketing & communications for EWF and founder & CEO of Inflection Point Agency.
Originally published at https://www.energyweb.org on May 1, 2019.