How large is the market for Energy Web DIDs?

Evaluating the total number of DIDs and the impact on the overall utility of the Energy Web Token (EWT).

Michal Bacia

Published in

Energy Web

9 min readNov 8, 2021

Decarbonizing power grids with… software?

Surprisingly, the biggest blocker in decarbonizing the electric grid is the lack of connectivity and shared standards, not the lack of new renewable energy resources. The energy sector needs a secure, scalable way to identify the growing number of clean energy resources, verify attributes about them (like location, capabilities, and financial relationships), and manage permissions and/or behaviors based on those attributes. In short, modern grids need an identity and access management solution tailored for the sheer volume and diversity of clean energy resources in the market.

Legacy approaches are not up to the task; it’s simply not feasible for any single company or platform to manage everything, and relying on point-to-point integrations between individual systems is too costly and complex to manage at scale. This is exactly why we are building open-source tools to unlock the full potential of decentralized identifiers (DIDs) with the Energy Web Decentralized Operating System (EW-DOS).

What are DIDs?

A DID is a digital, verifiable identity that is user-generated and not coupled to any centralized institution. It can be used to identify any object or subject, such as a person, an organization, a device (an electric vehicle on a smart meter), and non-tangible assets (like contracts). DIDs allow users to have control over both their identities and any data associated with them.

Instead of a central entity being in charge of issuing identities and verifying credentials for each identity, any individual or asset can create an identity, and then establish verified credentials over time through interactions with peers or authorities on a trusted, decentralized network.

A DID resides in a DID registry, which in the case of Energy Web, is on the Energy Web Chain. Because Energy Web DID technology is developed based on the established W3C standards, it is flexible enough to work with any technology and use case within the energy sector and outside it.

If you’re interested in learning more about DIDs, here’s a website that simulates and explains how they work, the Energy Web — DID Explainer. You can also dive into details in our Gitbook (Self-Sovereign Identity — Energy Web Digital Infrastructure (gitbook.io))

What is the DID business model?

Energy Web DIDs are created and controlled by users. They are free to use and open source. Anyone can use our entire DID tech stack and the Energy Web Blockchain without paying for it, except for the blockchain transaction (gas) fees. This would be the equivalent of launching a website on your own server, using free, open-source technologies like Linux, MySQL, and WordPress. It’s perfectly possible, but people and companies rarely do it, because this approach is inconvenient and cumbersome. It takes a lot of effort to launch a website like this, and it takes a lot of effort to maintain it. In the end, this approach tends to be quite expensive after considering all the time, effort, and associated risks.

What usually happens is users buy services from specialized providers. In the website example, users can buy pre-configured virtual servers from a cloud provider like Amazon Web Services or Azure or decide to buy a managed website service from a website builder like Wix or Squarespace. These services come with a Service Level Agreement (SLA) that guarantees the level of service users can expect such as website uptime, storage space, or the number of CPU cores. Users pay for convenience and reliability delivered by the specialized service providers because after considering all the costs and risks, this tends to be a cheaper solution.

At Energy Web, we understand that in order to have any meaningful adoption of enterprise applications using decentral technology, a DID-based tech stack has to be offered in a convenient and reliable way as well. This is why we’re developing the Decentralized Service Level Assurance (DLSA) solution. With this solution, users will be able to subscribe to professional-grade services delivered by specialized service providers. More about DSLA:

The main purpose of DSLA is to support DIDs using EW-DOS infrastructure. Therefore, we believe that the total number of DIDs in the ecosystem will be a good proxy for evaluating the economic activity on the Energy Web stack and the overall utility of the Energy Web Token (EWT).

DIDs in the energy sector

The first, primary users adopting DIDs on the open-source EW-DOS infrastructure will be enterprises operating in the energy sector. This is happening because of the groundbreaking transformation in the energy industry: customer spend on clean energy is on track to eclipse utility spending on all energy.

Customers are investing in clean energy assets. These assets are the future of the energy sector: battery storage, smart AC, electric cars and charging stations, solar systems, the list goes on.

A fundamental challenge faced by energy companies is caused by the fact that most of these clean energy assets are not integrated with market participant operating systems. Energy Web solves this problem by building operating systems for energy grids using DID-based, open-source software and standards. Open-source digital infrastructure makes it possible for customer-owned assets to enroll and participate in coordinated grid operator programs:

In the future, each energy sector stakeholder and eventually each asset will have its own DID. This includes consumers, companies operating in the space (grid operators, aggregators, renewable energy installers, EV charging network operators, independent power producers), solar systems, batteries, EVs, EV chargers, smart meters, and smart thermostats.

Energy Web has already implemented DID infrastructure for the California Independent System Operator (CAISO) in their Flex Alert program. We’re also working on rolling out DIDs for Australian Energy Market Operator (AEMO). This architecture also underpins ELECTRA CALDENSE, EV DASHBOARD with ELIA, APG.

Potential demand

We estimate, that by 2030 there can be between 200 million and 1.2 billion DIDs using the Energy Web tech stack. Around 83% of them will belong to energy assets like electric cars, solar PV systems, smart meters, and the rest (about 17%) will belong to people interacting with these assets. Here’s the logic behind our estimates:

First, we took data from Bloomberg New Energy Finance and Rocky Mountain Institute that forecast the total number of green and flexible energy-related devices. All the devices that would potentially use DIDs. These devices include:

Storage System Installations
Electric Vehicles
EV Chargers
Smart Thermostats (AC / Heating)
Water Heaters
HVAC
Water Heaters
Commercial Appliances
Commercial Lighting
Solar PV Inverters
Wind Turbines
Smart Meters

The industry forecasts that the total number of devices will grow from 2.2 billion in 2022 to 3.8 billion in 2030.

Given the strong network effects of DID technology, the exponential rate of adoption should be expected. Therefore, we assumed 3 scenarios for the adoption of the EW tech stack:

The optimistic scenario, where we assume the DID usage to increase 8% month to month (for every 100 DIDs we assume 108 DIDs next month)
The pessimistic scenario, with a 6% monthly usage increase
The “in the middle” scenario, with a 7% monthly increase

For all 3 scenarios, given Energy Web’s existing footprint in several of the world’s largest energy markets, we assume a starting point market share of 0.1% (1/10 of a percent) in 2022 for the commercial, B2B applications and 0.02% (2/100 of a percent) for domestic applications and smart meters.

Then, we estimate how many additional DIDs will be issued to people interacting with the assets. This number ranges between 0.1 (we assume in that case that 1 person will manage 10 devices) and 1 (1 person per device). On average, we expect 1 person to interact with around 5 devices.

This means that in 2022 we’re expecting to issue a total of around 728,000 DID for devices and people. We believe reaching close to 1 million DIDs in 2022 is feasible based on our current pipeline and recently completed project. For example, the above-mentioned CASIO Flex Alert can reach all California residents, close to 40 million people.

Based on the adoption scenario, we arrive at 3 different numbers of DID in 2030:

201 million DID and a market share of 4% for the conservative scenario,
almost 500 million DIDs and a 10% share for the “in the middle” scenario and
1.2 billion DIDs and a 25% market share for the optimistic scenario

Here is the breakdown of different types of devices using our DID, for all 3 scenarios.

The goal of issuing 200 million and more DIDs is very ambitious but doable by 2030. The middle adoption scenario assumes issuing almost 83 million DID to individuals by 2030. For context, this means onboarding around 16% of the existing customers of energy companies that are the current members of Energy Web.

To put these numbers in perspective, we compared them to the entire IoT market (the energy sector devices are just a subset of the broader market of connected IOT devices). The total number of connected IoT devices is expected to reach 27 billion by 2025, growing from the current 12 billion already connected devices. [source: State of IoT 2021: Number of connected IoT devices growing 9% to 12.3 B (iot-analytics.com)]

This means that in 2025 all the energy assets will account for just 10% of the total IoT market, and the EW DIDs’ share will be only around 0.04% (4/100 of a percent) (yes, the tiny purple line on the chart below).

Given the fact that energy-related devices underpin every aspect of our professional and personal lives, it is quite possible that Energy Web DID technology will be adopted by many other industries and sectors thanks to its flexibility, security, and focus on privacy. A shared, open-source solution widely used by regulators, grid operators, energy companies, solar installers, EVs, and consumers would be much welcomed by industries like agriculture, logistics, smart appliances, and many more.

Finally, Energy Web is a non-profit organization, and there’s no need to charge high fees and extract value to generate profits for shareholders. The value-added by DSLA and DID solutions will be transferred back to the Energy Web community. This means a win-win situation for existing and new users of the platform: thanks to DSLA, there will be no downsides or disincentives for using DID technology. Instead, there will be very strong, positive network effects, making our ambitious DID adoption and related decarbonization goals possible.

If you care about climate change and support our mission, here are additional resources explaining how you can get involved!

About Energy Web

Energy Web (EW) is a global nonprofit organization accelerating a low-carbon, customer-centric electricity system by unleashing the potential of open-source, decentralized technologies. EW focuses on building core infrastructure and shared technology, speeding the adoption of commercial solutions, and fostering a community of practice.