The Capital
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The Capital

Will There Be an Internet of Electricity?

Greening the grid

In parallel with the rise of the blockchain, environmental awareness is growing everywhere. The change in consciousness still is just starting, but the energy market will decentralize further as we grow less dependent on fossil fuels, which require a great deal of equipment as well as capital to extract, refine, and bring to market. Compared to oil and coal extraction, a solar and wind energy infrastructure is almost a child’s play to run once the initial investments have been made. These new energy sources have the potential to personalize the electrical grid. Rooftop solar panels have already become part of the global suburban landscape. They are the new way to heat and power our homes. In the United States, the residential solar power market grew 11%in the first quarter of this year over 2017’s first quarter.

The blockchain-enabled energy-sharing economy

Today’s energy systems increasingly face competition from independent producers who provide customers the services they expect to meet their every demand. Indeed, the future is that the customers themselves will become the producers, and they will be able to share the energy they produce in their homes with other users. I have already written about the sharing economy: the new approach to business which values sharing and uses it as a basis for its operations. The energy market may come to resemble the likes of Airbnb or Uber. Car charging-point owners will be able to make their outlets available to other drivers, setting terms of use, including, of course, price. This will allow them to capitalize the purchase of the device.

The new energy business

According to a World Energy Council report, decentralized renewable energy sources will have a 25 percent market share by 2025. That’s fast. It was only in 2016 that the first attempt was made in New York City to share energy by means of blockchain between neighboring households. Tech companies, and especially tech startups, believe in this future. They are selling the concept to the corporations that make up the traditional industry. The Energy Web Foundation, a global non-profit focused on accelerating blockchain adoption across the energy sector, envisions an open-source, blockchain-based platform for the electricity sector. Large international energy corporations have already invested around US$2.5 million in its development. Many of them run their own blockchain systems for energy settlements in areas where the capacity of the existing billing systems is insufficient. An example is EWF’s current test-network Kovan, which can perform up to 1,000 transactions per second. (The plan is to scale to one million tps.)

Regulatory roadblocks, of course

Energy experts are confident about the potential of blockchain technology to reinvent energy grids. People will soon be able to install software in their homes that will automate energy sales and purchases, allow price-setting contracts between grid users, and measure energy demand in real time. While everyone could obviously benefit from these solutions, legal and economic systems will certainly be a hurdle. How soon will the market make its way through the bureaucracy maze? How much effort will it take to convince traditional operators to change?

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Norbert Biedrzycki

Technology is my passion. Head of Microsoft Services CEE. Private opinions only