Many varying industries across the country are finding themselves in a position well suited for drastic innovation. But while many fields such as finance, communications, data-science and others are being swept away by blockchain technology, the energy industry has traditionally been slow to embrace change. Despite a growing market for green-energy and more decentralized power solutions, traditional energy companies have restrained themselves from jumping into the world of opportunity that decentralized technology can provide.

To fill this entrepreneurial gap, there have been a number of ICO’s and crypto-projects jumping on the scene to provide energy-solutions to the public at large. While most of these start-ups are at an early level of development, these projects help bring a variety of solutions to the table.

Blockchain Technology

A blockchain is a distributed, decentralized network as well as a public ledger where all the transactions within the network are shared with every participant in the system. This means that there is no need for central servers or ledgers to authorize and authenticate transactions. Not only are transaction speeds greatly increased under this model, but transaction fees to third-party intermediaries will no longer be a thing.

In our current global 21st century marketplace, it’s impossible to imagine how our lives would look like without the availability of energy resources that power our world nonstop. The global electricity market is calculated to be worth approximately $2 trillion but is largely controlled by a handful of large corporations. This remains true whether it be hydro, fossil, nuclear or even renewable resources such as wind and solar. The major players in the market control the dynamics to maximize profits, despite the fact that consumers and end-users are clamoring for alternative solutions.

For one, people are becoming more aware of the state of our environment, especially in regard to green-solutions, carbon-dioxide emissions, and pollution in general. While this is a big enough trend in and of itself when coupled with the fact that there is a noticeable decrease in the trust placed by consumers in large corporations. These things, when coupled together, create the perfect atmosphere for blockchain start-ups looking to change the industry.

Peer-to-Peer Trading Platforms

One particular application of decentralized technology is the use of Distributed Energy Grids (DER’s) or independent renewable energy sources (like solar panels) that link together to provide alternatives. What happens is that end-users can trade excess energy they produce themselves among other participants in the grid, which can be conveniently installed among communities and small municipalities. Units of energy can be tokenized and stored on a blockchain, which can be bought and sold using dedicated tokens.

This technology has the potential to induce a greater economic potential for both energy companies and consumers within the energy market. By making electricity a tradeable commodity on the blockchain, end consumers would be able the benefit from the many unique aspects of blockchain commerce that make it so desirable in the first place (transparency, low fees, etc.).

There already have been a number of practical experiments in this area. The energy firm LO3 was one of those with their Brooklyn Microgrid project in New York. The company used a blockchain powered mobile app to handle data on solar energy generation, consumption as well as facilitating a P2P exchange among a small community of 50 participants. However, this trading is taking place through US dollars, rather than using dedicated tokens. Which brings us to the next point…

Dedicated Energy Tokens

While on that topic, one innovation that large energy companies can use is to begin implementing dedicated tokens or cryptocurrencies as a means of purchasing energy not only between their customers and themselves but also other energy companies as well. Several utility companies have already begun pilot projects to permit these transactions. Marubeni Corporation (MARUY), a Japanese conglomerate, already accepts cryptocurrency payments in some parts of the country.

However, the use of these smaller microgrids that allow casual trading of some spare kilowatt hours is drastically different from larger, institutional energy systems that operate alongside hundreds of millions of participants. From a technical perspective, it’s much easier for these types of blockchain solutions to operate on a local, community-by-community basis rather than a provincial or federal level. One example is Bankymoon, a South Africa-based blockchain start-up partnered with crowdfunding company Usizo to enable cryptocurrency payments for bitcoin-compatible meters located in rural, remote areas.

Conclusion

There are dozens if not hundreds of crypto-projects that are hoping to bring blockchain technology into the energy industry, and while there are many benefits to tokenizing the industry, there is still much that needs to be done before a large-scale change takes place in the market. However, the next few years will see a plethora of new small-scale, do-it-yourself platforms for communities and individuals to provide their own energy solutions.