Indeed, for the energy sector blockchain technology could not have arrived at a better moment in time. Not only does it allow peer-to-peer trading, but it may also provide solutions to the increasing need for energy flexibility. This is a need that arises from an increase in decentralized energy production; an increasingly diffuse consumption pattern, with millions of new high-draw consumption points entering the system in the form of electric vehicles; and as a corollary to decentralization and decarbonisation, decreasing absorptive capacity in the energy system. A third application where blockchain’s immutability and traceability come in handy is for certificates of origin. With both regulation and increased awareness in society pushing for transparency of energy sources, blockchain may be able to provide this transparency, cut bureaucracy and allow for small scale certificate trading.
It is therefore no surprise that, over the course of 2017, there’s been a lot of experimenting with blockchain technology in the energy sector. Our comprehensive guide profiled 65 ongoing projects and will soon be updated to include 80+ projects. About time for a brief overview of the most interesting projects of 2017 and an outlook for 2018!
We’ll start off with the two most frequently highlighted token sales in the energy sector: Powerledger and Grid+. Both aim to use blockchain to enable peer-to-peer energy trading. While both tokenize energy to create a marketplace for locally generated energy, Grid+ focuses more on reducing the retail price of energy, whereas Powerledger focuses on creating a marketplace for excesses of energy. With a combined amount of raised capital of $65 million, developments around these two start-ups are definitely worth following in 2018. For anyone who is willing to spend some time in understanding the details, an interesting podcast can be found here.
A third player in the peer-to-peer energy trading field is LO3 energy. In contrast to Powerledger, Grid+ and over 1,500 other blockchain start-ups they did not start off their journey with a token sale or ICO. Instead they started with proving how blockchain could enable peer-to-peer energy trading in a pilot project in Brooklyn. Backed by investments of Siemens and Centrica, their pilot project became successful enough to cross the Atlantic Ocean and land in Europe. Their recently announced token Exergy (XRG) is definitely one to keep an eye on for 2018.
Brooklyn Microgrid, Photo: LO3 Energy
Where the aforementioned three companies aim to use blockchain for residential peer-to-peer trading, software & IT company Ponton is looking to disrupt wholesale energy trading with their Enerchain project. After the first energy trade over blockchain on the European Utility Week in November 2016, 2017 did not deliver that much new bits of spectacular news for the Enerchain Project. However, with 35 utilities involved in the project, including giants such as Enel and Engie, Enerchain might be one of the main projects to look out for in 2018.
As mentioned above, the demand for energy flexibility is growing and expected to grow exponentially in the coming years. Dutch-German TSO TenneT explored the potential that blockchain holds to contribute to solutions for this. In Germany they partnered with Sonnen to use residential battery storage as a buffer to absorb overloads of energy from the North-German wind power farms. This system proved useful for the limitation of the expensive curtailment of wind turbines. The blockchain presents the operator from TenneT with a comprehensive view of the available pool of flexibility. In The Netherlands they partnered with innovative energy utility Vandebron, using the charging of electric vehicles to balance the grid in case of mismatches between energy supply and demand. The blockchain enables each car to participate by recording their availability and their action in response to signals from TenneT.
One of the most promising start-ups anticipating on the rising demand for flexibility is Electron. This UK-based start-up received government funding to scale their Flexibility Trading Platform. Their huge potential market and their strong team, including reputable energy professionals Paul Massara and Jon Ferris, make Electron one of the major start-ups to pay attention to in 2018.
Perhaps one of the most interesting developments of 2017 was the formation of The Energy Web Foundation. Founding partners Rocky Mountain Institute and Grid Singularity aimed to launch a new energy-focused blockchain platform (“Energy Web Platform”) that provides the functionalities needed to implement various use cases for the energy sector. With powerful affiliates such as Engie, Shell and Innogy this platform may very well become one of the pillars of a post-energy transition era. For 2018 it will be interesting to see how their test network Tobalaba is received and if there will be an announcement of a token sale.
This was just a snapshot of all blockchain activity in the energy sector. Many more projects are running or about to be launched. It is impossible to say what exactly future will entail. WePower for example might outperform Powerledger and Grid+ with their token sale in 2018. The Energy Coin Foundation could very well be an unforeseen but serious competitor for The Energy Web Foundation. Others, such as Bluenote, will try to find new use cases for blockchain in the energy sector. The interesting thing about all these blockchain projects is that nobody knows who the winners will be or even if there will be any winners. On first sight blockchain and energy look like a perfect match, but in a highly regulated, complex industry full of powerful players, things are not always what they seem.
Making Solar Bankable: Evolving Business Models in Emerging Markets 2018
15 Feb - 16 Feb
Amsterdam, The Netherlands