Growing market interest and a host of ground-breaking projects exemplify how Asia could be set to match Europe and North America in the field of blockchain-based energy trading innovation. As well as hosting a vibrant start-up community of its own, the region is already a major focus for international energy blockchain leaders such as US-based LO3 Energy and Power Ledger of Australia.
“There is an immense appetite for blockchain-based energy trading in Asia,” said Power Ledger analyst Marrah Fry. “We have received a great deal of support for our two announced projects in this region.”
Perth-based Power Ledger’s Asian projects include a tie-up with the Thai renewable energy developer BCPG and an alliance with Kepco, Japan’s second-largest utility. The Thai project has been hailed as the first of its kind in the region, since local utility Metropolitan Electricity Authority is giving the blockchain company access to its network so that Power Ledger can help BCPG offer peer-to-peer energy trading.
Beyond Japan and Thailand, Fry reports active Power Ledger communities in China, South Korea and the Philippines. “This further shows just how much interest exists for our blockchain-fuelled innovation across Asia,” Fry said.
Belinda Kinkead, Australia director at LO3 Energy, said her company was also setting its sights on Asia, with two projects soon to be announced in Japan. Asian countries such as Japan, Singapore and South Korea were eager to embrace blockchain-based energy trading, she said, but working in Asia also meant dealing with energy markets that were less mature and receptive.
“It impacts the readiness of people to look at how this could be of benefit,” she said. “Each market is different. But a lot of Asian utilities are intrigued and want to do some sort of trial. They are generally quite receptive to learning more.”
Nevertheless, the challenges facing the introduction of blockchain energy trading in the region were highlighted in September, when the Electricity Generating Authority of Thailand announced plans to slap fees on blockchain-linked trades. The move, one of the first regulatory challenges to blockchain energy trading in the world, came just as Thailand was being cheered as a leading cryptocurrency market.
In August, the trend-watching site TechCrunch had named the nation as “one the most interesting cryptocurrency and blockchain countries in Southeast Asia in 2018.”
Power Ledger’s Fry brushed off concerns about the impact of the levy, though. “We are aware that the Thai Government recently announced a 15% capital gains tax on cryptocurrency transactions,” she said. “This particular regulation won’t have any impact on our deployment of the Power Ledger platform in Thailand, as users do not actually interact with any cryptocurrency.”
Furthermore, she said, the risk of regulatory challenges was not restricted to Asia. “More definitive regulation in the blockchain and cryptocurrency space is something that has become a reality for almost every jurisdiction around the world,” she noted.
For Willie Khoo, product and strategy manager at Singapore-based energy blockchain firm Electrify, the answer is to push for greater awareness of the benefits of distributed ledgers, peer-to-peer trading and cryptocurrencies. “People are generally receptive once they can wrap their heads around blockchain and energy, which is a difficult thing to do,” he said. “Explaining blockchain is a herculean task and the energy market is equally hard to fathom.”
This means there is often a steep learning curve that investors, regulators and other stakeholders have to go through before they are comfortable with the concept. Once that challenge has been overcome, though, there could be significant opportunities for blockchain energy trading in many Asian countries.
“The grids are becoming more and more decentralized,” Khoo said. “The markets are opening up to not just commercial and industrial entities, but also to residential households. The opportunities are there, especially in Asia.”
Deploying Blockchain Tech: Europe is ahead, but US is catching up with favorable regulatory landscape05-02 Future Grid