The energy sector is changing rapidly. In a decarbonizing, decentralizing and democratizing landscape, new innovative business models are often based on digital tools. Machine learning and artificial intelligence, for example, have ushered in unprecedented ways of forecasting and executing simulations. With the roll-out of smart meters and other data points, the “Internet of Energy” is slowly, but surely, starting to become a reality, increasing the value of data management even further. One of these digital tools attracted a remarkable amount of attention over the past few years: blockchain technology.
In the wake of cryptocurrencies, interest in blockchain technology peaked in late 2017, spreading like wildfire across newspapers and websites for weeks, which all reported on its seemingly unlimited potential to disrupt all industries, including the energy sector. Blockchain start-ups, pilot projects and ICOs (initial coin offerings) popped up on an almost daily basis. In the energy sector alone, we identified over 150 projects using blockchain, which we previously highlighted in our ‘Comprehensive Guide of Companies involved in Blockchain & Energy’.
But, just like the rise of interest in blockchain followed the curves of cryptocurrencies, so did the fall. At the time of writing, the total market cap of cryptocurrencies is just 16% of what it was exactly twelve months earlier. Similarly, Google Trends shows that the interest in blockchain as a search query is just 15% of what it was one year ago.
This wane in interest is nothing unexpected, as the peak of the hype - the so-called “peak of inflated expectations” - is usually supposed to be followed by the “trough of disillusionment” and blockchain appears to be following the hype cycle in an almost perfect way so far. The shakeout of failed experiments and implementations (research of the Dutch newspaper Volkskrant showed that 85% of the projects using blockchain already pulled the plug) is, therefore, nothing of real concern. It might actually even be considered a good thing, as these projects polarized the discussion around blockchain into a very black-or-white one, where shades of grey would be more appropriate and beneficial to the sector.
"Given the current energy sector climate, blockchain might actually still be the silver bullet, with the most promising features to truly enable the energy transition."
It is important to emphasize that the fact that 85% of the projects have failed, does not mean that the remaining 15% are not valuable. Given the current energy sector climate, blockchain might actually still be the silver bullet, with the most promising features to truly enable the energy transition. With more and smarter assets connected to the grid and the increasing convergence with other industries, such as the automotive sector, interoperability between even more assets is required. This can manifest best in a digital ledger technology, which allows for safe transactions between machines. The added feature of enhanced cybersecurity also increases the potential for various new forms of implementation and improvements of current processes. This is why it is crucial to highlight the progress that the survivors are making.
Investments and progress only continue if the surviving providers improve their products to the satisfaction of early adopters. Therefore, it is great to see platforms such as Electron getting adopted by early moving giants like EDF; to see partnerships between Solarcoin and the world’s biggest inverter manufacturer SMA; and to notice how even traditionally slow-moving stakeholders like DSOs are building their own applications on the Tobalaba blockchain. It is now more important than ever to show that actual progress is being made and to provide a platform to share results and learnings, in order to let these pioneering companies “lead us over the slope of enlightenment towards the plateau of productivity” (as the hype-cycle prescribes). Thus, we can all benefit from blockchain as a digital tool for the grid, creating a reliable and affordable energy supply.
That is the driving force behind this interactive map below, which tracks the progress of all blockchain implementations in the European energy sector and our Blockchain2EnergyEurope conference.
Deploying Blockchain Tech: Europe is ahead, but US is catching up with favorable regulatory landscape05-02 Future Grid