Author: Leoncio Montemayor, Solarplaza
Hello Sheryl! Good to have you here. Can you tell us a little bit about your role at your company as well as your experience with blockchain and energy?
As Director of Vertech Capital, I lead our Strategy and Innovation initiatives from our Asia Pacific headquarters in Singapore. Our team works closely with three key stakeholder groups in the energy and blockchain space: government research institutions, global enterprises and startups.
With a focus on building an intelligent energy ecosystem through public-private partnerships, we engage government institutions through a series of energy innovation workshops and corporate seminars with localized content. We partner with leading knowledge institutions to manage their innovation labs and incubation spaces to facilitate multi-stakeholder engagement across the blockchain and traditional energy domains.
For companies and startups looking to achieve scale through blockchain technology, Vertech advises management teams on ways to achieve speed to market through an agile, digital-first strategy customized to the energy industry. We help energy companies unlock the full, transformative value of blockchain by providing end-to-end advisory in technology integration, product commercialization and go-to-market strategy.
"Pioneering projects such as that of Power Ledger’s drive the discussion forward, bringing blockchain into the spotlight for regulators and utility companies."
What do you see as the main driver of adoption of blockchain technology in the energy sector?
Pilot projects are likely to be the key driver of adoption given the early stage of blockchain in the innovation journey. The potential use cases in the energy sector remain broad and wide-ranging, and it has witnessed significant progress in this region. From peer-to-peer, vehicle-to-grid, machine-to-machine applications, the multitude of pilots provides early proof of the far-reaching benefits that blockchain could bring, even to initial skeptics of the technology.
Blockchain pilots are already making waves in developing Asia, which has helped lead the way to more effective discussions with government stakeholders. For example, Power Ledger's project with the Metropolitan Electricity Authority (MEA) in Thailand is a breakthrough example of how blockchain could disrupt the energy landscape in the Southeast Asian region. Pioneering projects such as that of Power Ledger’s therefore drive the discussion forward, bringing blockchain into the spotlight for regulators and utility companies.
"Disintermediation and decentralization are here to stay, and utilities should anticipate the fast-approaching changes to traditional energy structures."
I agree with you, we need more projects like this that move the discussion forward. In Asia, many markets are being liberalized, which is bound to offer new opportunities for producers, consumers, operators and such. Where does blockchain fit in this puzzle?
With market liberalization in emerging Asian markets, the transparency and disintermediation that blockchain brings will translate to benefits for consumers, not only at city centers but also remote areas. Blockchain would have a highly transformative impact, empowering access to energy to millions of consumers and producers at a rapid pace.
Prosumers in the new decentralized economy will be increasingly empowered; having a multitude of choices and flexibility will become commonplace. I believe that Asia is fast approaching a major tipping point, and how traditional utilities respond will determine how rapidly the energy industry is disrupted in each market. Key stakeholders in today's energy ecosystem should therefore acknowledge that blockchain is an important enabling technology that should be on the C-suite agenda. Disintermediation and decentralization are here to stay, and utilities should anticipate the fast-approaching changes to traditional energy structures.
We are indeed on the brink of a tipping point. It’s crazy to think that many of the structures that we see now will not be there in the future. If we were to have a time machine and travel 15 years into the future, how does the energy grid look like?
Microgrid is one of the leading buzzwords in present-day discussions. In 15 years, it would be fascinating to witness how microgrids are transforming renewable energy structures. The Global Energy Interconnection, which proposes a global interconnection of power systems across Europe, Africa, South America, North America and Asia, would bring us significantly closer to achieving a low-carbon economy. Such a large-scale, intercontinental and cross-border grid interconnection would truly transform the scale and pace at which we can transition to a clean energy economy.
"From a planning and deployment perspective, these are the multitude of barriers that may impede the adoption of blockchain."
Interesting, if we were to have a global energy interconnection, we would need a database to keep track of all the transactions happening in the network. Blockchain fits here. However, we are all blockchain enthusiasts here, but can you give me one reason why blockchain will not reach mass market adoption, if any?
There are various conditions that need to be present before blockchain can feasibly be scaled as a solution. Data sharing, digital identity and verification process, the role of intermediaries, security, and data flows are some of the key considerations cited by industry experts, which have to be accounted for before deploying a blockchain solution at scale. From a planning and deployment perspective, these are the multitude of barriers that may impede the adoption of blockchain. Nonetheless, the potential for blockchain is still largely prevalent across most areas of the energy value chain, and the critical first step is for key stakeholders to assess their level of readiness from an internal “digital readiness” standpoint and determine their degree of commitment to blockchain implementation.
"Although regulators in markets such as Japan and Singapore are beginning to embrace blockchain and private firms are actively trialing blockchain applications, regulatory requirements remain a barrier in numerous APAC markets."
This brings us to an interesting question: what is the main limiting factor for blockchain and energy here in Asia?
There is a vast amount of innovation in the energy industry, from large-scale digitalization to microgrid technology innovation. However, due to the infancy of blockchain in this sector, various stakeholders in the public and private domains are taking a “wait and see” approach, which oftentimes results in a gap between policy and ground upmarket developments.
One of the key barriers is therefore the regulatory restriction in energy markets. Although regulators in markets such as Japan and Singapore are beginning to embrace blockchain and private firms are actively trialing blockchain applications, regulatory requirements remain a barrier in numerous APAC markets.
Asian energy markets would have to witness a greater degree of decentralization to lower the barriers of entry into energy markets for prosumers and producers to effectively promote the adoption of blockchain. For instance, the Energy Market Authority of Singapore recently promoted Regulatory Sandbox for piloting innovative blockchain projects in the electricity and gas sectors. It would be revolutionary to witness more regulators in Asia Pacific encourage blockchain experimentation for wider deployment in the energy industry.
What can energy companies in Asia learn from their European counterparts in terms of trialing blockchain technology?
Industry-wide collaboration is one of the key takeaways, from prosumers to utilities to regulators. Many pilot projects in Europe are being led by private energy companies and clean energy providers in a ground-up approach. Partnerships between private companies and other organizations such as knowledge institutions have accelerated the pace of pilot project deployment in these markets. Companies in Asia that are looking to trial new blockchain pilots should therefore start by understanding best practices from Europe. Incentivizing utility participation, frameworks for managing records, and validating the technology's resilience and security are some of the key areas. Leveraging on strong blockchain communities and agreeing on standards across multiple stakeholders would help companies further accelerate their blockchain deployment efforts.