Up to $300m was invested in over 100 energy-related blockchain applications last year, according to a new report.
The study by the World Energy Council and consultancy PwC finds that the global power sector has seen global investment growth in digital infrastructure rise by more than 20 per cent a year since 2014, hitting $47bn in 2017.
And after interviewing almost 40 companies to understand the maturity and potential of blockchain in the energy sector, the report concludes that the future for blockchain in energy is “both promising and uncertain”.
Angela Wilkinson, senior director of Scenarios and Business Insights at WEC, said: “Energy blockchain is hailed by many as a game-changer that will entirely transform the energy value chain, support new business models and stimulate a shift from consumers to prosumers. The open question we find is: can it revolutionise the way residential consumers receive and consume energy without a restructuring of today’s regulatory framework and without large scale consumer engagement?”
The report spotlights seven different types of uses for blockchain across the energy system: Flexible energy trading platforms; Emissions trading systems; Supply chain tracking; E-mobility; Tokenization and project financing; Bitcoin mining; and peer-to-peer trading.
It finds that there are two challenges that are prominent in inhibiting the full adoption of blockchain technology by the energy sector. “Those interviewed express confidence that time, testing and refining of the technology will enable lingering hurdles of technological feasibility and scalability to be crossed,” says the report. “Yet there is also broad agreement amongst them that regulation and customer engagement loom as wildcards poised to either doom the technology or allow it to transform the industry.
“Energy blockchain might one day enable a transactive grid, but its disruptive impact will depend in no small part on how blockchain emerges in the so-called ‘Grand Transition’, and is thereby tied to factors beyond just energy.
“Hence while it can facilitate disruption of existing value chains, new consumer logics/active energy behaviours remain uncertain. Moreover, accelerating decarbonisation and decentralisation also creates the risk of new energy shocks, such as cyber risks, dynamic load management and grid investment issues.”
The study concludes that the future outlook for energy blockchain “is both promising and uncertain. This is partly because the technology is so new, hence it is difficult to make accurate predictions of how and when developments within any given application will come to full fruition in the market. That said, in the near term and without addressing the two obstacles of customer engagement and regulatory reform, a full transformative disruption may not be feasible. However, energy blockchain will continue to optimise the practices of today’s energy eco-system.”
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