Leonardo Botti, Global Head of Product Management ABB, reviews the impact of Blockchain and how digitalization can support the technology’s adoption.
In 2009 a new disrupter finance model was launched- BitCoin. It heralded a new era in how currency and transactions were made and transferred globally. The emergence and rising popularity of this new cryptocurrency market reached a defining point in 2017 when the number of B2B enterprises adopting Bitcoin trebled and suddenly attracted the attention of global investors. But what does this decentralized digital currency have to do with the changing energy market?
To answer this question we need to look at the technology that underpins BitCoin – ‘blockchain’.
Blockchain is based on a peer-to-peer platform that has created new ways in which we can transact with one another. The underlying transaction model moves us away from a centralized architecture towards a more direct and decentralized system between peers. This reduces the need for a central server, authorization and authentication of transactions by one single authoritative body.
For the energy market, it is presenting new opportunities for innovation within utilities and amongst homeowners. It is redefining how our energy is supplied and potentially creating a sustainable energy community.
Role of the prosumer
Energy transactions have historically been based on a multi-tiered and complex supply and demand business matrix between producers, transmission system operators, distribution system operators, utilities and consumers.
Yet through the emergence of digitalization, the uptake in renewable energy sources and storage – such as rooftop solar connecting to the grid – the energy model is offering potential for a more decentralized and simplified energy management architecture.
The ‘Smart Buildings’ revolution in modern residential and commercial installations means that today’s energy consumers are demanding ever smarter solutions together with greater control. This demand has seen a move away from consumers to what’s known as ‘prosumers’.
These prosumers will no longer be solely focused on consuming energy but also in producing it at the same time. They will increasingly look at how energy is created, when it’s used and how effectively their electricity costs can and will be reduced.
The blockchain technology, coupled with smart metering technology, will take this model one step further. It will allow prosumers to not only chose when and how to use the energy they produce on their own, but also to trade surpluses with peers and neighbours through a token system, thereby creating a sustainable energy sharing economy, based on ‘peer-to-peer energy transactions’.