British energy giant Centrica announced April 30, 2018, that it plans to “deploy blockchain technology as part of Local Energy Market trial in Cornwall.” The platform, named Exergy, will enable small consumers and businesses to trade electricity with each other depending on need.
Blockchain to Disrupt Traditional Energy Model
The pilot project, to be implemented in partnership with LO3 Energy, aims to unlock potential savings for around 200 households. The trial is a part of Centrica’s £19 million local energy market program that will find new technologies to disrupt the traditional power business.
Mark Hanafin, Chief Executive of Centrica Business said, “This is an exciting opportunity for us to test blockchain technology beyond the theoretical and put it into practice, developing innovative new solutions that will empower consumers in the UK, North America and beyond to take control of how they engage with energy.”
The use of blockchain technology will enable large power consumers to place customized orders as per their need. These consumers, who do not currently have a fixed price contract to obtain electricity, will be then matched with the most competitive bid.
LO3 Energy CEO, Lawrence Orsini, said, “Exergy is designed to empower new prosumers while enabling traditional industry players to shift business models and find their place in the energy market of the future.”
Applications of Blockchain in Electricity Distribution
According to a MIT Technology Review, experts believe that blockchain technology could potentially help keep track of how much clean energy is produced.
Jesse Morris, an energy expert at the Rocky Mountain Institute, said, “Keeping track of renewable-energy certificates is one of dozens of potential applications of blockchain technology that could solve data management challenges in the electricity sector without disrupting business as usual.”
The study highlighted how the distributed ledger technology could be useful in industries where members in the network depend on shared sets of data.
How Blockchain Could Help Utility Companies
Carbon credits are often issued to companies who have taken steps to reduce their carbon footprint by using reusable energy and saving environment. With blockchain technology, however, the entire process of issuing credits can be shifted to the blockchain instead. Large industries can be rewarded with redeemable digital tokens for energy efficiency. At the end of every financial year, governments can then grant tax breaks proportional to the carbon credits accumulated by a company.
Companies could then sell these tokens for other utilities or trade them to businesses that need more carbon credits. Given that a blockchain is public to all members of the network and cannot be modified later, such a decentralized electricity trading platform would be entirely safe to use.
Blockchain and Power Across the World
Australian company Power Ledger is also developing a blockchain based platform that allows peer to peer transfer of excess electricity from one user to another. Jemma Green, founder of the company stated that, on average, it would take 60 to 80 days for an electricity producer to get paid. With blockchain technology, however, producers can be paid their dues immediately.