Blockchain in Energy Sector : Handling Electric Energy Demand

Blockchain in Energy Sector  

Electricity, one of the most essential component of our day to day life, a worldwide utility readily available for consumers. But when it comes to the energy industry, the circumstances turn into imposing business model or all out political agitation. Generating electricity is only half the story using the existing grid, matching supply and demand, and reducing greenhouse emissions while producing is a complex task.

According to data from the International Energy Agency (IEA), more than 3.8 billion people have no access to electricity or only partial access. Limited or no electricity markets are concentrated in three main regions - South America, the Indian subcontinent and Africa.

Therefore, the number of people without the access of electricity is decreasing very rapidly in time interval. This trend also coincides with the increase of electricity from renewable sources, which poses specific challenges in joining the grid and setting record and market prices.

The lockdown measures due to Coronavirus(Covid-19) crisis, have drastically reduced the demand for electricity, affecting the power consumption. Daily data collected for more than 30 countries, representing more than one-third of global electricity demand, suggest that the extent of demand decline depends on the duration and rigidity of the lockdown. On average, it has been found that a full lockdown reduced demand by an average of 25% each month, or more than 1.7% on an annual basis.

Demand cuts have increased the share of renewable in electricity supply, as their production is unaffected by demand. Demand for all other sources of electricity including coal, gas and nuclear power declined. 

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As per reports for 2020, global electricity demand will fall by 7%, with some regions cutting by 12%. Low-carbon energy sources will outstrip coal-fired generation globally, increasing the leadership established in 2019. A rapid, fast moving economic recovery would cut the impact on electricity demand by half, leading to coal shortages from year to year, Gas and nuclear power. Thus, after the effect of Coronavirus(Covid-19) crisis the energy consumption increased by margin as people are staying in their houses due to lockdown in entire world. Therefore, Blockchain can handling electric energy demand throughout the world.

Global electricity demand has decreased by 2.7% in Quarter1, 2020, although lockdown measures were put in place for less than a month in most countries. China was the first to implement prevention measures, in mid-January, and experienced the world's largest demand reduction in Quarter1 2020 of 6.5%. The effects were more limited in other parts of the world, where restrictions began in March and were introduced progressively. Electricity demand in Europe, Japan, Korea and the United States fell 2.5% to 5.5% in Quarter1 2020, not only because of Coronavirus(Covid-19), but the weather in January and February was modest compared to 2019 .

Complete lockdown measures in this pandemic pushed electricity demand down 20% or more, with small effects of partial lockdown. After fixing the effects of the weather, the complete lockdown has reduced daily electricity demand by at least 15% in France, India, Italy, Spain, the United Kingdom and the northwest of the US. 

The greatest impact has been felt in economies that have implemented stringent measures and where services are a large part of the economy. Both these criteria apply to Italy, where electricity demand has fallen by more than 25%. During the period of partial lockdown measures, in Europe and the United States during the initial containment phases and ongoing measures in Japan, electricity demand was impacted by at least 10%.

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How can Blockchain help in Handling Electric Energy demand ?

As discussed above, the production of electricity, the matching of supply and demand, as well as generating some forecasts, are important to bring reliable electric power to a wider population in this pandemic situation of Coronavirus(Covid-19).

Some form of data-based solution is indispensable in distributing electricity and creating secondary markets to include the grid. Fortunately, there is already a keen interest in exploring those solutions. A recent reports, some challenges and opportunities in integrating distributed energy generation through a blockchain-based approach.

The first use of blockchain to resolve these issues lies in its capabilities for record-keeping, peer-to-peer connections, and token generation. Using Blockchain Technology, the record of energy exchange can be instantiated using the unique keys of grid participants. A payment event can also occur immediately, and the transaction record can be closed in an irrevocable block. With regard to blockchain interactions and payments, events can occur at almost the same time, leaving the need for data matching.

Each transaction will become unforgivable due to the fact that the use of complex encryption that removes the need to rely on a regulator or a human entity. Each transaction will be traceable and discoverable, as blockchain are not completely anonymous and may be de-anonymous for energy tracking. In theory, connections within a blockchain-driven network would map the actual grid and the connections between producers and consumers as they are called, because they are on both sides of the energy equation.

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Despite the potential challenges, it is clear that blockchain has significant potential in the energy industry. Research by Global Market Insights predicts the blockchain energy segment to grow from $ 200 million in 2018 to $ 4 million in 2025.

While it is unsure, what those blockchain solutions will resemble, As per research of Renewable and Sustainable Energy Review found that 60% of the analyzed projects are currently based on Ethereum. This number probably distorts the number of projects that are being built on energy-use specific blockchains or private, permitting systems. As per recent reports, Blockchain Technology in Energy Market is set to grow from its current market value of  $5 billion to over $30 billion by 2025.

How can Blockchain Technology improve transactions in the Electric Energy industry during Coronavirus pandemic crisis?

 1. Peer-to-Peer Transaction (P2P)

Finally, peer-to-peer transactions - one of the initial value propositions of crypto - are an opportunity for improvement for the energy sector. Blockchain systems can allow users to trade energy directly. This basically help in promoting renewable sources of energy such as solar and wind, which client can generate themselves. This innovation will essentially allow prosecutors to enter the energy market as a supplier.

2. Energy financing

The use of Blockchain Technology and cryptocurrency to raise funds for Future energy projects includes the second largest initiative to implement blockchain in the electric power sector. This category excludes start-ups, which formed ICOs to raise funds to develop a peer-to-peer trading platform. Instead, the category primarily includes enterprises focused on using cryptocurrencies to raise funds for energy consumption projects.

Blockchain networks can make it easier to raise funds for renewable energy projects and provide necessary investment balance.

3. Removing Intermediate

Blockchain transactions are also particularly effective in eliminating the intermediate path, who can operate at lower costs than those established by energy retailers. As, these retailers sell energy to utility providers who provide energy to the users. A more transparent blockchain-based system may allow users to purchase directly from utility providers. The United States-based startup Grid is using the Ethereum blockchain, so that users can buy bulk of electricity instead of retailers.

4. Commodity and Ecological Trading

One of the first places where blockchain technology can have a major impact on the transaction ecosystem within the energy industry. Companies currently spend millions to build and use proprietary commodity trading platforms that track and execute transactions. Instead of many proprietary systems, blockchain technology can be used to ensure the safety, security, and irreversibility of the energy business.

Additionally, there is an opportunity in the manufacture and trade of green certificates and carbon offsets, which are often expensive to obtain. Automated smart contract and metering systems can improve offset accessibility for future use.

5. Electric Vehicles

The growing popularity of Electric vehicles has blurred the line between electric power and transportation sectors. Such vehicles, however, still face considerable hurdles in adopting the customer - in particular, the lack of public charging infrastructure may disappoint potential buyers. Blockchain network that enables Electric vehicles owners to basically charge charging infrastructure to sell charging services and can improve Electric vehicles appeal and improvement.

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