- Blockchain technology could enable direct transactions between energy provider and consumer in the future
- Blockchain business models facilitate decentralized energy supply and fosters the energy transition
- Legal barriers along the path to the blockchain-based energy market
Will the electricity market of the future manage to survive without public utilities, energy providers or electricity exchanges? “Blockchain technology could allow energy producers and consumers to engage directly with each other without the necessity of intermediaries,” said Dr. Ansgar Steinkamp, Senior Expert at Open Grid Europe, in the ComIn Talk organized by networker NRW in Essen. “The participants could then interact directly with each other via blockchain and trade electricity, gas and renewable energy certificates.” Blockchain can be used as transaction technology to simplify exchange, validation, billing and documentation.
“The energy sector is one of the most exciting fields of application for blockchain technology,” according to Stephan Zimprich, Leader of the Competence Group Blockchain in eco – Association of the Internet industry. In the decentralized data structure of blockchain, transactions can be executed directly and the status and history of each individual transaction can be saved simultaneously.
Blockchain could revolutionize the energy industry
The energy market of the future will depend on smart meters, i.e. intelligent energy meters that are connected directly to a blockchain via the Internet and which record performance and consumption, as well as supplying the database for automated transactions. The terms and conditions would then be recorded in a smart contract. For example, this could also be possible with Ethereum – a blockchain with a built-in programming language.
An electricity and gas market that is based on blockchain technology, decentralized power generation plants could be easily connected to the power grid, and thus the production of renewable energy could be promoted in order to support the energy transition. “Blockchain could cause major upheavals in the energy industry,” says Ansgar Steinkamp. “For example, this would allow consumers to purchase their energy flexibly from the desired gas or electricity provider.” Decentralized and tamper-proof storage of transaction data can make it possible to hand down and use authentication certificates for electricity from renewable sources or CO2 certificates.
Legal framework lacking in Germany
According to experts, it will take years before an energy market based on blockchain technology will consolidate. “The current legal framework does not allow such solutions to be used,” says Stephan Zimprich. “New blockchain business models are often not compatible with existing regulatory concepts.” Therefore, it may be that Germany is not well-positioned when it comes to the development of blockchain-based business models in the energy sector: “Countries with a weaker regulatory framework have greater flexibility and are thus able to exploit the innovation potential of blockchain technology for the energy industry more quickly,” says Zimprich.
A photo of Stephan Zimprich, leader of the competence group Blockchain, is available here.
