Empowering participation in the energy transition with blockchain

The energy industry is on the path of an unprecedented transition, shifting towards a more ecosystem-centric model in response to four key disruptors: decarbonization, decentralization, digitalization and democratization — to be at the heart of the transition to net-zero carbon.

This transition has been brought into focus as the world navigates a global pandemic. With an increasing pressure to act on climate change and to ensure a sustainable recovery, the need to engage and incentivize more businesses and people to participate in this radical change is becoming clear.

The benefits of blockchain are clear when it comes to solving challenges in the decarbonization and decentralization of energy at scale, by enabling access to small, distributed energy resources.

“But what is perhaps most revealing is how [technology] supports the democratization of energy. It enables consumer choice and fairness in access to markets, and empowers participation in the energy transition.” — Phil Spring, EMEA EE&U Leader at IBM

This has been shown in the The Green Light, which brings together seven stories from different organizations, across different countries and markets, to demonstrate various ways in which blockchain, together with other exponential technologies, is being applied to enable the energy transition.

The decarbonization of the electricity system and other energy intensive sectors is at the center of the journey to net-zero emissions. This is characterized by the integration of a large number of privately-owned distributed energy resources, such as home battery systems, electric vehicles and heat pumps, driving the electricity system to transform from a central to a more decentralized system, enabled by digital technologies. As a result, the energy ecosystem is expanding to include new, more diverse and highly distributed participants.

However, most of the existing energy market processes, and the related IT systems, have been designed for managing only a small number of large assets and participants. The current underlying processes are becoming increasingly complex and simply cannot scale to deal with the disruptions it faces, slowing down progress as a result.

“We have to keep pace with the energy transition, not block it. The idea of having to limit the development of renewables because we can’t manage them is just not acceptable.” — Lucian Balea, R&D Program Director at RTE

It is clear that parties will have to come together in new ways to address these issues and drive the transition to net-zero carbon emissions. They must work together more closely, as well as interact with new partners, to break down the barriers for participation and unlock the potential of small-scale assets in these markets.

“If we want to go through with the energy transition, we need to involve every citizen, every consumer, every household. We need a whole new approach.” — Max Laven, Policy Adviser at CertiQ

A decentralized and democratic system will have to replace the high levels of centralized control that are currently used to ensure reliability and security in the grid. Questions on who handles device information, who can control it, and who is ultimately responsible for it, become increasingly relevant. Trust will be essential in addressing these issues.

Blockchain plays an important role here by enabling the registration of device-level data in a shared and immutable ledger. It ensures that all participants involved in a transaction have access to the same information, and by doing so, it builds trust and transparency into the system. It provides a basis for building more efficient, shared processes that are fit for scaling across multiple axes.

“Ultimately, blockchain helps us to get more flexible, simple and open market solutions up and running. It has a huge role to play in a green economy.” — Tom van der Staak, Project Manager at Enexis

In addition to addressing the four key disruptors, we see five themes emerge, namely: opening up access to existing markets, the emergence of new marketplaces, a move towards full disclosure, a drive for standardization, and achieving back-end process simplification.

Each story has a unique starting point and objective, yet all share the same approach in carefully designing the blockchain-based solution with the entire ecosystem in mind. In the end, these stories demonstrate that it is not about the technology, but about what blockchain enables for companies, industries and society as a whole.

The pressure is on to deliver on the changes we need to transition to a low-carbon economy, but this brings about many opportunities. We hope the examples in this report not only demonstrate the art of the possible with blockchain, but also inspire you to bring other use cases into reality.