blockchain energy - Photo by Shubham Dhage

Blockchain as an energy sector game changer

This article was published on Apr 14, 2023, 3:13 PM

Reading time: 2 minutes

Around the globe blockchain is touted as a game changer for many sectors, particularly electricity.

What's in this article

    Blockchain as an energy sector game-changer

    [Stu Innes]

    It's been a pretty interesting afternoon. Definitely good to see how many people are involved

    and interested now from the industry so that's definitely changing. 12 to 24 months ago the

    talk was all around batteries and EVs and what they would do to the industry and now big

    big interest in blockchain and what that means for the businesses here.

    [Fraser Clark]

    The challenge to thank for blockchain is to demonstrate that it's something more than the

    systems that we've got today, which are working sort of adequately for the market so it's, can

    you use blockchain to get more value, to get more efficiency, create new services and

    products so that's I think a little bit for the people in the market to see those opportunities

    and then use that blockchain is the platform for that to happen.

    But when you look at the extent of transactions and interactions that are going to have on

    the market and to the future we've got a range of new consumer technologies, more

    computing power, more ways for consumers to participate, so we’ve got a whole range of

    products. Then you've got markets, the electricity market becoming more sophisticated as

    it's become more mature, finding new ways to manage risks, new ways to operate, new

    services coming along. As networks try to optimise their assets can they use some of this

    technologies, so you're only going to see an increasing proliferation and the amount of

    transactions, and the extent in complexity of those.

    [Dhanish Semar]

    I found that it’s pretty engaging actually. There's variety of speakers and I personally wasn't

    big into electricity sector but it's good to see the amount of disruption that's available within

    this industry and where New Zealand's playing it. So yeah I really enjoyed.

    [Jennifer Rozendaal]

    I thought it was really good as well. I thought they all brought a very different point of view,

    and they all built on each other as well. So we went right from, kind of, what the wider

    impacts are through to the challenges.

    [Paul Ruediger]

    What trader doesn't want a faster transaction, more transparent platform, and you know

    efficient trading. The, so what you'll see is these private networks forming betwee

    organisations where they can buy a sell directly with one another. You'll also see platforms

    from, you know, one-too-many, so capacity markets might be one. Globally we haven't

    seen capacity markets work that well in the energy sector, and maybe blockchain

    can do that because you can sell to thousands of people rather than just maybe one person

    or two.

    [Nigel Broomhall]

    Blockchain provides a number of opportunities for the electricity sector. I think anywhere

    where these friction around transactions, so there's an ability to apply that. Blockchain it's

    never gonna be the silver bullet to a lot of things so I think there’s payments is going to be

    interesting. So I know you talked about what you could do with cryptocurrency in terms of

    paying and things like that, I don't think a lot of people realise just how seamless that is

    to use as a payment systems. I think with the energy industry would be interested in that.

    [Margie McCrone]

    One thing that I did find quite interesting is that I've always sort of thought about it from the

    consumer end of the spectrum, so always sort of being at that kind of peer-to-peer level, but

    actually the opposite end of it, at that whole sale market level, perhaps is where there are

    a lot of opportunities.

    [Jenny Cameron]

    Even getting down to transparency of what your specific appliances are doing which will

    have great customer benefits at that real front end. But then there's all the backend benefits

    from blockchain or even just more crunching of the data that's coming through, and the

    amount of data. So in that case you've got the supply contracts of getting more visibility

    around maybe it might be percentage of renewables that was actually provided at

    that time, and more real time perhaps might come through, areas around metering

    billing and clearing processes will start to become more faster basically, and more prosumer

    engagement, which i think is one of the key areas where blockchain is really stimulated,

    stimulated the market and stimulated people's ideas around that peer-to-peer more

    engagement and that's really driving engagement from consumers as well.

    [Jennifer Rozendaal]

    Yeah I think if I could say okay at some point from 7 p.m. to 8 a.m. I want my washing

    machine to turn on, whatever the time of that, in-between there is a [], one hundred

    percentage see it will automatically turn on.

    [Dhanish Semar]

    Yeah, if I can turn on and off my mains when I'm not at home, then sure I will, like I mean

    why not. Like if things are easier then yeah I’ll do it.

    [Stu Innes]

    We've had a pretty cool journey over the last, what's it been now, probably six months we've

    been working pretty intensely with Callaghan, coming out of the Lightning Lad electric

    program, was where we really really got involved with that. That was a huge amount of effort

    massive massive amount of reward out of the end of that with the trajectory that we're now

    on. And even today working with your data science team so we didn't even know about them

    six months ago and today we got to go and visit them.

    Blockchain - a public ledger of records, linked and secured using cryptography - is one of many technologies which may disrupt the energy sector. There is much potential in blockchain technology, but also complexity in trying to understand what opportunities it really offers, and how these can be applied to the sector.

    On Thursday 16 November 2017, ERANZ, Genesis Energy, Callaghan Innovation and Advisian held a seminar exploring blockchain's future in the energy sector.  

    Fraser Clark, Associate Advisian

    [Fraser Clark]

    The challenge I think for blockchain is to-to demonstrate that it’s more than just a system

    that we’ve got today, which is working, sort of, adequately for the market. So, can you use

    blockchain to get more value, to get more efficiency, create new services and products so

    that, I think a little bit, for the people in the market to see those opportunities and then create

    that, use the blockchain as the platform for that to happen. But, when you look at the extend

    of transactions and interactions that are going to happen on the market, in to the future,

    we‘ve got a range of new consumer technologies, more computing power, more ways for

    consumers to participate. So we’ve got a whole range of products, then you’ve got the

    markets, the electricity market becoming more sophisticated, it’s becoming more mature,

    finding new ways to manage risks, new ways to operate, new services coming along as

    networks try to optimise their assets, can they use this technology? So, you’re only going to

    see an increasing proliferation and the amount of transactions and the extend in complexity

    of those.

    The application, in the electricity market in general is quite challenging, you’ve got this need

    to, you know, unlike some of the areas where you’re trying to establish a peer-to-peer trading

    like AirBnb and Uber, where there’s, sort of, you look in to the future, with electricity, you

    need this- you know, everything to balance in real-time. So you’ve got to try and- it’s not

    about what’s happenin in the future, it’s right now, supply demand need to be balanced,

    which creates a sort of different dynamic around it. And then, related to that too is that we’ve

    got this sort of common pool- everyone is putting their electricity into this big bucket and then

    taking out of the same bucket. So, what your customer, if you like, the person you’re selling

    to, isn’t going to get the very thing that you put into that market. So then there’s little quirks

    with that, abd the losses in the system as well, so you have to manage that. It’s probably not

    necessarily a big deal, but just something you have to bear in mind that what you put in isn’t

    what you take out. And then you’ve got another quirk that we all need the same quality, so

    you need to make sure-you need to make sure the power system stays robust with voltage

    and frequency and power quality. And so, at a bulk level, we have people providing services

    that ensures that so you need to make sure through all the blockchain trading process that

    all those people who are providing those services are being paid for that. And that, might be

    people that are participating in that process as well. You’ve got… qual-quality then unlike

    other areas, you can’t take yourself out of- you can’t remove the whole supply chain. And

    there’s been some of the other models around disentermidation and taking people out of the

    supply chain if you want to sell your electricity to someone down the road, or even further

    afield, you need to use the networks, probably the meters. So somewhere along that

    process, you need to make sure people get paid for providing those services. And then the

    other thing to is that your- it’s not going to be a one-to-one transaction at any given time,

    you’re going to- every half-hour or how long it is, you’re going to be buying electricity from

    somebody else. Multiple parties selling to one party, so there’s a whole, sort of, range of

    different- something that are different to just to, kind of, more well-recognised peer-to-peer

    type of relationship that might use a blockchain arrangement. So for New Zealand, probably

    some regulatory challenges around some of the data access side of thing. At the moment,

    there’s a retailer who control- are responsible for the flow of data. You might have some

    commercial challenges around, well, if you’ve got multiple parties involved in supplying a

    customer, who is going to be responsible for paying for the networks, for the meters? Who’s

    going to responsible if there’s a loss of supply or some quality issues? Who do you talk to if

    you want to change, say if you want to change your tariff in terms of say the distribution

    networks that you’re on? What happens if the lights go out, who do you call? At the moment,

    it’s the retailer and in the future, is that the retailer? If you don’t-well, if it’s your neighbour,

    you probably aren’t going to get much help from them. So it- not to say that the retailer of

    today is the right person to do that role, but it might mean that the way we think about who’s

    responsible for some of the services, some of the way…, some of the responsibility around

    guarantees and performance, who to talk to when there are issue? Some of those might

    change a bit, which will mean changes for some of the different parts of the sector and

    different parts of the supply chain.

    In this video Fraser Clark from Advisian looks into the future of blockchain and energy to answer the following questions:

    • How significant will blockchain be for the electricity sector?
    • What are the challenges for blockchain adoption in the sector?

    The challenge for blockchain is to demonstrate that it is something more than the systems that we have today
    …Can we use blockchain to get more value, to get more efficiency, create new services and products?

    Presentations from the seminar:

    Further information:

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