Today’s energy companies face a stark choice: innovate or become redundant.
As with the smartphone market, they may follow the path of Nokia, which, overestimating the power of the brand and underestimating the market willingness to embrace a novel way to communicate, failed to capture a timely transition to smartphones. Alternatively, they may follow the Samsung path, which changed its philosophy of being a “fast follower,” embraced engineering talent from abroad and adopted a unique innovation process to become a telecommunications technology leader.
Energy markets across the globe are a source of enthralling new opportunities as they experience transformation at unprecedented scale. Days, or rather decades, of the sole domination of centralised large-scale assets, systems and processes are numbered.
The future is one where people embrace a critical role in specifying and controlling their energy; where autonomous, intelligent devices operate on a hyper-local level, aggregating to underpin a distributed energy network; where renewables, including home solar panels and electric vehicle batteries, operate in harmony with large-scale assets.
The new business models will be founded on completely new capabilities enabling the Schumpeter gale of creative destruction along the entire energy value chain:
- Transactive Energy: the ability for individuals and communities to obtain and trade energy peer-to-peer and machine-to-machine without (complex) intermediaries and with an unprecedented control of their own data and energy usage, additionally empowered by the ability to source energy from smaller assets, including their own renewables, and to provide energy access to the entire planet.
- Certificates of Origin (Renewable Energy): the complete reinvention of complex accounting, transacting and reporting systems to increase participation, simplify trading and settle instantaneously.
- Vehicle to Grid: individuals, communities and businesses combining to utilise electric vehicles to both power their own accommodation, but also to receive value for providing spare electricity from the vehicles to the network.
- Local Participation in New Markets (Flexibility, Capacity): individuals and communities taking action locally, ranging from providing electrons and capacity (solar, storage, EVs) to demand response, and receiving value from the system operator.
- Asset Management and Supply Chain: the ability to switch supplier instantly, along with the ownership and title to on-site assets, without the complexity of involving multiple parties, complex registers and processes.
Blockchain’s fundamental attributes as a transparent, inherently trusted and more-resilient IT platform, capable of operating applications defined by smart contracts, render it a powerful technology to accelerate the transition towards a distributed and decarbonised energy future.
Blockchain a) improves the efficiency and delivery of current business model; b) unleashes incremental innovation in core business models; and c) unlocks entirely new business models that simply were not possible before its advent.
Currently, there are a number of companies developing demonstration projects and proof of concepts, and they will present novel, blockchain-empowered energy models at the annual convening of energy and blockchain innovators, EventHorizon 2018, which will be held in Berlin, Germany, April 17–19, 2018.
Many of these pioneering developers - including Electron, EvolvePower, GreenRunning, Oli Systems, Swytch, Wirelane and Wirepass - have joined the Energy Web Foundation, a non-profit organisation building an open-source public blockchain as a platform for blockchain applications in the energy sector with the support of major global energy corporations.
As the pace of blockchain technology adoption increases and billions of connected devices challenge how we produce, control and consume energy, who will be the leaders and who will fall by the wayside becomes but a rhetorical question.
Neil Pennington, Ph.D., is a strategic advisor to blockchain company Grid Singularity, a co-founder of the Energy Web Foundation.
Ana Trbovich, Ph.D., is co-founder and COO of Grid Singularity and member of the Energy Web Foundation Council.