Blockchain technology has a huge potential for the future of the global energy sector.

To unlock this potential, four research projects have been launched with the support of the Federal Ministry for Economic Affairs and Energy, examining solutions based on blockchain for the coming period of distributed energy. The projects deal with a full range of options, from energy trading in real time, through community solutions and virtual energy storages, to platforms enabling energy producers and subscribers to stabilize the local grid (virtual grid of included users).

In the energy sector, blockchain technology is used more and more, because it has potential to provide these benefits:

  • Cost reduction using optimization of energy processes
  • Improvement of energy security in the sense of cybernetic security and in terms of support technologies for distribution security as well
  • Supporting greater use of renewable energy resources and reducing carbon footprint

Where is blockchain most beneficial?

A typical field for application of blockchain in energetics is trading. The involved parties use blockchain for simplification of energy transactions within the distribution or even wholesale level and create a virtual grid. With smart technologies, the whole process can be automated.

Benefits and limitations

There’s a whole myriad of benefits to this approach, however the most appreciated one is cost reduction. Lower bills for energies, lower transaction costs and last but not least, reduction of costs for human capital belong to the most obvious benefits of blockchain. More cost savings emerge thanks to better information about variable components of consumption and energy production, for example from renewable resources.

Even though significant benefits have been reached in connection to blockchain, there are still some pitfalls standing in the way between blockchain and mainstream technology. Energy regulations that contain exact rules on who can be an energy trader and who not might be one of them.

Although pertinent system decentralization is going to require thorough control and functional management techniques, blockchain will offer a much more flexible environment and high quality coverage of real energy needs without major outages and overloads.