Blockchain tech could reshape utilities sector
Blockchain has the potential to change the utilities sector, according to research from the Council on Foreign Relations (CFR) an influential US-based non-profit organization.
The CFR insists blockchain could be a tool for managing complexities into the functioning of electric power systems and provide an easy solution to those who need to escape from centralization and switch to direct trading instead.
Blockchain’s transformative capacity comes from its ability to host secure, swift, frictionless, and transparent transactions and most energy firms plan to replace centralized power system with a decentralized, P2P energy trading.
However, CFR believes ventures that combine blockchain with existing systems will do much better in the future.
CFR noted: “As utilities struggle to sustain reliable service, meet new policy objectives, and cope with rising complexity, innovators are peddling a putative solution: blockchain technology.
“Proponents of blockchain technology liken its potential to that of the internet three decades ago.”
As reported in Cryptovest, Peer-to-peer transactions seem the most useful of all functionalities allowed by the blockchain for companies trading with electricity as some start-ups are working on distributed ledger technology (DLT) initiatives to transform the mechanisms of the electric power market.
They aim to develop a ledger to host virtual transactions and allow entities to sell their electricity generated by solar panels or batteries.
Many ventures are using blockchain to raise crypto funds for projects, predominantly in the clean energy market, while others prefer using it to record and trade attributes of sustainability, such as those related to the emissions volume after electricity production or whether a unit of electricity is renewable.
Even if utility-related companies are willing to adopt blockchain, they need to be backed by proper regulation, according to CFR.
Indeed, CFR has issued recommendations on what type of regulation this industry would need to apply blockchain easily. The organization suggests policymakers should support the development of technical standards and allow blockchain ventures to set up small-scale demonstration projects through regulatory sandboxes