The Energy Industry Leverages Blockchain for Energy Trading

Energy manufacturers use blockchain technology for energy trading to solve issues like energy loss.

FREMONT, CA: Research and discussion on the connection between centralized energy systems and climate change are quickly gaining popularity. Numerous potential solutions, including distributed energy resources (DERs), renewable energy sources, and blockchain-based peer-to-peer (P2P) energy trade, will undoubtedly be implemented for such a significant problem. The energy sector must deal with substantial concerns like rising energy usage, a failing environment, and rapidly changing technology. The blockchain solution has the potential to help, but it does not immediately solve these issues. Although Bitcoin miners and cryptocurrency are frequently linked to the blockchain, this technology is equally applicable to the transactive energy market.

The centralized electricity infrastructure has several serious problems. These include its limited fault tolerance and energy loss during long-distance transmissions. A decentralized smart grid serves as an alternative to a conventionally centralized system. DERs like solar panels, wind turbines, and combined heat and power systems are essential to a decentralized smart grid. DERs produce electricity locally, which could address the problems of energy loss and fault tolerance. These technologies are evolving quickly, but they require a reliable trading mechanism for energy. DERs want to sell any extra energy like any other power source and get paid promptly. Because the decentralized network of local energy providers that makes up the current energy trading systems was not intended for it, a new method of energy trading is needed.

Although some blockchains offer “smart contract" technology, blockchain systems are fault-tolerant. This enables a straightforward buy and sells energy contract to be expressed in code and carried out automatically on a trading platform based on the blockchain. Both transaction costs and settlement times could be dramatically lowered in the energy trading industry as a result. Blockchain-based decentralized smart grids could make payments instantly and dynamically adjust to changes in supply and demand. The cost of renewable energy is reduced, energy efficiency can be increased, climate change is stopped, and much more precise measurements of energy generation and consumption is made by resolving the energy transaction difficulties.

Renewable energy sources are usually criticized for their reliance on particular circumstances. Solar power needs sunlight, and windmills require wind. By making it much simpler for people with excess capacity to sell it to those who need it, blockchain trade offers a solution to these issues. Participants in a microgrid can buy power from other sources when renewable energy sources cannot produce it at night or on a windless day. Although biomass, geothermal, and hydropower are reliable sources of green energy that could profit from blockchain trade, solar and wind are the two most well-known DERs.