The Uses of Blockchain in Energy Trading

The energy sector faces challenges of rising energy use, deteriorating climate, and ever-changing technology. Blockchain technology is not an immediate solution to these issues, but it has the potential to assist.

Fremont, CA: A decentralized smart grid relies on distributed energy resources such as solar panels, wind turbines, and combined heat and power systems. DERs create electricity locally, potentially resolving energy loss and fault tolerance issues. These technologies are advancing rapidly, but they require a dependable energy trading platform. As with any power generator, DERs wish to sell excess energy and be paid promptly. Current energy trading systems were not intended for this decentralized network comprised of tiny energy providers; hence, a new energy trading system is required.

Some blockchains additionally feature so-called "smart contract" technology. Blockchain platforms are fault-tolerant. This permits a basic buy-and-sell energy contract to be expressed in code and automatically executed on a blockchain-based trading system. This has the potential to drastically lower transaction costs and settlement delays associated with energy trading. A decentralized smart grid utilizing blockchain technology may adjust dynamically to supply and demand in near real-time and distribute payments in minutes. Energy transaction concerns can be resolved to reduce the cost of renewable energy, boost energy efficiency, combat climate change, and track energy consumption and generation at an unprecedented degree of precision.

Blockchain is a P2P energy trading system

On a connected grid, P2P trading is the direct exchange of excess power between two parties. The blockchain provides a secure platform for peer-to-peer trade that tracks the transfer of assets, such as an energy unit. Blockchain is a distributed ledger technology that keeps data on a decentralized network in a transparent manner. It is utilized to track transactions and assets. Each block in the chain holds several transactions in a simple format to audit and verify but is extremely difficult to modify or alter. Blockchain can be a highly attractive solution for distributed energy firms when combined with smart contracts that automate the buying and selling of energy depending on supply and demand. It might substantially simplify the process of purchasing and selling electricity and enable very localized energy production. Existing energy firms may also participate, but they must adapt their current technologies and business strategies.

Blockchain trading with renewable energy

Solar energy is one of the most widespread and readily available DERs. People without solar panels might purchase excess renewable energy from their neighbors in a P2P trading system. A localized microgrid avoids many inefficiencies of a centralized, monolithic power generation system since it can respond more flexibly to local demands. Local power generation also decreases transmission line power loss. DERs can minimize expenses, waste, and environmental damage. Renewables are sometimes criticized for their reliance on particular conditions. Solar energy requires sunlight, while windmills require wind. Blockchain trading presents a remedy to these issues by facilitating the sale of extra energy to those in need.