For over a century, the energy grid has been run by a monopoly. It remained a centralized, state-owned system co-located with significant sources of fuel. Due to the high barriers to entry and economies of scale, little competition exists.

With old equipment, outdated engineering, and the use of non-renewable fossil fuels, futurists believe that blockchain technology could fuel a disruptive peer to peer energy movement.

Breakthroughs in solar cell technology coupled with the blockchain allows households to generate, store, and sell electricity directly to the market than through a third party utility.

How to decentralize energy

A centralized energy grid is a multi-tiered system. Energy producers, the network, transmission operators, suppliers, and banks all work together to supply the user with electricity.

A decentralized energy grid, on the other hand, only involves energy producers, the network, and the user. This simplification is highly dependent on a combination of current and emerging technologies. These include renewable energy sources, an energy network, sensor technology, the blockchain, and the internet of things.

Using solar energy as an example, ‘pro-sumers’ (consumers that produce renewable energy) could install meters with sensors and smart technology. A smart meter would measure energy from the solar grid and send information concerning energy production, consumption and any excess energy to a mobile app.

Informed pro-sumers can sell this excess energy to the market via an online trading platform. Any transaction would be fully automated based on smart contracts, and the Ethereum network could record these sales. The power grid would deliver the purchased energy to the consumer to use.

Using blockchain as a base, it’s possible for a decentralized energy grid to facilitate the production, distribution, and selling of renewable energy from small local homeowners.

Wien Energie and We Power

Wien Energie is Austria’s largest utility conglomerate. They currently partner with Canadian Based BTL Group, as part of a new blockchain trial focused on energy trading.

The trial finished in June 2017, becoming the first successful blockchain-based application on the energy market. While Wien Energy’s focus is on leveraging blockchain technology in the existing system, startups We Power are building a new infrastructure.

We Power, unlike Wien Energy, is a blockchain-based energy trading platform. Based in Europe, they connect green energy producers with global energy consumers. The platform aims to launch in March 2018. The organization allows energy producers to finance their renewable energy projects through tokens, which represents an upfront purchase of electricity.

We Power accelerates the development and use of renewable energy through selling and raising capital on a blockchain-based trading platform. In the short term, We Power plans to work with larger energy producers. The long-term vision, though, is to involve smaller players. In the future, they hope to bring homeowners on board to create a co-operative, flat electricity system.

Although a decentralized energy grid could disrupt monopolies running the utility network, the energy industry remains highly regulated. Loosening regulations will take time.

Blockchain and the internet of things are relatively new technologies that require further development. Given this, it may take several years for these technologies to achieve widespread adoption and use.

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