Ten energy companies spanning continents have joined forces to explore the use of blockchain technology in the energy sector including Royal Dutch Shell, Centrica, Tokyo Electric Power Co (Tepco), Elia, Engie, SP Group, Statoil ASA, Stedin, TWL (Technical Works Ludwigshafen AG) and Sempra Energy.

They have joined the Energy Web Foundation (EWF), founded by the Rocky Mountain Institute, an independent, nonprofit organization focused on driving the efficient and restorative use of resources, and Grid Singularity, a blockchain technology company specializing in energy sector applications.

Grid Singularity is co-founded by Gavin Wood and Jutta Steiner, both well known ethereum developers, and describes itself as “building integrative blockchain solutions for distributed energy markets with Parity tech on ethereum.” According to a press release:

“Grid Singularity is leading the development of an open-source, energy-specific blockchain infrastructure that will be maintained by EWF and supporting affiliates. Grid Singularity, together with its partner Parity Technologies, will bring the most advanced blockchain technology, addressing the limitations in terms of speed and transaction costs of the currently available blockchains, and enabling features that are focused on supporting energy-specific applications.”

Ewald Hesse, chief executive of Grid Singularity and vice-president of EWF, said that the current ethereum testnet network, Kovan, can handle 1,000 transactions per second, with plans through the use of state channels to scale it to some 1 million transactions a second.

The project has just received funding of $2.5 million, so it is not clear what the end result blockchain will look like, but considering that the blockchain specialists seem to be mainly ethereum experts, it appears likely the end base protocol will be very similar to eth.

Their aim is to more easily integrate renewable energy into the grid system which presents unique challenges of its own as it requires “automation at the distribution edge, and integration of this automation with wholesale markets,” according to Hervé Touati, a managing director at RMI and president of EWF, who further says:

“Blockchain will not be the only building block of the 21st Century grid, but it will most likely be a key building block. It also provides much higher levels of cybersecurity essentially for free – which addresses, as a by-product, one of the key concerns of utility executives when it comes to distributed energy resources.”

The very complex energy grid system requires constant monitoring of supply and demand to address any misbalances through turning on or off the use of energy resources as required. That means a vast web of devices is connected which can more easily be managed with blockchain technology. The press release says:

“Blockchain technology can allow millions of energy devices (HVAC systems, water heaters, electric vehicles, batteries, solar PV installations) to transact with each other at the distribution edge while providing support to utilities and grid operators to integrate more utility-scale variable renewable energy capacity at much lower cost.”

Energy isn’t the first thing that comes to mind when you think of blockchains, but there have been a number of energy related blockchain projects in development or piloting recently such as the smart grid energy sale pilot by Siemens in collaboration with an ethereum based energy start-up.

That may suggest the applications of this technology might truly extent to all areas, from finance to music, social networks to our very own electricity.