Transformative disruption within the energy system from energy blockchain is only achievable if there are new regulatory frameworks and a willingness for consumers to engage, finds a new paper presented at World Energy Week.
Through a series of 39 interviews with key global leaders across the energy sector, regulators, and think tanks actively engaged in the blockchain space. The 2018 World Energy Blockchain Insights Brief, developed in partnership with PwC, posed two key questions: How far along is blockchain technology and is regulation an impediment to its progress?
Interviewees agreed that while blockchain has spurred great efforts in the innovation space from a wide number of organisations in the energy sector, much has yet to be done to ascertain the effectiveness of the technology and its full economic and technological potential.
“Energy blockchain is hailed by many as a game changer that will entirely transform the energy value chain, support new business models and stimulate a shift from consumers to prosumers,” said Angela Wilkinson, Senior Director, Scenarios and Business Insights.
She added: “The open question we find is: can it revolutionize the way residential consumers receive and consume energy without a restructuring of today’s regulatory framework and without large-scale consumer engagement?”
The brief shows there appears to be a broad consensus that however successful blockchain applications will be in the future, Innovative technology such as blockchain is accelerating the transition from energy as a commodity to a service and is fueling a re-evaluation of the energy value chain.
From the interviews conducted, two challenges appear prominent in inhibiting full adoption of blockchain within the energy sector: regulation and customer engagement. The majority of interviewees agreed that market participants need to design a new energy blockchain- enabled market before regulators could intervene.
Additional key findings and recommendations include:
- 85% of the interviewees agreed that blockchain has not yet attained commercial impact
- Blockchain technology is not an essential requisite for decentralization and democratization of energy
- Regulators must clearly state their philosophy and long-term vision
- Regulators need to define policies that do not constrain new business models enabling transactive energy systems
- Regulators need to define how DSOs and TSOs will collaborate in the future
- A fully scaled P2P market is dependent on residential customers becoming prosumers
“The further role of regulation with regards to blockchain applications in energy sector remains unclear,” said Jeroen van Hoof, PwC Global Power & Utilities Leader. “Certain degree of regulation, particularly in P2P, is warranted and should provide balance between innovation and customer protection. The big question remains open: at what point regulation should be updated to allow the full potential of blockchain technology to transform the electricity grid.”
van Hoof added: “Regulators, for their part, are by-and-large of a mind that regulation should wait until blockchain technology reaches maturity.”