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Study Indicates Blockchain Vital Ingredient for Carbon Efficient World

Study Indicates Blockchain Vital Ingredient for Carbon Efficient World

According to a major comprehensive study, blockchain technologies “can clearly benefit energy systems operations, markets, and consumers”.

Unbiased

The study, ‘Blockchain technology in the energy sector: A systematic review of challenges and opportunities‘, was made available online last month. It was conducted by scientists from Heriot-Watt University in Scotland who were looking deeper into the potential of blockchain technology when applied to the energy sector.

Having reviewed 140 blockchain research projects and startups, the researchers mapped out the “potential and relevance of blockchains for energy applications”, from which they have drawn several varied conclusions with regards to the present and future opportunities of distributed ledger technologies (DLT) as well as the challenges the technology faces.

Citing hallmark blockchain features such as “disintermediation, transparency and tamper-proof transactions”, the study also describes the “novel solutions” that DLT offers, writing that it also empowers consumers and “small renewable generators to play a more active role in the energy market and monetize their assets”. It adds that blockchains have resulted in sharing economy applications in energy, prompting authors to cite “novel market models and energy democratization”.

Intelligent energy

Referencing a survey of the German Energy Agency, the study highlights the growing positive sentiments toward blockchain with 20% of them seeing the tech as a “game changer for energy suppliers”. Furthermore, it notes that numerous energy utility companies have begun to explore DLT’s potential “as an enabling technology for low-carbon transition and sustainability”.

A city in South Korea and the United Kingdom are just two examples of jurisdictions that have partnered with blockchain enterprises on a mission to reduce carbon emissions via their solutions. The UK example is notable as the intention behind the ambitious project is to turn the city climate-positive, offsetting 110% of the emissions and utilizing the positive figure to fund conservation projects around the world.

There is also mention of blockchain enabled Virtual Power Plants (VPPs), these are distributed energy production facilities that connect multiple energy producers to a cloud-based system where excess and idle energy can be tapped and efficiently distributed and monitored. In South Korea, a VPP project was recently announced with renewable power generating units as the core energy model, intended to reduce energy consumption demands during peak-hours and redistribute it to wherever it is needed.

Power trades

A notable takeaway from the study is the examination of peer-to-peer (P2P) trading and decentralized energy. As written in the report: “Potential use cases in this category are decentralized trading in microgrids, bilateral transactions between prosumers and consumers and business-to-business (B2B) energy trading.”

Solutions provided by blockchain could be used in conjunction with VPPs, enhance grid and network management control as well other benefits. Most interestingly, direct P2P energy trading between users could create an on-demand energy marketplace, something of which numerous energy-based eco-blockchain startups are vying for, including one that is soon to go ahead in Japan.

The study is one of the most comprehensive of its kind and from an unbiased perspective, carefully examines blockchain in the energy sector as a future technology that boasts marvelous promise, but is not without its challenges.

Singing off, the study writes: “Blockchain technologies can be disruptive for energy companies and face a large variety of challenges to achieve market penetration, including legal, regulatory and competition barriers. Additional research initiatives, trials, projects, and collaborations will show if the technology can reach its full potential, prove its commercial viability and finally be adopted in the mainstream.”

 

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Blockchain Tech to Develop Next-Gen Energy Micro Grids in South Korea

In a press release today, South Korea’s largest power provider KEPCO said it plans to develop future micro-grids (MG) that use blockchain technology alongside other open energy community solutions.

Kim Jong-gap, president and CEO of KEPCO, said in the announcement that they are pursuing the KEPCO Open MG Project to develop future microgrids. The aim is to improve the already established energy infrastructures, especially those of the green energy systems by bridging the gaps between independent MG providers.

The current energy infrastructure being developed is seen as a solution to energy supply problems: “If electricity can be traded between MGs, it will be helpful to stabilize the power system of new and renewable energy by eliminating the system connection bottleneck.”

Previously existing MGs were based on the systems of photovoltaics, wind turbines, and energy storage devices which made it difficult for the electric power producer to supply stable power. However, with the newly introduced Open MG system, which is equipped with a fuel cell as a power source, there should be an increase in the energy dependence rate and efficiency, which will also promote eco-friendly energy practices as it does not emit greenhouse gases.

KEPCO is leveraging on blockchain’s decentralized aspects, one of the three major trends Kim believes are in the future of the energy industry: decarbonization, decentralization, and digitalization.

KEPCO is responsible for the generation, transmission, and distribution of electricity for most of South Korea. About 50% of the equity shares in the company is owned by the government and a government-owned bank, despite it being a public company. However, it continues to explore new technologies and innovations to improve energy distribution models.

In April this year, Power Ledger announced its partnership with KEPCO to begin exploring peer-to-peer energy trading. With the promise of increased funding from the South Korean government and the recent partnerships between KEPCO, Mitsubishi UFJ Bank, IT service management company Nihon Unisys, and the University of Tokyo, the country may well be on its way to transforming the energy distribution sector domestically.

 

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Shell, Equinor, BP to Use Blockchain for Energy Trading

Shell, Equinor and BP will be using the blockchain-based platform Vakt for energy trading, with operations on the platform to go live by the end of November 2018 in the North Sea oil fields. The purpose of using Vakt is to move energy trading from cumbersome paper contracts to digital smart contracts. Cryptocurrency will not be used for the trades but the deal recap, contract, confirmation, logistics, and invoicing will be recorded on the blockchain.

Shell is based in the Netherlands and has an annual revenue of USD 300 billion. Norway-based Equinor records annual revenues of USD 60 billion and BP USD 245 billion. Combined, these energy companies have assets of nearly USD 800 billion, approximately eight times the Bitcoin market cap.

Blockchain is known to shorten and strengthen supply chains, by providing a cryptographically secure, immutable, and transparent ledger. Inefficiencies and errors in the energy trading process will be easy to spot and correct, and fraud will be reduced due to the transparency. Overall, energy trading on the blockchain will be more reliable and efficient than with paper. It is expected that energy trading fees will drop 40% once the blockchain platform is implemented.

Vakt is a post-trade management platform that is meant to digitize the commodities trading industry. Aside from the major oil companies backing Vakt, the banks ING, Societe Generale, and ABN AMRO are on board, as well as the independent traders Koch, Mercuria, and Gunvor.

After the integration of energy trading in the North Sea oil fields in late 2018, Vakt will look to integrate barges, waterborne energy markets, and United States crude pipelines in 2019. Additionally, in 2019 Vakt expects its first licensees and shareholders, implicitly indicating the door is open for other energy trading firms to join Vakt.

 

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Affluent Bangkok Community Uses Blockchain to Exchange Energy

Residents of an affluent Bangkok neighborhood have been trialing a blockchain platform that allows them to exchange renewably sourced electricity with one another.

The firms involved with the project claim that it is one of the world’s biggest blockchain platforms providing users with peer-to-peer renewable energy services; the total generating capacity of the platform totals 635 KW. It operates within the Bangkok city energy grid with right now just a mall, school, dental hospital and an apartment complex taking part but commercial operations are planned to start next month.

David Martin is the managing director of Australian firm and partner of the project, Power Ledger. Speaking to the Thomson Reuters Foundation, Martin said that by enabling the community in Sukhumvit to trade and meet their own energy needs, the outcome will be cheaper bills for buyers, better selling prices and arguably most importantly, a reduced carbon footprint.

Consumers are incentivized to only use electricity that is necessary as they can sell unused supplies instead. The costs of switching to renewable energy through this process are also offset by users selling what they don’t need. If there is an energy surplus from all four locations currently taking part, it will be sold to local suppliers.

Gloyta Nathalang, a spokeswoman for Thai renewable energy firm BCPG that handled the installation for the project said that the future scope for renewables is endless: “There are opportunities everywhere – not just in cities, but also in islands and remote areas where electricity supply is a challenge.”

The World Energy Council has predicted that decentralized energy supply solutions such as this will expand to take over a quarter of the market in 2025 from just a 5% stake that it holds right now. The Bangkok Metropolitan Electricity Authority agrees with this, itself predicting that peer-to-peer energy trading will be mass-adopted in the long term.

Thailand aims to have 30% of total energy consumption renewably sourced by 2036, encouraged by the country’s energy ministry that is currently pushing for a reduction of fossil fuel use and new legislation to permit energy trading.

 

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US Senate to Review Blockchain Energy Efficiency

The US Senate is preparing for another blockchain hearing next week, this time to discuss its energy efficiency and implications.

The 23-member Committee on Energy and Natural Resources will hold the “Energy Efficiency of Blockchain and Similar Technologies” hearing on 21August to discuss the issues and practical implications of its widespread adoption on the energy sector.

A specific focus will be placed on the potential increase in energy consumption and subsequent electricity price rises, with the discussion based on estimating the most likely outcomes in the near future as the technology evolves.

The committee will also consider similar decentralized technologies, focusing also on the cybersecurity possibilities for energy industry applications. It will debate considering how blockchain could, in fact, be used to improve the security of computing systems that supply energy across the country.

This appears to be the first committee meeting from the Senate to explicitly discuss blockchains role and future in the energy sector.

The entirety of the hearing will be broadcast live on the committee’s website via webcam, with witness testimony also available on the site from the start of the hearing.

Renewable energy in blockchain

While Bitcoin has received criticism over the accused unsustainability of the mining process as was the case in Washington State recently, there is a significant movement in the community to develop a climate responsible solution to the problems of energy consumption.

A Lichtenstein-based startup called Solareum has developed a decentralized marketplace platform for renewables, with an aim to make solar energy more readily available and affordable to people internationally.

Another blockchain project, HashByte, allows users to rent hash-power from companies to limit wastefulness, as well opening up its own centers across Europe that utilize only renewable energy in their operations.

Unfortunately, the Senate has a poor record when it comes to staying fully up to date and informed on the most recent cases in technology as recently seen in the now notorious interview with Mark Zuckerberg, so blockchain advocates can only hope they have done their research this time.

 

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New Study Finds That Bitcoin Mining Consumes Far Less Energy Than Previous Estimates

Christopher Bendiksen and Samuel Gibbons from Coinshares Research released an analysis of the Bitcoin mining network on 21 May 2018 and found that Bitcoin mining consumes 35 TWh annually, 0.14% of global capacity and less than the energy consumption the tiny European nation of Luxembourg. This is less than half of the 71 TWh estimated by Digicononomist, which would be 0.32% of global consumption and comparable to the large South American nation of Chile.

The Coinshares study estimates the spectrum of rig types being used across the Bitcoin mining network in order to make its calculation. Quite the opposite, Digiconomist uses the Bitcoin Energy Consumption Index (BCEI) which is based on the philosophy that it is too difficult to calculate energy consumption based on hash rate because of all the different types of mining rigs and their varying efficiency. BCEI simply assumes that Bitcoin mining electricity costs are 60% of Bitcoin mining revenue, and calculates electricity consumption from the resulting figure by using a global average of 0.05 USD per KWh.

Furthermore, the Coinshares study finds that the Bitcoin mining network is primarily fueled by renewable energy, especially hydroelectric, massively reducing its carbon footprint. Apparently, Bitcoin miners do a good job of setting up farms where there is an excess of renewable energy being generated, like in parts of China and Quebec, Canada.

This would make the estimates on Digiconomist of carbon footprint far overestimated. Currently, they say each Bitcoin transaction releases 500 kg of CO2 into the atmosphere, but if Coinshares is right then the amount of CO2 released per Bitcoin transaction is less than half this estimation.

On 16 May 2018, Alex de Vries published a study on Bitcoin mining energy consumption in ScienceDirect that used the BCEI, and his study made rounds through cryptocurrency media causing much discussion on how Bitcoin mining is bad for the environment due to the burning of fossil fuels, and would soon lead to increased electricity costs globally.

Apparently the BCEI calculation used by Digiconomist and Alex de Vries is overly simplistic and makes no attempt to calculate Bitcoin mining energy consumption by summing up the power consumption of the mining equipment that comprises the Bitcoin network, which is what the Coinshares study does.

It can’t be known for sure which methodology is right or wrong, what can be known for sure is that experts disagree on the amount of Bitcoin mining energy consumption and it may be far less than what the media has been reporting previously.

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