How blockchain can open up the energy market: EU DLT expert explains

How blockchain can open up the energy market: EU DLT expert explains – Mail Bonus

Aside from the buzzing newcomer Web3, the concept of Industry 4.0, which incorporates the new and revolutionary driving forces of the next-generation industrial landscape, is a little less catchy. And, especially when it comes to the energy sector, blockchain is at the heart of this technology.

The authors of the recently published report by the EUBlockchain Observatory “Blockchain Applications in the Energy Sector” are convinced that distributed ledger technology (DLT) could become a key technology and has a very high potential to affect or even disrupt the energy sector. This is not surprising, given the five Ds in the digital green shift: deregulation, carbon offsets, decentralization, digitalisation and democratization.

The report outlines key guidelines for the blockchain in the sector and adds them to real-life examples and insights from energy market stakeholders such as Volkswagen, Elia Group, Energy Web Foundation and more.

Cointelegraph spoke to one of the co-authors of the report, the European, Middle East and Africa (EMEA) Trade Commissioner on the Energy Web and EU Blockchain Observatory and Forum member Ioannis Vlachos.

Vlachos explained the most interesting parts and concepts of the document, such as the granularity assumptions, the importance of self-sovereign identity and the possible role of DLT in developing non-electricity consumption.

Cointelegraph: The report points out that to this day, no blockchain / DLT solution has been widely adopted by energy system stakeholders. Why do you think this is? Could you try to answer that?

Ioannis Vlachos: The main obstacle to the widespread adoption of blockchain solutions by stakeholders in the energy system is related to the way energy markets are currently structured. The regulatory requirement, in most countries around the world, for small-scale flexibility, such as residential batteries, electric vehicles, heat pumps and more, makes it possible to participate in energy markets only with their representative representatives.

By considering a more direct market design where flexible assets, regardless of their capacity, can bid directly into the energy market, will minimize their marginal costs and will promote and encourage the participation of small-scale distributed energy resources (DERs) in energy markets.

This need for direct asset participation in the markets was identified and considered as a principle in the joint report “Roadmap on the Development of Regulatory Flexibility Regulations” by Entso-E and the European Union Representatives of the Distribution System published in June 2021, which recommends “access to all markets for all assets either directly or in combination “.

Blockchain technology, through the concept of DID and VC, provides the necessary tools to enable this direct access of smaller DERs to the energy market.

CT: How could a blockchain be used to track non-electricity sources such as biofuels?

IV: Blockchain technology provides the way to create a reliable ecosystem of perpetrators, where all information exchanged between assets, systems and actors can be verified independently with DIDs and VCs. This is very important to provide the necessary audit sites in non-electricity supply chains such as natural gas, green hydrogen and more.

Recently, Shell, along with Accenture, announced American Express Global Business Travel with the support of Energy Web as a blockchain solution provider, Avelia, one of the first blockchain-powered digital book-and-claims solutions for expanding sustainable aviation fuel (SAF).

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The report states that the use of blockchain in the energy sector is likely to be further explored and advanced.

What are the reasons for such an optimistic conclusion?

This conclusion is mainly drawn from the assumption that despite a highly controlled energy environment, we have recently seen a number of projects in the broader energy sector using blockchain technology. They do this either by implementing non-current use cases such as SAF’s Shell projects or with the support of national regulators and market participants such as EDGE and Symphony projects in Australia.

The EDGE and Symphony projects are supported by government agencies, the Australia Energy Market Operato and the Australian Renewable Energy Agency, and implement an innovative approach to integrating consumer-owned DERs to enable them to participate in a future energy-based energy market. approximation. In both projects, the distributed blockchain-based digital infrastructure of the Energy Web is used by assigning digital identifiers to participants, thus facilitating the secure and efficient sharing and verification of market participants’ data.

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In addition, we can not neglect the fact that blockchain technology is referred to in the European Union’s action plan for the digital energy sector, with an emphasis on increasing the adoption of digital technology.

IV: The term granularity refers to the need to increase the frequency of data that make it possible to trace energy products. Especially in the case of electricity, it is best to go from a monthly or annual correspondence of energy consumption and renewable electricity produced at a specific location to a more granular one (eg every hour) as the best method as it minimizes energy green washing. In this regard, Energy Web, in collaboration with Elia, SP Group and Shell, developed and released an open source toolkit to simplify 24/7 clean energy generation.

CT: Could you explain the concept of granularity, which sets the demand for blockchain in the energy sector?

CT: The report mentions an independent sovereign identity and defines it as “a growing ideology that promotes individual control over identification data rather than relying on external authorities. It is easy to imagine such an ideology with personal data online, but what does it mean for energy production and consumption?

IV: The importance of SSIs for energy production and consumption is due to the fact that consumer energy data can be considered as private data. [Prosumer is a term combining consumer and producer roles by one individual or entity.] Particularly in the environment of the European Union and in the light of the general data protection regulation, the accuracy (sampling frequency) of data on smart measurements can be very much related to data privacy. In addition, given the emergence of new business models that use consumer energy data to facilitate the provision of energy efficiency and management services, it further empowers the consumer with the concept of SSI to approve the distribution, processing and storage of its energy data. of necessity rather than luxury.