As recently as 2016, blockchain was almost unheard of in the energy industry. However, after the explosion of ICOs in 2017, it seems people are realizing how blockchain could change the way we use energy.
It’s not just start-ups pushing this change; established power companies are also getting in on the act. Research has suggested that crypto adoption in the energy industry could skyrocket from 2019 to 2023.
The beginnings of crypto adoption in energy
According to Wood Mackenzie, the adoption rate of blockchain in the energy sector improved markedly in 2017. This is mainly thanks to energy-related ICOs raising more $300 million in 2017 alone. These fundraisers brought 122 companies to life, mostly in the U.S. and Germany.
Of course, the growth of the blockchain industry as a whole also helps explain this expansion. Businesses that had previously been scared off by value fluctuations and hacks in the crypto world began to see how they could use blockchain in a completely different way.
There is, of course, a long way to go. According to PwC research published in June 2018, only one percent of energy CIOs reported that their business had adopted blockchain in any way. Of those CIOs, only eight percent had any interest in adopting blockchain in the future.
Blockchain improving energy efficiency
A host of companies around the world are now using blockchain to create smart grids. These grids reduce energy consumption and allow for peer-to-peer energy sales. Siemens is perhaps the biggest name to get involved in, albeit indirectly, by investing in blockchain start-up LO3 Energy.
South Korea’s biggest power utility – Korea Electric Power Corporation (KEPCO) – recently announced development plans for its own blockchain network. In the announcement, President and CEO Kim Jong-gap said:
The three major trends in the future of the energy industry are decarbonization, decentralization, and digitalization.
The Korean company plans to implement its distributed ledger energy system in 2019.
Another recent example of blockchain adoption in energy is Singapore Power Group. In late October, the group released its new blockchain-based platform, which allows businesses to trade renewable energy certificates.
Neither the Singaporean nor the Korean platform currently uses cryptocurrencies. But both examples show that major energy companies are looking to this new technology to solve problems.
A bright future ahead
According to a report by Power Engineering International (PEi), blockchain adoption in the energy industry is expected to grow 65 percent between 2019 and 2023. Tech giants such as IBM, Amazon, and Microsoft have developed BaaS programs (Blockchain as a Service) for energy firms. Other energy organizations are looking to develop their own in-house solutions.
With major players like IBM and Microsoft on board, experts see a bright future for crypto adoption in the energy industry. PwC lists lower costs, faster processes, and greater flexibility as reasons for companies to test blockchain as a solution.
That said, several obstacles remain. One of the biggest hurdles is energy companies’ aversion to cryptocurrencies. While they’re happy to implement blockchain ledgers, many remain lukewarm towards crypto.
While it might take time for energy companies to warm up to crypto, their adoption of blockchain is a great sign. In the future, we can expect that the transparency, efficiency, and network stability of blockchain will help compel energy companies to invest in this revolutionary technology.