If you like to keep up with the buzzwords, then it is more than likely that you are aware of the term blockchain. It has been a buzzword for way too long but let’s not reduce it to merely just that, even though it is mostly just thrown around for that purpose. However, blockchain is a buzzword for good reason. Blockchain can be applied to the industries in the real world, just in case you were wondering. From banking to healthcare, blockchain is being applied thoroughly to every sector out there in the market. And as if blockchain wasn’t already being applied everywhere, now a green energy production company in Estonia which goes by the name of WePower is focusing on harnessing the power of blockchain to make operations in energy market more convenient.
What the company basically did was it connected the green energy suppliers to the buyers of green energy, and this was done after WePower signed a deal with Elering which is a well reputed and independent energy system operator in Estonia. The basic gist behind this was to utilize tokenization by simply entering the production and consumption data of energy into the blockchain and then enabling the sector to get digitized. Now the project is receiving the results of its pilot assessments.
Ever since the inception of this project and up until now, WePower has successfully been able to put up the data of 26,000 hours and 24 TWh of energy consumption to the blockchain. The company began by linking its blockchain based platform with the data of the energy system operator Elering in Estonia. This basically enabled the blockchain based platform to get the access of Estonia’s smart meter data. This led WePower to create 39 billion energy tokens.
Now that we have covered the process of connecting the blockchain platform with the data of the Estonian energy sector, let’s discuss the problems WePower and Elering were aiming to solve with this cutting edge platform.
The energy produced in this European state – as much as 82% of it – is produced through fossil fuels. A mere 18% of it is produced through renewables which evidently is a very short number. The purpose behind implementing blockchain technology in the energy sector of Estonia is to check out the limits of blockchain and see what doors would this technology will open for the energy sector of the Baltic state. In addition to the testing process, WePower is also trying to foresee if the percentage of the energy produced by renewable resources can be increased, and if yes then how. Although, recently there has been a drop in the prices of renewables, small companies still don’t have means to start buying green energy yet.
This is where WePower came in, to provide the data of the available energy and make it available for energy buyers. However, the data isn’t just restricted to the available energy. It also enables people to share their personal energy meter data with energy suppliers.
Prior to blockchain one of the problems coming in the way of making this process widespread was how sensitive the information of energy actually was. It was keeping the investors, developers and engineers at bay and the process of coming up with new solutions was slowed down. Now with blockchain both the developers and the investors have a trustworthy and transparent platform that they can rely on to keep the information safe. It also develops reliability and liquidity between the supplier and the purchaser. So to simplify, it can be said that blockchain technology makes it quite easy to trade on renewable energy. By doing this WePower enables the purchasers of energy to choose between multiple green energy providers which makes everything very convenient for them to say the least. Not only does it provide people with readily available green energy sources but due to the diminishment of the middleman, the price significantly goes down as well.
If you have researched about blockchain and you are aware about this technology, then you must be aware of the fact that it is applicable to any sort of energy or any good can be purchased or sold over it like we have discussed in our earlier post. However, WePower is only focusing on the energy produced from renewables at the moment.
For now, the tokenization of the renewable energy is provided as a way more sophisticated and convenient way of purchasing energy as opposed to the traditional energy purchasing method. This pilot project is going to provide the investors with the data that what are the limits of blockchain with respect to renewable energy. In case this project is successful and a lot of buyers purchase energy through it then it is assumed that the project will be scaled up and made bigger.
Although, currently it is not clear if scaling up the project is actually going to work or not. This is because blockchain technology would have to deal with the data that is coming in, in high speed and huge volume. Another concern that has arose is the transaction capacity. The transaction capacity is a factor because WePower primarily uses public ethereum blockchain which utilized the POW approach which uses a lot of power and expertise that only the experienced ethereum miners have. It is however, expected that ethereum might in the future move to the relatively easier, POS approach. But for now the POW approach is keeping the capacity of the transaction limited.
Although this is not going to be an issue for now, as long as the pilot project is running. But it will be a problem if the project is going to expand and full potential of it is unlocked.
Another concern in this market is the fact that the energy sector is rather centralized so it is difficult to try to eliminate the “middlemen”. This makes blockchain to be accepted by the general public for long term tricky and difficult.
So, it is safe to say that currently blockchain technology is still in search for real-world application.