The electricity sector is in need of digital transformation, yet it’s often one that gets neglected. We know that blockchain technology cannot fix every problem. However, it holds significant value for the utilities sector, and especially power.
This means not just recording usage, but also tokenizing electricity and making distribution and usage fees fairer.
We can tokenize electricity to buy or sell surplus energy. This will allow for many consumers to save money on their electricity use, as well as obtain profit from selling their surplus energy. Often homeowners who use solar power, for instance, find themselves gaining credit as opposed to paying for electricity.
We call these ‘energy prosumers’ – essentially, they both consume energy and produce it. They are connected to the energy grid in case they do not produce enough self-sufficient (usually solar) electricity to manage; however, much of this energy returns back into the grid and therefore the consumers gain credits for the production.
If tokenized, this could allow for consumers to buy cheaper, local and more sustainable energy to create a power economy that users have more control over. It could also prohibit the monopoly of electricity by a small number of companies in ther market.
Blockchain technology is the perfect opportunity for this because of its permanence, security and decentralised nature. It could enable prosumers to tokenize and transact their electricity in a secure and trackable method.
The benefit for the environment
Tokenization of electricity can also fundamentally have an environmentally beneficial impact.
Blockchain does not have a sustainable reputation. In fact, it can use large amounts of electricity to power, especially in the case of cryptocurrencies such as Bitcoin. However, tokenizing electricity with blockchain could, in fact, reduce environmental impact by preserving and circulating power.
Considering much of this power is solar-generated, it could pave the way for, one day, an entirely self-sustainable economy. This will also include wind or hydro power when these options become more visible and widespread.
Consequently, many companies are already using blockchain technology to harness the value of electricity, including Electron, WePower, and Perth-born Power Ledger.
At Blockhead, we’re bringing blockchain into supply chains, to optimize the power of company data – whether that be in fuel, manufacturing or mining. To find out more, click here.