MARKNetwork Blockchain: Use Case

What’s wrong with Energy Sector and how does blockchain bring respite?

Short summary of the article:

“Do not get left behind”

»Industries, commercial spaces and households are unknowingly consuming massive amounts of fossil fuels. It is leading to increase in carbon emission and thus global warming. Blockchain does not have any direct relation with energy sector but quite potential use cases have come up.«


The energy sector is rapidly transforming across the globe. A noteworthy transition from centralized to a distributed system is just one facet of what is changing in the energy distribution. According to the reports, the UK energy sector is undergoing paradigm shifts with the privatization, Electricity Market Reform and shift to low carbon energy technologies. Such transitions are expected to add to the existing complexities of energy generation, distribution, and management.

The world has been witness to the era when around 80% of all the generated energy was lost before it was used. With the adoption of innovative and sophisticated technologies, the energy sector has always been able to circumvent crises like the Argentine energy crisis in early 2002. As soon as the country came out of Argentina Great Depression and started functioning in full capacity, they exhausted all of the energy reserves. It resulted in imminent energy cuts to top industries. The cuts as high as 30% paralyzed the industrial sector of Argentina. It is considered as a historic setback to Argentina’s economic and industrial growth.

To support the global growth, the world energy consumption is expected to grow by 28% in between the years 2015 to 2040 primarily in the countries that are part of Organization for Economic Cooperation and Development (OECD). Conversely, the energy consumption figures of non- OECD countries like the Asian nations are expected to account for 60% of the global energy consumption during the same years of the forecast.

Globally, we are consuming more energy than we are consuming. Natural energy sources like fossil fuels are declining aggressively. Although many countries are aggressively switching to renewable sources of energy energy conservation remains the major focus across the globe. To corroborate, the European Union (EU) targets to reduce the 20% energy consumption by the year 2020 which will be further raised to 32.5% in the year 2030. Blockchain protagonists have found a direct relation between DLT-the core of Blockchain and the methods of energy conservation.

Blockchain in no sense is expected to be an energy saving solution. But indirectly it is expected to find profound use cases in containing the leaks during energy production and distribution.

Monitoring Energy over tokens

As per the recent stats, 78.4% of the energy consumption around the globe is being generated by non-sustainable fuels. The irreversible impact of using fossil fuels is leading to tremendous climate change despite that, there is no stop on the theft of dirty energy. The United Kingdom alone reports 25,000 cases of electricity theft and roughly 3,300 cases of gas theft every year consistently. The pound equivalent of this scale of energy theft costs the UK approximately £500 million every year. Effectively every person in the UK is contributing £20 to the cost of theft every year.

To combat the existential issues, UK, US, and the developing world is eyeing the expansion of the green energy market. But there is a stack of hurdles!

Government and other central bodies are reluctant to the energy market transition as their interests in continuing the current process are way too deep vested. The current set up of fossil fuel energy generation was a revenue contributor of almost $1.4 Trillion global for the government agencies. Despite all the reluctance the status quo is changing as the informed end users are encouraging the adoption of sustainable fuels. The rapid growth of the green energy market needs to circumvent the existing centralized approach which creates a market need of alternative decentralized energy distribution platforms.

Blockchain solves the existing struggle for both renewable energy generators and users. Sustainable energy producers are facing investment challenges. The blockchain projects like WePower are bringing users and renewable energy producers together to raise funds for moving the projects from supporting micro-grids to higher-scale projects. The end users of these projects have access to non-fossil fuel based energy at a price lower than the market rates. Apart from solving the capital raising challenges, energy tokenization makes the distribution of energy between consumer and producer trackable to diminish the thefts. Each unit of energy generated can be tokenized so that the supply chain has no leaks. As the theft will be contained the demand-supply issue will never plague the existing supply chain.

Projects like MyBit are helping in the adoption of solar panels by supporting the production projects with a crowdfunding platform on the blockchain.

Microgrid management

As per the recent reports from the International Energy Agency (IEA) population of around 1.1 billion are living in darkness due to demand-supply issues of the electricity. Almost 95% of these people are the dwellers of developing Asian countries and Africa’s Saharan belt. Microgrid’s prove to be the only promising mechanism to make electricity accessible in these remote and rural areas.

Currently, the Microgrid’s meet the electricity demands of over 90 million people across the globe and by 2030 almost the demand is going to shoot up beyond 60% due to depletion of fossil fuels. According to a report of Microgrid market of 2017, the preliminary investment of $20-40 million is required to build and maintain a Microgrid and the capital investment is going to scale up to $100 million by 2020. Despite the identification of potential benefits, the adoption rates are low because of the regulatory uncertainties and the challenges microgrids face in over seeing the electricity distribution.

Blockchain promises to take the nascent Microgrid market to an efficiently operational ecosystem. It will not only address the challenges of raising capital but will also circumvent the regulatory policies. Apart from that it will bring tariff uniformity across the landscape as it will maintain the complete business model transparent thus no middlemen can hype the price of the electricity. Such operational support by blockchain where the consumption and generation can be monitored transparently will expedite the adoption of Microgrids thus reducing the cost of distribution and increase the reach of electricity sources to rural areas. Projects like Drift are building a marketplace of 100% renewable energy. The platform is powered by blockchain which is helping the clean energy providers create efficient grids by helping them find the consumers. Apart from that is building a route for energy consumers to use renewable energy sources.

Precise Tracking consumption of fossil fuels

Generation and distribution of sustainable energy is not the only panacea to the existing challenges. The extensive consumption of fossil fuel is leading to higher emission of carbon dioxide which is the 65% contributor to the global greenhouse effect. In the last four decades, the CO2 emissions have increased by 90% which effectively enhanced the greenhouse impact by 78%.

Higher Consumption of fossil fuels is leading to increased global emissions of carbon dioxide which has been gone up by 2% since the last 2 years. In the next year, the emissions are expected to grow by 2.7 % due to more use of oil and gas. This scale of increase in emissions will be leading to +3 degree Celsius of global warming which is much above the permissible limits of Paris Agreement. At this stage, it becomes very critical to monitor consumer and producer behavior to develop strategies to contain the consumption of energy produced by fossil fuels using technology solutions like blockchain.

Decentralized Energy Trading

Deregulating the electricity trading has been a prime focus for investors, producers and consumers since 2014 when Netherland received it’s first ever online energy buying marketplace where the traders where independent energy producers. Following the footsteps, the UK also launched a P2P energy trading platform and the trend is being followed across Germany and US also.

Such P2P platforms emphasize that this form of trading holds potential benefits for consumers and producers both. The producers are not dependent on any intermediaries to state the price and at the same time the consumer are able to get renewable power at lower per unit price. This direct trade climates surplus charges that the intermediaries add for the end consumers. According to the solar panel installation project Yeloha, with P2P trading the power consumers are empowered to save around 5-10% on their monthly electricity bills.

Although the P2P trading of electricity is a brilliant idea it requires the support of blockchain to build a trustless and immutable ecosystem around it. The blockchain offers the P2P access to a trustable accounting system where the consumption will be tracked and traced in a reliable manner so that neither the producers nor consumers are led to conflicts due to inappropriate energy consumption recording systems. Blockchain projects like P2P Energy Grid are fortifying the ecosystem by providing a decentralized energy marketplace.

To wrap

International Energy Outlook 2017 reports the non-fossil fuels energy consumption to grow faster in the next few years. Despite the rapid adoption, fossil fuels will still contribute 75% to the world’s energy consumption until 2040. There is a growing need for blockchain projects that will expedite the adoption of green energy sources. At MARKNetwork we are supporting the growth of a clean ecosystem by rendering customized blockchain development services to hasten the establishment of a sustainable energy market.

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