Blockchain uses a lot of electricity. So much so that Bitcoin transactions alone put pressure on the grid. As power companies work to adapt to this new technology, Maher Chebbo, Chief Business Innovation Officer for Global Digital Energy at GE Power and a member of the advisory board for Electrify Europe, argues that blockchain itself is the answer. And so much more.
Blockchain. Even the word alone is exciting, so vividly does it bring to mind images of a future full with possibility. And it’s not just a flash in the pan. The initial hype and subsequent unviable offerings have largely passed. Now blockchain is making a notable impact in a range of spheres, away from cryptocurrencies – from large businesses’ global supply chains all the way down to individual citizens’ birth, wedding and death certificates. Put simply, the technology is here to stay.
But that poses a problem for utilities and power producers. The issue is that blockchain transactions are hugely energy intensive. So much so that Bitcoin alone is having a marked effect on the grid. Each Bitcoin transaction is currently estimated to consume enough energy to power a home for nine days, meaning the currency’s network consumes 32TWh per year – the same as the population of Denmark. And it continues to grow rapidly.
Providing the power infrastructure to support this development is no small task. It’s difficult to imagine adding capacity to the grid quickly enough to keep up. Fortunately, blockchain itself could provide the solution by providing the flexibility upon which tomorrow’s electricity network will be built.
Rock around the block
The flexible power system of the future will see low-carbon energy produced at scale – not only by big utilities, but also by end users’ own renewable sources. A world of smart, internet-enabled devices and sensors will then measure who needs how much energy, in real-time, and, with the help of battery technology, facilitate a truly efficient and waste-free market to ensure everybody gets exactly what they need as cheaply as possible.
However, our ability to realize this future depends on four interlocking trends: decarbonization, digitalization, decentralization and electrification. Blockchain can help them reach full throttle.
First, take decarbonization, which requires the replacement of carbon-intensive fossil fuel generation with renewable energy. This won’t be achieved with large wind and solar farms alone. Rather, such installations will be supplemented by small-scale local generation by communities, businesses and even individual households. It’s an inherently decentralized set-up, which means a shift from a world of passive energy consumers to one filled with ‘prosumers’ – not only buying energy, but also selling it back to the grid as well.
This will entail a series of complex contractual arrangements, which is where blockchain comes in. The technology creates peer-to-peer transactions, so consumers won’t just pay the utilities for power, but utilities will also pay prosumers, and prosumers will pay each other. The entire transaction process – including contracts, billing and payment – can take place on the chain in the blink of an eye. It’s a crucial step towards a flexible system that makes use of all available energy.