Blockchain Tech and the Energy Industry: More Decentralization and Greater Efficiency

A similar effect will hopefully be the outcome of allowing energy giants to trade with each other using blockchains, since increases in efficiency and security can hopefully be passed on to consumers in the form of lower energy prices - although there's always the risk that energy companies will simply take bigger profits for themselves.

The most exciting use of blockchain in the energy industry - and the one that fits best with the whole ethos of decentralization - comes in the context of microgrids.

For one, the use of blockchain tech promises to increase interoperability between the numerous energy sources, suppliers and customers that make up microgrids.

In particular, this is the aim being pursued by the Energy Web Foundation, an international nonprofit organization that, according to its director of marketing, Peter Bronski, is bringing blockchain tech to all areas of the energy industry.

"EWF is actually building a core blockchain - similar to but importantly distinct from Ethereum - specifically tailored to the energy sector and the industry's unique regulatory, operational, and market needs: the Energy Web Chain," he tells Cointelegraph.

"It'll come as no surprise, I suspect, that blockchain offers significant cybersecurity and decentralization benefits to the energy sector. Globally, the energy sector is amidst a fundamental transition from a centralized electricity grid with a relatively small number of very large power plants to a decentralized, low-carbon electricity grid with billions of connected devices such as rooftop solar panels, batteries, smart thermostats, electric vehicles, etc. Blockchain, and especially the Energy Web Chain, is very well suited to helping managing that future grid."

Aside from offering a secure record of transactions and also rewards for producers, blockchain tech is set to serve the energy industry in other ways.

As promising as blockchain tech seems for the energy industry, there are, as ever, a number of challenges that have to be overcome before distributed ledgers become an integral part of the sector.

"Second, the regulatory and legal frameworks in relevant markets have to be adapted in order to make full use of the potential efficiency gains provided by [] future blockchain based energy systems."

"A few examples: a) We're using a Proof-of-Authority-based approach to consensus, because we believe that degree of validator oversight will be important, especially to regulators, in the highly regulated energy sector. b) At the same time that the Energy Web Chain is an open-source, public blockchain, we're also building in features that can keep sensitive information private, so that only approved actors can access confidential data."