Blockchain in Energy

In the world

2019

In 2019, Mindsmith and the Energy Center of the Moscow School of Management SKOLKOVO analyzed existing blockchain projects in the field of electric power, highlighting the geographical distribution, years of launch and typology of projects and investors, as well as determining the size of investments and areas of interest of various groups of investors.

"Currently, there is a decrease in the number of blockchain projects in the field of electricity. However, at the same time, the maturity and depth of the development of projects, their complexity and industrial specificity are growing. This is confirmed by the fact that projects continue to successfully attract external funding, but not at the expense of a wide audience and ICOs, but from professional groups of investors. We offer you an analysis of blockchain projects and investment activity in the field of electric power. The study provides a detailed analysis of projects: typology, geography, launch year, type of attracted investments, as well as an analysis of the interests of professional investor groups. This report will be useful to everyone who is interested in using blockchain in traditional industries, as well as interested in new digital technologies and business models, in particular, within the electric power industry. We expect that this study will contribute to the development of the discussion on the practical use of blockchain technology in the energy industry, "commented Yusufov Ruslan, managing partner of MINDSMITH.

The study highlights:

• 13 types of projects that create solutions in the field of trading platforms; attracting funding to energy projects; environmental certificates; payment solutions; blockchain as; ON data management; charging infrastructure for electric vehicles; power distribution platforms; partnerships; recycling waste into energy; aggregators; green; mining cryptocurrencies energy management;
• 5 types of investors: venture capital investors; energy companies; accelerators and incubators; state investors and a wide audience (crowd investors).

Key findings of the study:

• by August 2019, 234 blockchain projects in the field of electricity were launched;
• according to the disclosed information, the volume of investments in blockchain projects is almost $600 million: $307.7 million was attracted from various groups of investors; $290 million was attracted during the initial coin offering (ICO);
• one in three projects received external funding. At least 78 of 234 projects received external funding;
• the number of blockchain projects decreased in 2018 and 2019, but the quality and maturity of projects is increasing. In 2018, the number of blockchain projects in the electric power industry decreased by one and a half times compared to 2017, which accounted for the highest peak (40% of projects). This is probably due to the popularity of cryptocurrencies and the number of ICOs held. Projects entering the market and receiving funding now are more complex and industrial in nature;
• Among the countries where blockchain projects in the electric power industry are launched, the United States, Germany and the United Kingdom are leading. These countries account for 21.4%, 9.4% and 6.4% of the total number of projects, respectively;
• the most interesting area for investors was platforms for trading or exchanging electricity. More than 40% of projects in this area received external funding. The trend to build direct trade communication of market participants through peer-to-peer (p2p) transactions was called "energy democratization." Projects in this area are interesting to all groups of investors and account for 32.5% of all blockchain projects in the field of electricity;
• 58.5% of projects are related to the creation of trading platforms, investment in energy projects and environmental certification. These areas account for 32.5%, 14.5% and 11.5% of the total number of projects, respectively;
• the focus and interest of entrepreneurs creating blockchain projects in the field of electricity and investors varies. A large number of projects remain without investment, since these decisions do not lie in the field of investor interests.
• areas of interest of various groups of investors: venture funds - trading platforms and platforms for energy distribution; state investors - trading platforms, payment solutions and scalable blockchain platforms; startup accelerators and business incubators - environmental certificates and "blockchain as software" (to build their own castomized blockchain solutions); energy companies - blockchain partnerships, trading platforms and infrastructure for financing; a wide audience (investors participating in the ICO) supported almost all types of projects;
• investors almost do not finance projects related to payment solutions, data management, charging infrastructure for electric vehicles, recycling waste into energy, aggregators, environmentally friendly cryptocurrency mining and energy management;
• 44% of the total number of professional investors who have shown interest in blockchain projects in the electric power industry are venture investors.

"The dynamics of the volume of investments and their source demonstrate the sectoral specifics of the development of digital technologies in general. The use of blockchain in energy has a characteristic distribution and is directly related to state policy in the field of digitalization and the climate agenda, as well as the activity of energy companies and solution providers, including within the framework of technology partnerships. Despite the regional specifics, the examined foreign experience can be adapted to domestic conditions for the development of digital solutions in the sector and be useful for both the corporate and public sectors, "said Anastasia Perdero, project manager of the Internet of Energy Center for Energy of the Moscow School of Management SKOLKOVO.

The activity of states, primarily the United States and the EU countries, suggests that by the beginning of 2020 an assessment will be made of the field of application of blockchain technology and its economic effectiveness.

2016-2018

Since 2016, German Conjoule has launched a pilot project for connecting private photovoltaic systems and consumers to its blockchain platform. The project covers the German cities of Essen and Mühlheim, and also contributes to the purchase of excess electricity produced by solar power plants in private houses by residents of the neighboring area. Conditions are also created for the sale of "home" electricity to private and public legal entities in the region. In addition to transparency, freedom of contracting and market pricing, the company is trying to create a new social community based on the value of "clean energy." The capitalization of the company at the start exceeded 4.5 million euros^[1]..

In addition to Germany, the British startup Electron also takes a leading position in the European energy market. Even at the stage of testing the platform, he downloaded random data on more than 53 million electricity metering points. This system is designed to control energy distribution and record consumption data. The main feature of this system is to significantly reduce the switching time between resource suppliers in order to optimize the cost of electricity, as well as manage the interaction between generators and power grid companies.

In America, the main developments in the field of distributed registry fall on Grid +, a joint venture between LO3 Energy and ConsenSys. At the moment she created a prototype for exchange of certificates for energy of RES (renewables) and in the future plans to become the full-fledged platform for power supply activity. Its concept is based on the connection of decentralized sources of energy production into a centralized network. At the same time, volumes of electricity not used by the producer are sold to neighboring households. All manufacturers and buyers are united in a traditional electrical network, and transactions are controlled using the blockchain. To implement this concept, the use of smart counters and smart contracts technologies is mandatory. The former record the amount of energy produced, and the latter are needed to conduct and display transactions in automatic and secure mode.

Another company from America eMotorWerks and the German architect of the blockchain platform Share & Charge announced a project for a system with which anyone can create their own mini-station for charging cars. Manage this technology through a mobile application. Station owners will program their chargers, setting the price of power sales and the time it takes to charge. Using the application, drivers will be able to see the nearest charging devices. Transactions for the payment of electric car charging services at such stations are planned to be carried out using the blockchain.

In Australia, the main flagship for the development of distributed registry technologies is a new PowerLedger project. The company is developing an energy trading platform that gives users the right to buy and sell surplus solar energy. The PowerLedger believes that their service can save households up to 475 US dollars a year. To perform operations, the platform uses tokens that will be converted on the exchange with other digital money, which gives the system liquidity. PowerLedger also developed an energy management system for apartments in apartment buildings.

Thus, in world energy, blockchain technology is mainly used in the field of RE microgeneration, in the creation of decentralized networks and as localized trading platforms between consumers and suppliers of resources in small territories in a free, competitive market. So far, the share of the renewable energy market is small compared to large sources of energy consuming hydrocarbons. But renewable energy technologies are rapidly developing and becoming cheaper, and the number of micro-players in the energy market is constantly growing. In this situation, blockchain platforms can indeed in the future become a strong competitor to the traditional energy system or at least its understudy.

In Russia

2019

The Mindsmith company and the Center of energetikimoskovsky school of management SKOLKOVO carried out in 2019 the analysis existing a blockchain projects in the field of power industry, having marked out geographical distribution, years of start and typology of projects and investors and also having determined the amounts of investments and areas of interests of various groups of investors.

Russia accounts for only 1.7% of the total number of blockchain projects in the electric power industry.

The development of blockchain solutions in Russia depends on key stakeholders in the industry: the state, energy companies and blockchain solution providers.

The state has a decisive role in supporting innovative solutions and digital technologies. In Russia, as in many other countries, cryptocurrencies and the blockchain industry as a whole are still out of regulation, although it is worth noting that existing proposals are in the process of draft laws or their development.

In the context of strategic priority in the digital economy in Russia, effective communication between decision providers, initiative groups and market stakeholders, as well as the formation of a favorable regulatory and economic environment, will be an important condition for creating a favorable environment for the development of blockchain solutions.

2018

Although more than 50 companies are registered in Russia whose activities are related to blockchain technologies, quite bright players have not formed in the domestic market. The introduction of blockchain in the Russian energy sector is constrained by low (compared to world) electricity prices, regulation of the retail market and the lack of legislative norms necessary for its formation. In addition, maintaining the stability of the energy system as a whole and solving energy security problems remains a priority for the state - a new capacity renewal program is now being launched to modernize traditional generation. So for now, the prospects of the blockchain look more rosy in the field of energy service contracts, where the use of technology will eliminate disputes between their participants.

At the beginning of 2018, the development of the infrastructure of the "smart network" is the prerogative of network organizations, while guaranteeing suppliers are also interested in improving intelligent electricity accounting systems and in forming a calculation platform based on them. Accurately measured and recorded resource consumption underlies the trade relationship between the consumer and the supplier. It is obvious that in order to implement such plans, it is necessary to seriously change the legislation. It is in this direction that sales companies intend to move, offering regulators conceptual and detailed changes that make it possible to form a modern market that can integrate current types of trading technologies, innovative household appliances ("Internet of Things").