Implementation of blockchain technology in the energy sector

Blockchain technology offers an effective solution to most problems in various energy sectors, including electricity, gas, oil and other renewable resources. This will lead to the global blockchain market in the energy sector reaching $1,564 by 2026, with an average annual growth of 37.6%.

At least this is the opinion of experts from Fortune Business Insights.

In this article, we will explain what makes the blockchain such a valuable tool in the energy sector and what tasks it can solve.

Blockchain is essentially a kind of database that consists of a chain of consecutive digital blocks distributed among various nodes on the Internet. The main task of this technology is to ensure reliable storage of data and prevent their modification, hacking or compromise. If we talk about the energy sector, here the blockchain provides several critical advantages:

• Decentralization. Blockchain assumes a decentralized approach. In practice, this means that all market participants within the network can operate without the need for control by a central authority. In addition, financial transactions between them can be carried out using smart contracts – programmable and cryptographically protected software scripts, which completely get rid of corruption.
• Process optimization. The energy industry is made up of many complex networks and supply chains, from exploration and resource extraction to processing and transportation. Blockchain, due to its immutability, is able to provide a trustful and reliable connection between all network participants, which will speed up processes and increase the efficiency of the entire sector.

• Transparency. Blockchain is able to provide maximum transparency among all network participants. This is achieved due to the fact that any information stored in the chain can be easily verified by any network member. At the same time, the immutability of the blockchain ensures that the data recorded in the ledger has not been changed.
• Single data source. In the current energy market conditions, the end user has practically no tools to check the quality of resources before purchasing them. For example, when refueling a car, the driver cannot check the class of gasoline he buys. Blockchain easily solves this problem with a consensus mechanism that thwarts any attempts to enter data from unauthorized sources into the registry, and also protects them from being changed or deleted. As a result, the consumer can be sure that he is not paying for counterfeit products.

The energy sector is traditionally considered conservative, however, many companies from this industry have already begun to test and implement their own decentralized solutions. In the short term, this may lead to the formation of new, more efficient energy markets.

Therefore, we propose to consider the most common options for using blockchain technology in this direction.

Blockchain can completely change the way energy resources are delivered to end consumers. The fact is that decentralized systems do not need intermediaries, which means that there is no need for retailers.

For example, in the electricity sector, this will allow subscribers to connect directly to the main grid and receive electricity at wholesale prices. As a result, utility bills will be reduced significantly.

Today, companies and households already have the ability to generate their own electricity and sell their surplus. The introduction of the blockchain will further develop this concept and create conditions in which producers and buyers of electricity can interact directly, without the participation of centralized suppliers.

By controlling all the flows of electricity that are intended for sale and storage, the blockchain will be able to balance supply and demand, and smart contracts will easily provide the entire economic side in such a model.

Smart Grid, or intelligent networks, are modernized power supply networks that allow you to optimize energy consumption. They may consist of devices such as smart meters, electricity consumption controllers, smart home energy management systems, and more.

In such networks, blockchain can be used to combine all smart devices into a single network, where they can communicate with each other and exchange data. As a result, this will make energy consumption even more economical, as well as provide the user with additional options for automation and situation management.

Blockchain was originally developed to provide financial transactions in the cryptocurrency market, therefore, along with publicity, it guarantees a high degree of privacy and data security. For example, the SHA-256 protocol, which is used in the Bitcoin blockchain, the most popular digital currency, has not yet been hacked.

Accordingly, the use of blockchain and its hashing mechanisms in the energy market guarantees complete security of confidential data for all network participants.

As you know, many innovative ideas never enter the market due to lack of funding. Blockchain will help solve this problem. It will allow companies and start-ups to receive investments for the implementation of projects in the energy sector not only from large venture capital funds, but also through crowdfunding.

As a result, the energy sector will begin to develop much faster and more technological tools will appear in it.

Blockchain is a complex and niche technology, and it will take a whole team of qualified specialists to bring an effective product to the energy market:

• Project Manager – a project manager who organizes the development process, manages deadlines, budgets, and the team.
• UI/UX designers – design attractive and functional user interfaces.
• Frontend developers are responsible for implementing the client side of the application with which users interact. Layout, creation of animations, event handlers, and so on – all this is part of the tasks of the front-ender. The stack of such developers can consist of static technologies such as HTML/CSS/JavaScript or reactive technologies such as Vue.js/React.js.
• Backend developers – create the server side of the software that stores and processes data. The backender technology stack can include Java, Python, PHP, Node.js programming languages and Django/Flask/Yii2/Laravel frameworks.

• Mobile developers are involved in the implementation of mobile applications. In their work, they can use native technologies: Kotlin for Android and Swift for IOS, as well as cross-platform ones, such as the Flutter framework and the Dart programming language.
• Blockchain developers create decentralized software that will be hosted on a decentralized blockchain network.
• QA-engineers – they test the software product and monitor its quality at all stages of development.

If we talk about the technology stack, then for each project it is selected individually. It all depends on the technical features of a particular project and the platform on which it will work – desktop, web interfaces or smartphones.

According to experts, in the near future, blockchain technology can significantly transform the energy industry and increase its efficiency. Already, companies and startups are working on the introduction of innovative decentralized solutions in this area, but given the volume of the energy market, they are still not enough. Therefore, investments in this direction look quite reasonable and attractive.

Our team has extensive experience in developing complex blockchain solutions. Using our knowledge, we will help to test the viability of your ideas, find the optimal business model and bring to the market an effective product that will be in demand and bring the expected economic results.