The energy sector is vast and complex. Its value chain covers many different touchpoints like extraction, generation, and transmission — all the way through to consumers using their appliances in their homes. Virtual and physical asset exchange flows in many different directions; the sheer volume of data exchange is massive.
In such a complicated and high-value landscape, Distributed Ledger Technology solves the challenge of sharing reliable data and assets through the value chain.
What is Distributed Ledger Technology (DLT)?
DLT, also known as blockchain, is a decentralised governance mechanism. It allows multiple parties to own and control data mutually, so they collectively, simultaneously own that data, with a single source of truth. This gives organisations the essential capability to improve the integrity, quality, and security of data.
Opportunity one: transparent and efficient peer-to-peer energy trading
DLT is a critical component in supporting the transition to renewables within the consumer energy market. It provides the decentralised mechanism required for real-time peer-to-peer energy trading and data exchange, which are central to managing a complex network of local prosumers.
Whereas traditionally energy flowed from the big energy producers to people’s homes, increasingly we now see the emergence of smaller-scale energy production on a local scale. As this concept grows, the energy system is becoming more distributed. DLT by its very nature facilitates decentralized data sharing and governance, enabling microgrids to work at maximum transparency and efficiency.
The alternative to DLT, a central trusted authority (probably in the form of an energy company) to aggregate and distribute energy on behalf of the consumers, is not fit-for-purpose for this new model. Crucially, it would introduce latency into the system, meaning variability in supply and demand would not be dealt with in real-time. As a result, we would see reduced efficiency of energy distribution.
The inability to trade in real-time would impact p2p market dynamics and impinge the financial incentives of installing and managing small scale renewable sources, deterring consumers from adopting renewable technology. Ultimately, not adopting DLT would have a direct impact on grid balancing and the wider adoption of renewables.
Opportunity two: securing and optimising the supply chain
The energy supply chain includes safety-critical, expensive components with many different suppliers that feed into the manufacturing process. This requires a huge amount of trust, and traceability and auditability of the process.
As large scale renewable sources (such as wind and solar farms) are developed, DLT will be essential in streamlining complex manufacturing processes to reduce operational costs and associated risks. If DLT is not used, there is a risk of defaulting to the same techniques that were (and still are) used throughout the fossil fuel value chain, which results in massive operational costs, risk of unintentional error or fraud, and ultimately increased energy costs for consumers.
The complexity of the renewable supply chain is increased given its distributed nature, meaning the problems experienced in the distribution of conventional, centralised infrastructure would be exacerbated.
Opportunity three: fortifying national security
Without coherent security practices in place, countries are at risk of unintentional or malicious activity that threatens energy distribution and ultimately the wellbeing of citizens. We have already seen the prevalence of IoT devices being hacked and exploited due to the lack of security standards. As the uptake of these devices continues to grow and connect with our power distribution networks, DLT is necessary to manage device identification, secure communication, and enable auditable trading of energy assets.
Moreover, the inherent redundancy of a DLT-based decentralised power network would provide the necessary resilience to ensure 100% uptime, and the principles of consensus and state-of-the-art cryptography would prevent any manipulation of the data or interference with energy trades.
“The inherent redundancy of a DLT based decentralised power network would provide the necessary resilience to ensure 100% uptime, and the principles of consensus and state-of-the-art cryptography would prevent any manipulation of the data or interference with energy trades.”
The benefits of SICCAR for the Energy sector
SICCAR enables cross-organisational processes to be performed while protecting sensitive data through robust shared governance. Its core technology is a combination of Distributed Ledger Technology and unique encryption management, which maintains the integrity and security of the data.
SICCAR integrates into existing workflows, applications, services, and products, and enables companies to get all the benefits of enterprise blockchain, without having to disrupt existing processes. Companies can start small and scale up in a way that manages risk while proving the benefits of blockchain and DLT.
Speak with SICCAR to get started
Whether you want to start with a small Proof of Value project or go big and re-design your existing supply chain around DLT security principles, we can provide tailored advice that will maximise your return on investment.
Through the work we have done with Scottish Power Renewables, we can apply our expertise to your specific situation and requirements.
Get in touch with our team to get a demo of the SICCAR platform or discuss the best route forward for your project.