Hey, Neighbor! Can I borrow a few watts? The rise of P2P Energy

In anticipation of our blockchain discussion next week, I tried to find an unusual application of the technology to showcase the different ways it could be used across industries. For the power utility industry, blockchain presents a great existential threat to the traditional notion of power delivery and management. This Bloomberg article really piqued my interest in nonconventional blockchain applications.

-1x-1

Imagine being a homeowner with a solar array on your roof. You’re probably generating more power than you need on long, sunny days. Now, look at your neighbor across the street. He’s planning a block party tonight, and needs extra wattage to run his speakers, lights, etc. In addition, your next door neighbor needs a little more juice for his electric vehicle since he’s been driving more this past week. With the power behind blockchain, you could sell your excess power directly to them for a much greater profit than if you were to send that excess back to the utility company at pocket change rates. Since blockchain operates as a digital ledger of transactions, your renewables-focused community could establish a local market for buying selling stored power. This pulls control of power distribution away from massive utility companies such as Eversource or National Grid, which is exactly what has those industries so worried about their future relevance.

For those who currently own renewable energy sources and have excess to sell, power companies pay a paltry sum due to the laws of supply and demand – they usually have no need for the additional power, disincentivizing them from paying much per watt, and you have no use for the excess, disincentivizing you from holding on to it. This effectively forces you to sell at low rates or obtain no profit at all. I liken this old system of selling excess power as the “Island Layout” since everyone who has renewables to sell back is effectively an island amongst his neighbors, isolated and alone.

wind_farms

As an alternative application with blockchain, imagine being able to link your battery backups directly to solar and wind farms. In certain countries, your existing power cables can serve as conduits that link households together in ways that would have been previously-impossible so that everyone can experience the advantages of blockchain-enabled power distribution. Since there are already cables that link large swaths of land and because each house that has stored power can operate as a mini utility company, people who would have traditionally required utilities to run cables to their property no longer need such services. This presents another threat to power delivery companies since a significant portion of their revenues depend on laying new equipment and restoring those that are aging.

 

After reading this article and all the potential applications for blockchain in this industry, I was very optimistic about the future of power delivery. Energy companies across the U.S. have traditionally been operating as near-monopolies, charging seemingly arbitrary rates for a critical necessity. By democratizing the power distribution system, blockchain has presented the first significant challenge to their hegemony, allowing consumers to reap numerous benefits.  As the years have gone by, I’ve noticed an increasing number of my neighbors adding solar panels to their roofs. I would gladly pay them lower rates for power than I do to utility companies for the exact same thing. Plus, I’m sure the fee layouts will be much more transparent as well!

What do you think about this new method of recording energy transactions? Does it have the potential to disrupt a massive industry filled with decades-old incumbents? And, after reading this article, how could blockchain transactions be implemented in another industry?

4 comments

  1. To be very honest here, I do know little about Block-chain yet. While I’m also excited about this talk next week, my take-away from your post is essentially that Blockchain would essentially remove all the middlemen, institutions that are currently managing our transaction. Like Bitcoin remove the financial institution of bank, and your example that when could remove electricity institutions. Therefore, does that mean the Blockchain concept would disrupt all industry that involve a authoritative institutions for transactions? Maybe, gas, telecom, etc. In that way, blockchain completely democratize to the economy? Correct me if I’m wrong, since I have not much previous knowledge on blockchain, and thank you for the insight.

  2. Very interesting post, Michael! In Don Tapscott’s TED Talk for this week’s discussion, he mentions the sharing economy as one of the areas that could benefit the most from the proliferation of blockchain technology and this idea of peer-to-peer energy transactions is a perfect example! I have found that a lot of blockchain literature out there tends to focus on the implications that the technology could have in the financial industry, so it’s cool to hear how other areas of business stand to benefit (or not, depending on which point of view you take!). Although, as the article you linked mentioned, we won’t know the ultimate use cases for blockchain for quite a while. It will be interesting to see if companies and industries (like power suppliers) see blockchain as a credible threat to their business models or something that is too far off in the future.

  3. Interesting angle. Will be nice to work into our conversation tonight.

  4. Really cool post, Michael. The first thing that came to mind was sharing “wi-fi” – I have so many older neighbors on our street who don’t use much of their wi-fi speed, while my house of 4 siblings and I are fighting for smartphone speed as we snapchat, text and surf the internet. Perhaps I’m missing the point, and this might not be a possible blockchain network, but I’m sure there’s people who could pay a percentage of their XFinity and Verizon bills by selling their extra wi-fi speed! Thanks for taking the time to research an interesting application of blockchain.

%d bloggers like this: