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.
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.
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?