The Transformative Impact of Blockchain in the Energy Sector Blockchain can act as a driver of growth through interoperability of systems, provenance and smart contracts
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India is one of the fastest-growing energy markets in the world and has a vital role in contributing to the future of global energy markets. For the transformation of energy systems, security and affordability, leveraging distributed ledger technology is necessary.
Innovations in rooftop solar and smart metering have consistently catalyzed the energy industry. Blockchain can act as a driver of growth through interoperability of systems, provenance and smart contracts. According to Global Markets Insights Inc, blockchain technology in the energy market is expected to grow from $200 million to $18 billion approximately in five years.
There are more than 65 blockchain use cases, identified by the World Economic Forum, Stanford Woods Institute for the Environment and PWC, for the energy markets. There are proven use cases on peer-to-peer energy trading, real-time data management and trading of carbon credits on blockchain marketplaces.
The wholesale energy distribution is a significant use case, and more than 50 per cent of blockchain projects are based on peer-to-peer energy markets.
What is peer-to-peer energy trading?
Peer-to-peer (P2P) energy trading involves buying and selling of energy between grid-connected consumers. It offers the freedom of choice to consumers to decide on buying or selling to the consumers of their preference.
Benefits of P2P trading
There are various benefits of P2P trading. It allows consumers to get access to renewable energy even if they do not have rooftop solar installed. P2P trading minimizes electricity transportation costs significantly. Blockchain offers immutability, provenance and transparency with respect to energy trading transactions. Benefit for electricity utility firms: P2P trading will aid in scaling up the rooftop photovoltaic system and contribute towards meeting revenue purchase obligations (RPO) of discoms.
It opens up new revenue streams for discoms through wheeling charges and transaction fees. Energy trading on a P2P marketplaces built on the blockchain does not allow manipulation of monthly billing slabs without local energy storage. Transparency and provenance offered by blockchain rules out the need for third-party auditors for monitoring energy transactions thereby reducing compliance and reporting costs for the power discoms. P2P trading on blockchain will put electricity utility companies at the cusp of innovation and open up new channels for revenue optimization.
Blockchain-based P2P trading of Rooftop Solar Energy: Project by Uttar Pradesh Power Corporation (UPPCL)
Uttar Pradesh Electricity Regulatory Commission (UPERC), India has taken a lead in adopting P2P energy trading on blockchain. UPERC commission has a mission "To provide flexibility to rooftop solar power prosumers, taking a progressive view, the Commission is proposing provision of mutual sale and purchase of electricity through P2P transaction in a secured and reliable way with proper accounting and billing mechanism implemented with the help Blockchain technology."
India Smart Grid Forum in collaboration with UPERC has undertaken the project to establish P2P trading opportunities for "Prosumers & Consumers" in the state of Uttar Pradesh. India Smart Grid Forum (ISGF) is a Public-Private Partnership initiative of the Ministry of Power (MoP), Government of India for accelerated development of smart grid technologies in the Indian power sector.
The mandate of ISGF is to advise the government on policies and programs for the promotion of Smart Grids in India, work with national and international agencies in standards development and to help utilities, regulators and the Industry in technology selection, training and capacity building. UPERC has adopted a regulatory sandbox approach for this project. The consultation with UPPCL (Uttar Pradesh Power Corporation Limited), Department of Additional Sources of Energy, Govt of UP, and other stakeholders is on to get more state governments onboard along with institutional and retail consumers.
The objective is to make outreach to consumers, who are environment- conscious, so that they can engaging in buying and selling of "Green Power" at affordable rates to reduce carbon footprint. India Smart Grid Forum is engaging with UPERC to frame appropriate regulations to facilitate and promote P2P energy trading at the state level. State governments of the Indian Union should collaborate with UPERC to provide better proof of impact and garner guaranteed revenues for projects in the renewable energy space. This is an excellent opportunity for state governments to demonstrate leadership in the energy sector.