“We are witnessing a paradigm shift from a centralized internet world to a decentralized one, which is characterized by disintermediation and democratization. There is a lot of overlap with how the energy sector is transforming to become more decentralized and distributed in nature,” says Sabine Brink, Shell’s Blockchain and Web3 Lead.
There is a wide range of application opportunities for Web3 and blockchain technology to support the urgent energy transition. For example, Shell and a number of other global companies have launched Avelia, a reservation and claim solution to help scale sustainable aviation fuel supply. Tech companies like Toucan, Moss.Earth and JustCarbon are tokenizing carbon credits, offering customers an easier way to offset carbon emissions. Peer-to-peer energy trading is becoming a reality thanks to companies like Powerledger, Grid+ and LO3 Energy.
Paul Brody, global blockchain leader at EY, highlights the transformative nature of this infrastructure technology: “In a blockchain-based ecosystem, you can have a very fluid digital interaction, where you can choose from a dozen different vendors and the you can evaluate. everything on a digital basis”.
Decarbonisation requires decentralisation
Tackling climate change has one requirement above all else: the decarbonisation of energy systems. This requires greater electrification of economies and decentralization of the energy system.
Due to the nature of renewable energy, especially solar and wind power, the electricity generated is not always readily available (without storage) and is often located geographically far from where the electricity is needed. In addition, with the arrival of prosumers—consumers who also generate energy that can be fed back into the grid—existing energy systems need a thorough overhaul.
“We have many more players entering the energy market, as well as a different mix of low-carbon energy products. This requires a global orchestration of large-scale energy systems to ensure we reach net zero across the board. In addition, the transparency, auditing and accountability will be key.” explains Brink. “Blockchain as a decentralized network technology makes a lot of sense to underpin it.”
These changes in the energy system will exponentially increase the number of transactions, including microtransactions, that will be made every day between many actors and energy assets. They must be recorded and managed in a way that ensures transparency, trust and data verification. It is vital that transaction systems and regulations evolve to meet this need.
The role of blockchain technology
Blockchain technology, a decentralized digital ledger that keeps multiple copies of transactions, makes data manipulation nearly impossible. Although developed for cryptocurrency, which remains strongly associated with digital currencies, blockchain lends itself to many uses. Its main benefit, incorruptibility, generates a valuable asset for markets: trust.