Blockchain is currently not suitable as a digital platform for energy transactions, says the Atlantic Council in their report Assessing Blockchain's Future in Transactive energy. In determining the value of using this emerging technology as a means of decentralising and democratising the energy market, the report weighed the upside of using blockchain against the impact of its costs.
Renewables are becoming an affordable form of energy generation. At the same time, new battery storage and smart energy technologies are also being introduced into the market. As such, there is an opportunity for an increasingly decentralised power system for energy buyers and sellers, which forms the basis of a transactive energy market.
However, to become a viable platform for a transactive energy market, blockchain has six costs that need to be addressed first, including certainty and privacy.
- Certainty. The challenge of certainty is the need to each transaction in a blockchain to be validated by group consensus. This has the effect of slowing down the time taken for each transaction to be completed, which can take 20 minutes or more. Unfortunately, for a transactive energy market to operate, each transaction cannot take more than 15 minutes.
- Privacy. The issue of privacy is also a concern in a transactive energy market. Blockchain requires a significant degree of transparency to operate, due to its consensus model. However, when it comes to energy data, a high level of privacy is preferred, as it can reveal sensitive information about individual users, such as their daily behaviour, as well as make entire communities vulnerable to exploitation of their energy grid.
The report recommends how the various costs of blockchain, including the two mentioned above, can be mitigated, but ultimately acknowledges that it is still too early in the technology's development.
Therefore it is unlikely at this point for blockchain to play the role of a digital platform in a transactive energy market. However, blockchain should not be dismissed outright, as further innovation and refinement could make it more suitable in the future.
For more sight into how blockchain can contribute to a transactive energy market, read the full report, Assessing Blockchain's Future in Transactive Energy.