written by: Solarplaza & Vertech Capital
With its ability to speed up transactions and cut overhead process costs by eliminating intermediaries, blockchain has grasped the attention of several utilities and energy companies looking to further digitize the energy industry.
Pilot projects trialing different applications in energy are kicking off in several parts of the world. While the majority of energy blockchain innovation is concentrated in Europe and the US, Asia is quickly gaining momentum. In 2018 alone, blockchain energy projects were launched in over five APAC countries, including Singapore, Japan, and Thailand, highlighting the rapid uptake of this technology within the energy industry.
Blockchain can be applied at various stages of the energy value chain to improve security and automate processes geared towards eliminating lag, errors, and fraud. The utilization of blockchain within the energy sector has provided significant benefits and opportunities for countries within Asia to meet their national and international development and sustainability goals. With APAC economies accounting for over 50% of global carbon emissions and having some of the most expensive power fuel rates, blockchain solutions can be used to decarbonize the energy sector and prioritize affordable, clean energy.
However, despite being at the forefront of cryptocurrency and blockchain knowledge and dialogue, blockchain innovation specifically tailored to the energy sector is lagging in Asia, when compared to other markets. This is largely due to the fact that the energy sector in most APAC countries is highly centralized and regulated, with few having a retail sector that provides the opportunity to decentralize and allows for different stakeholders to experiment with new technologies. Highly regulated energy sectors limit the ability of consumers to choose where their energy comes from. As most blockchain energy use cases focus on creating an energy trading and energy sharing economy for collaborative consumption, blockchain applications are viewed as a disruption in the way current markets work.
At the same time, these applications can provide a path to survival for industry incumbents, as market structures will inevitably change to increase the uptake of renewable energy for sustainability purposes. Energy blockchain projects and innovations within the APAC region are therefore being led by countries with favorable market conditions and forward-thinking governments and utilities, like Australia and Singapore.
Energy utilities in several countries are experimenting with diverse blockchain applications, such as the Singapore Power (SP) Group, which launched a blockchain marketplace platform for renewable energy certificate (REC) trading. Most projects, however, involve partnerships between utilities and start-ups providing new solutions to a market. Examples include those of Japan’s largest utility Tokyo Electric Power Company (TEPCO), who has invested in startup Electron and is working with Electrify.Asia for a P2P energy trading platform; the Metropolitan Electricity Authority (MEA) in Thailand, who will launch ASEAN’s first ‘across the meter’ energy trading project with Thai renewable energy business BCPG and Australian start-up Power Ledger; a blockchain-powered distributed energy and water system in the city of Fremantle by Power Ledger, funded by the government of Australia; and the partnership between Energo Labs and clean energy supplier First Gen for P2P energy trading in a campus microgrid in the Philippines.
Thus, it is imperative to connect existing utilities with businesses and start-ups that offer innovative energy solutions, which will allow new business models to emerge within the industry; optimize the use of existing hardware through digital technologies; and allow a more secure and clean source of energy. This will be possible through expert networks, platforms, and firms that promote collaboration in disruption.
Firms like Vertech Capital, for example, are well-positioned to bring together different players in a collaborative ecosystem. With a presence in Thailand, Singapore, New Zealand, and Shanghai, and with footholds within the UK and North America, Vertech is an advisory firm with cross-domain expertise and global insights that helps disruptive companies compete and thrive in industries where innovation poses both an opportunity and a threat.
The advisory enables fast-growing startups to scale in new markets and commercialize their products, and works with enterprises and governments to provide tech and business advisory. Vertech is open to collaboration through expert networks, partnerships and business, and is committed to helping firms implement innovative solutions in industries rapidly turning to digital technologies.
In addition to bringing together different players to bridge the gap between innovation demand and supply, inbound trends that will be critical in bringing the technology to market include connecting different blockchain platforms to allow for easy switching - and therefore collaboration - within the sector. Most energy blockchain projects currently use private blockchain platforms to prioritize data security and restrict data access. However, there is a multitude of blockchain platforms with unique characteristics available for firms to utilize.
Blockchain’s key value, firmly separating it from other distributed ledger technologies, is its ability to bring together many different players to operate within the same platform, while still providing decentralized data storage and security. Therefore, as the industry continues to exponentially gain momentum, it will be important to introduce mechanisms that focus on platform interoperability and allow for the standardization of data in order to achieve a situation where different sector players can truly collaborate and achieve large-scale impact.
With the widespread launch of pilot projects in the region, one thing is for certain - Asia is ready for the revolution blockchain will bring to the energy sector, with favorable market conditions forthcoming.
To find out more about Asia’s energy blockchain opportunities, register now for Blockchain2Energy Asia.