The energy sector needs to stop seeing blockchain as a disruption
Across both sides of the blockchain aisle — both industries contemplating the technology’s implications and evangelists advocating its adoption — people often describe blockchain as the next big disruptor. Skeptics tend to see such claims of blockchain-based disruption as overblown, while the pro-blockchain community tends to see it ushering in nothing short of a decentralized revolution.
But they all use that word: disruptor.
Media headlines heralding the arrival of disruption at the hands of blockchain technology are nearly inescapable, including throughout the energy sector:
Compelo: Is Energy Trading Next Up for Blockchain Disruption?
Power Technology: Will Blockchain Disrupt the Traditional Distribution Network Model?
Electronics 360: How Can Blockchain Disrupt the Energy Industry?
Choose Energy: How Blockchain is Disrupting the Energy Market
Lexology: Can Blockchain Technology Disrupt Renewable Energy Finance?
Antenna Group: How Blockchain is Disrupting the Energy Industry
Capdax via Medium: How Blockchain Technology Will Disrupt the Energy Sector
GreenBiz: How the Blockchain Will Disrupt Energy Markets
But I’m here to say: Enough! It’s time to stop calling blockchain a disruption. Not only is the energy sector becoming numb to such headlines but pointing a finger at blockchain as the disruptor misses a more important point.
The energy sector is already facing multiple mega-disruptions — and blockchain isn’t one of them
Most significantly, the global energy sector is already facing multiple, concurrent disruptions that are fundamentally transforming electricity markets around the world. These disruptions really gained a foothold in recent years, and their intensity has only strengthened. Let’s consider just four: digitalization; decarbonization; decentralization; and electric mobility.
Digitalization: Although many electricity grids remain largely analog, the transformation to digital is well under way and gaining momentum. If we use advanced smart metering as a proxy for grid digitalization, the trend becomes readily apparent. For example, advanced metering deployments by utilities in the United States grew from more than 7 percent at the end of 2007 to about 50 percent a decade later. In Europe, smart meter deployments are expected to grow from more than 40 percent of households in early 2018 to 70 percent by 2023. With such advanced metering infrastructure comes the ability for two-way flows of communications, data and power — in the process unlocking previously unattainable business models and wholly new ways of managing the electricity grid.
Decarbonization: The renewable energy revolution at this point will surprise no one. According to the International Energy Agency’s Renewables 2018 report, in 2017, renewables accounted for more than two-thirds of new global electricity capacity growth. For solar photovoltaics (PV) alone, global new installations are expected to surpass 100 GW per year through at least 2023. As the grid decarbonizes with growing speed, it is fundamentally overturning century-old assumptions about central thermal baseload generation as the foundation for the electricity stack. Utilities and other grid operators are wrestling with the dynamic combination of variable-but-predictable renewable generation and increasingly dynamic demand as well, thanks to factors including rapid customer adoption of smart devices such as thermostats and electric vehicles.
Decentralization: Gone are the days when customers could be lumped into a few big customer classes, their demand profiles assumed to be relatively static and predictable and their relationship with the electricity grid and their utility more or less one-way only: as buyers and consumers of kilowatt-hours of electricity…