The energy markets structure has been stagnant for a long time. The traditional value chain was protected by the structure of technology whereby predominantly power is generated in big sources (power plant).
The power was transmitted via transmission lines (high voltage) to distribution lines (low voltage) to the consumers.
Among the infrastructure were the generators (wholesalers), usually a big corporation that has invested a large amount of capital in power plants. The retailers who sometimes are also the generators, purchase the power from the generators and on-sell it to the consumers. In between this transaction are the network owner and operators who again have significant capital investments to manage the grid allowing the electricity to be sent from the generating plants to the consumes. The government and the regulator usually try to apply oversight with the aim of protecting the consumers and maintaining competitive markets.
With advancement in renewable power generation technology (e.g. Solar, Wind and Hydro), especially at micro scale, the consumers have options in producing their energy. However, the economics of these option has not been attractive mainly due to the low cost of fossil fuel and the high cost of renewable energy technologies.
In more recent years the energy economics equation has changed. The cost of fossil fuels has increased, and the cost of renewable energy technologies has reduced. Australia is a good example whereby the installation of the solar panel is at a very high rate. This has a significant impact on the power supply and demand equation by shifting the balance towards the consumers.
The impact of increased solar panel installation on energy supply and demand equation is limited mainly due to the nature of electricity. Up until recently the electrons which are produced need be used or dispatched instantaneously. With the development of battery and energy storage technology, their economic equations have started to display viability.
However, the true potential of these two technologies will be realised only when they are combined together in a way that they can be sent back to the grid to be used by other consumers. This is the advent of “prosumers” in the energy markets.
Impact of blockchain on power markets
The advancements in micro-renewable energy generation and storage technologies has led to the proliferation of energy prosumers. To truly maximise the benefit of renewable technologies, all its potentials benefits need to be considered. The most obvious being environmental, but also we need to look at the social and economic benefits. To truly exploit the full potential of micro-renewable energy, we need to allow the prosumers to transact with consumers.
However, there has not been a platform which will allow this to occur easily. The friction for the peer to peer energy exchange has been on multiple fronts. The blockchain is one technology which can allow the peer to peer energy exchange.
Atlantic Power Exchange is developing a platform to allow a frictionless peer to peer energy transition to occur. This is with the added benefit of proving the provenance of the energy which will assure its users their energy is coming from a clean and renewable source. In addition, by using Overledger, Atlantic Power Exchange will enable new blockchain technologies to be easily adopted by its platform.