Blockchain is the future of information technology and is beginning to be applied to how energy is created and transmitted in the US.

First, a quick review. Blockchain is the direction of information technology is moving toward: how we gather and store data. A blockchain is a collection of records aggregated into “blocks” that are linked to one another in a “chain”. It typically contains a history of a certain process, such as amount of energy generated, what type, when, and under what circumstances, and can also be used to set future actions, such as energy generation, based on history or other circumstances programmed. Blockchain data is usually available in some form in hundreds of distinct copies. While there are privacy guards in case someone attempts to alter the blockchain, a hacker will likely be able to alter only a minority of the copies. Full data from a blockchain is available to those that are permitted to access it, is accurate based on what was entered, and can provide privacy (which person is responsible for what), if need be.

Initiatives spearheaded by energy industry groups and stakeholders are working to create standardization in energy data sharing and blockchains. The North American Energy Standards Board (NAESB) is in the process of developing a standard digital representation of natural gas trading using blockchain. The results and mechanism for developing useful standards may well be replicated in other parts of the energy industry, such as managing electricity generation and renewable energy certificates (RECs). NAESB is industry-driven and organized by areas of interest, such as wholesale gas, wholesale electric, and retail markets to develop the standards for each energy group.

NAESB has developed a joint committee to develop a standard digital representation of natural gas trade events (futures or actual) in order to standardize and communicate smart contracts and trade disputes. A base contract for the sale or purchase of natural gas is being developed for the industry that can be used in a blockchain to keep appropriate and useful records. The actual base contracts are still being developed.

Given that renewable energy generation differs from that of fossil fuel-derived because the nature of renewable energy generation, the sun or wind, is free and, theoretically available to all, the future renewable energy blockchain application will likely focus less on development and futures, but instead on post-generation services, such as storage, distribution, and RECs, from generation to sales and retirement. This should come in handy as tracking RECs currently is a difficult process as records of transactions associated with RECs sales are difficult, given the different organizations and rules concerning RECs. Developing standards with blockchain to track RECs through their lifecycle could encourage renewable energy growth and investment.

CCES can partner with experts on blockchain technology to improve your data management. In addition, we can help you understand and manage your energy demand and usage, which is the first step to being more cost-effective and minimizing risk. Contact us today at 914-584-6720 or at karell@CCESworld.com.