In our current climate, blockchain goes hand in hand with disruptive tech companies and solutions like cryptocurrency. However, we’re seeing a number of other industries — specifically those that are slow to evolve — integrate this technology into their operations.
Leading energy traders and banks recently launched a new digital platform in which blockchain facilitates crude oil trading, with more energy-specific use cases possibly on the horizon. While technological advances in this sector aren’t rare, the industry’s largest players typically anchor their operations in older technology.
In most cases, platforms and processes are tailored to the needs of energy companies. Large organizations like ExxonMobil, for instance, run independently with little desire to share and work together — a hindrance that makes something like implementing an industrywide blockchain hard to envision. Hurdles aside, energy companies that commit to blockchain will see efficiency and transparency added to every layer of their operations.
In many ways, the blockchain isn’t an entirely new development; it’s a digital update of the paper-based contracts that market makers and participants have always used. Invoices, inspection certificates, and other financial documents still circulate the globe via fax, post, or email, but blockchain can expedite these processes.
Unlike other jointly administered technologies, public and permissionless blockchain ledgers don’t require real collaboration from participants. Instead, the cross-functional effort and mutual trust these networks need to function correctly come from a system utilizing game theory and rewards.
Broadly speaking, digital-based solutions like blockchain aren’t new to the energy sector. Technology already has made energy systems safer, more efficient, and more sustainable while also forcing executives to make tough decisions about security and operations. Most C-suite leaders don’t have the time or resources to properly understand this new technology or the business purposes it serves. Some prefer to ignore the hype until it has materialized into real innovation, and others are too rigid to change at all.
Blockchain’s emergence will soon be impossible to ignore, though. Its ability to enhance real-time interactions between multiple entities will improve areas such as document organization, pricing mechanisms, and maintenance expenses — all of which should reduce customer costs and enhance the industry’s public profile.
Energy supply chains are slow and expensive to operate and maintain. Blockchain lifts the veil of secrecy from these operations, giving consumers end-to-end insight into the origins and cost of their energy supply while incentivizing suppliers to pursue efficiencies. Additionally, blockchain can set up local energy marketplaces or distributed energy platforms to drive self-production and self-consumption, which could affect revenues.
For future-focused energy industry leaders, experimenting with blockchain can yield competitive advantages. Here are three such benefits:
Using blockchain, you can create a market for resources and incentivize sharing among multiple users. For example, infrastructure and storage for electric vehicle charging could be bought, shared, and sold without traditional market barriers such as transaction fees and commissions.
Energy leaders should consider creating SaaS platforms that can consolidate markets and build a community around energy or emerging technology. This would be one way to demonstrate innovation to consumers and collect feedback.
A blockchain-powered SaaS platform could clear up any maintenance confusion for energy supply chains. Specifically, it’s a solution that can help energy providers form a clearer picture of the costs associated with ownership and make maintenance more efficient.
The data contained on the blockchain could allow anyone to compare costs across a range of energy providers. This would not only benefit consumers, but it might also incentivize improved business performance.
With smart contracts and smart metering, companies can automate billing for consumers and distributed generators. This could enable energy micropayments as well as prepaid and pay-per-use energy solutions that would benefit energy companies and their customers.
Furthermore, energy companies could help their customers by creating a consumer-based ecosystem that pulls energy data into a repository. Companies could then use that data to educate customers on their utility use and demonstrate how their habits translate into energy costs and carbon footprint.
The promise of blockchain technology has yet to fully be realized in any industry, as most viable business use cases are still in testing. With that said, energy executives who begin to explore implementations for the technology now could find themselves leading the transformation of an entire industry — and changing the world in the process.
DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation for writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.
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