The Blockchain Market in the Energy Sector market is expected to register a CAGR of over 67.23 % during the forecast period 2019 - 2024.
The blockchain technology, which has greatly benefitted the financial sector, finds applications in the energy sector predominantly for wholesale energy trading. However, the increasing number of use cases and efforts from the regional blockchain associations are promoting the adoption of the technology for various other applications like smart contracts and digital identification.
The increasing investment activity across the emerging vendors, like LO3 and Electron, among other 100+ startups, in the market enable the vendors to actively invest in more research and innovation for developing blockchain solutions for the energy sector. Considering that the innovation would be user-driven, such investments would increase the trust among the energy market participants to adopt blockchain technology.
Utilities are expressing their interest in the technology by investing in blockchain startups. For instance, Utilities like Tokyo Electric Power Company, a Japanese utility company has invested in the Energy Web Foundation, to accelerate the commercial deployment of blockchain technology in the energy industry. In 2017, the Japanese utility has also made investments in Electron, a UK-based blockchain vendors specializing in the energy sector.
Centrica, a prominent British multinational utility giant, is set to invest in LO3, in partnership with Braemar Energy. Similar investments have also been made by RWE, a German power company in 2017. LO3 Energy has also received investments from Siemens, a prominent player in the energy sector. The vendors are also closely working with Siemens to develop a blockchain enabled transactive energy platform for environmentally-friendly electricity.
The blockchain technology is currently under testing phase across the United States and the United Kingdom, among others. The technical and costs constraints of the blockchain technology might challenge the technology adoption in the energy sector. The blockchain technology for the peer-to-peer transactions may neither be particularly cost-effective nor can be easily scaled to support massive transaction levels in the long run. The presence of very few use cases that can emphasize on the scalability of the technology and the cost associated is the reason for the blockchain technology not being viewed as a cost-effective solution in the long run.
For peer-to-peer trading, blockchains would need to handle transactions of just a few kilowatts, which may take a minimum time span of 15 minutes. The costs associated with the transaction may be worth just a few cents in traditional methods, considering the amount of trading. The Bitcoin trading fee, for instance, has increased significantly from the last quarter of 2017 to 2018. Currently, a USD 16 fee is being imposed for a USD 25 bitcoin transaction. Such high trading fee of bitcoin and other 1600 cryptocurrencies used across regions for trading makes the blockchain technology expensive, in terms of handling huge transaction levels in the long run of peer-to-peer trading.
Source : https://www.prnewswire.com/news-releases/blockchain-market-in-the-energy-sector-2024---emergence-of-variable-electricity-rates-and-need-for-peer-to-peer-trading--aggressive-spending-by-venture-capitalists-300816585.html
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