The use of blockchain to enable innovative business models in the energy sector cannot succeed unless utilities work together, industry figures have warned.
They must collaborate on the “core infrastructure” before adapting the technology to meet their individual needs, according to Centrica senior architect Joseph Stanley.
“We took a decision internally as a company that we shouldn’t be building this,” Stanley said at this week’s Cired exhibition and conference in Glasgow.
Explaining why Centrica had joined the Energy Web Foundation, an international blockchain initiative for energy, he told delegates: “This is like the Windows operating system or the iOS built by Apple. It’s quite difficult but we need to get it right.
“It makes sense that all the utilities join together to create something which is available to everybody… On top of that you could create your own uses.”
A blockchain is a distributed digital ledger which enables two parties to conduct secure, verifiable transactions without the involvement of a third-party intermediary such as a bank.
The transactions – or blocks – are chained together in sequence to form an immutable record of every exchange which has ever taken place. The technology became famous as the basis for the bitcoin digital currency.
But Stanley said the lack of technical standards for blockchain is a “major issue” at the moment. “There are lots of different blockchains being worked on. Interoperability is going to quite key going forward.”
He said the Energy Web Foundation is now developing a “blueprint” for blockchain in the energy industry in an effort to resolve the issue.
Diego Del Canto, innovation manager at Italian utility Enel, agreed that cooperation is essential: “There will not be, according to our point of view, any blockchain use case without the collaboration between companies in the same industrial sector.”
Canto said utilities will need to be mindful of the limitations of the technology, explaining that blockchain is “not very economic” when compared to traditional banking transactions. He said the cost of conducting bitcoin transactions now exceeds $1 per instance. “The point is not low transaction fees,” he added
Stanley cautioned that distributed ledgers are also “inherently slower” than a traditional central database: “‘Is there a better way of doing things’, should always be the question”, he advised.
Blockchain company Electron announced last month that it is creating a nationwide energy platform to enable customers to switch between suppliers within just 15 seconds. The company has recently been awarded “technology pioneer” status by the World Economic Fourm.