3. Blockchain's limits for energy transactions
More sophisticated energy systems will be needed for the diversified, smart electric grids of the future, but blockchain — one widely promoted solution — may require difficult tradeoffs, Axios Expert Voices contributors David Livingston and Ben Hertz-Shargel write.
Why it matters: Electricity is increasingly distributed and decarbonized as more renewables, energy storage and other smart technologies are deployed.
- But if new energy markets can't make a symphony of these assets, the result could be a dysfunctional cacophony.
Where it stands: Blockchain, the distributed ledger technology, has been proposed as a promising platform for these energy markets.
- It solves a challenging problem: enabling mistrusting parties to transact with one another securely without trusting — or paying — a central authority.
Yes, but: Blockchain relies on massive duplication of data storage and processing, which could prove prohibitive for energy market processes and transactions.
- All that duplication slows down the network and makes inefficient use of its resources.
Between the lines: Beyond technical challenges, blockchain poses practical and legal risks, including...
- The ledger's immutability leaves it vulnerable to faulty and malicious transactions.
- Blockchain's decentralization is misaligned with the statutory authority of state regulators and the utilities they franchise.
The other side: Selective use could mitigate some concerns, such as quickly processing certain transactions "off-chain" and recording only the most important data on blockchains.
- Blockchain's signature strength — disintermediation of a central authority — could also be valuable in applications like asset registration, payment systems, and managing carbon and clean energy credits.
Go deeper: Read the Atlantic Council's report on blockchain and the power grid.
Livingston is deputy director for climate and advanced energy at the Atlantic Council's Global Energy Center. Hertz-Shargel is VP of advanced grid services and analytics at EnergyHub.