Blockchain in the Energy Sector: Potential for Energy Providers

What opportunities does blockchain technology offer the energy sector? Will it lead to new business models and more efficiency? A study by SAP, the German Association of Energy and Water Industries (BDEW), and the Fresenius university provides some insight.

Everyone has been talking about blockchain for some time now. The energy sector is no different. Around the world, energy companies have been looking at use cases and many projects are already using initial applications. Although the conditions in which blockchain projects are created vary by country, there are similarities in how the technology is used.

In the study, 'Blockchain in the Energy Sector: The Potential for Energy Providers,' SAP, the BDEW, and the Fresenius university provide an overview of how blockchain could be used in the energy sector.

'There is a growing sense of decentralization, connection, and complexity in the energy sector. And this is a trend that we are seeing not just in Germany, but around the world. Blockchain can take these trends further and open up the field for innovation and new business models,' says Stefan Kapferer, chairperson of the Management Board at BDEW.

Innovations and New Business Models

'I'm pleased that we had SAP, an internationally recognized partner, on board for the English version of our blockchain study. It means that we can now present Germany's experience of blockchain technology to an international audience,' Kapferer continues. 'The diversity of the projects alone proves that Germany's energy sector is leading the way on digitalization and the use of new technologies such as blockchain.'

The study shows that blockchain solutions are being worked on across the energy sector for a variety of use cases, including the infrastructure for charging electric vehicles, the certification of energy products, and peer-to-peer energy trading.

To benefit from the potential, companies are advised to start trying out blockchain applications, even if they are small and simple ones to begin with, to build up some experience with the technology. That way, their employees can see what it is like to work with blockchain in practice. It also means that they can easily tap into the technology's potential and build on it.

Harnessing the full potential of blockchain often requires companies to work together. This may even mean cross-border collaboration if companies located in different countries have the same requirements and are subject to similar regulations.

Some Use Cases are Already Possible

'Some of the uses identified by the energy sector are already feasible with blockchain in its current form. And judging by the rapid rate of development, the technology will soon meet the highest standards in terms of speed and energy consumption,' explains Professor Jens Strüker, managing director of the Institute of Energy Economics at Fresenius University of Applied Sciences in Germany. 'Our study offers a simple introduction to blockchain, which is actually a complex topic. We didn't want to use the study only to investigate how blockchain works and examine the different types of blockchain; we also wanted to clearly demonstrate how it could benefit the energy sector.'

Blockchain does not just present opportunities for new business, it also has the potential to automate collaboration between companies. Communication on the energy market is one example of how it could be used without creating new business or new players.

SAP is working around the world on a variety of use cases for blockchain and supports companies and projects with implementing the technology. The company develops its own solutions and is a member of relevant international bodies such as the Hyperledger Foundation, Alastria Consortium, and the Chinese Trusted Blockchain Alliance.

From Hype to Use at Utility Companies

We are currently going through a phase of determining what we can realistically achieve with blockchain. The energy sector is starting to concentrate on how to implement it in a way that makes economic sense and is looking at how it fits into the overall IT strategy. Embedding blockchain into business processes at every innovative utility company will lead to more automation and new opportunities for network-based collaboration.'

Clemens Fricke, manager of Utilities Sales at SAP, adds: 'Success hinges on a flexible blockchain strategy that supports collaboration with other providers, even if they use a different ERP system. We believe that differentiation should be current in the current IT environments and not in specific closed blockchains. It should also be aligned with other important automation technologies and all IT solutions inside the digital transformation of the energy sector.'

Raik Kilinna is global lead for Blockchain Technology at Utility Companies at SAP.