Blockchain Not Well-Suited to Transactive Energy

Blockchain—a distributed database technology that allows a network of parties to securely transact with each other—has been hailed as a game-changing innovation in the power sector for its potential to host transactive energy markets and boost decentralization (Figure 1). In one much-touted application, for example, residential and commercial actors could use blockchain to bypass existing electricity markets and electric utilities, and directly buy and sell energy with each other and other entities via a digital platform. And, as IBM experts noted in October, the technology may offer intelligence, transparency, and automation to existing systems—attributes they noted could help “mitigate the massive capital investments that would be required to re-architect the physical grid.”

1. Some experts believe blockchain promises great things for power and utility companies, but a report titled “Assessing Blockchain’s Future in Transactive Energy” suggests it may not be the panacea for all energy challenges. Source: Shutterstock

But according to a September 2019 report from American think-tank Atlantic Council, blockchain isn’t currently well-suited to host any of the primary functions of a real-time transactive energy market, including for energy data transmission, financial bids, trades, settlement, price formation, and grid service provision to the utility. “While blockchain has many other potential energy-relevant applications for which it may be a far more logical and valuable tool, this does not currently extend to serving as the key platform for transactive energy markets,” concludes the report, “Assessing Blockchain’s Future in Transactive Energy.”

The report stems from a scrutiny of the technology’s costs and benefits against specific power sector needs in a real-time transactive energy market. “Rather than paint a straw man perspective of first-iteration blockchain systems that would inevitably be easy to…

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